In an editorial on November 10 in the wake of Secretary of State Hillary Clinton’s visit to major U.S. allies and partners in Asia, The People’s Daily concluded that “US foreign policy basically encourages disagreements among Asian countries, especially by rallying Asian countries against China.” The editorial told the rest of Asia that it must now decide “how many resources will be wasted keeping this ‘balance of power’” when in the end, China “will not only watch to prevent the US from messing up Asia, but also prevent the US from sticking its hands into China.”

From Beijing’s perspective, in other words, China is the status quo power in Asia. It is the United States that is resisting the natural reordering of relations in the region around a “harmonious society” based on China’s “peaceful rise.” It is the United States that is reintroducing a “Cold War mentality” and “messing up Asia” as it seeks to preserve regional hegemony when China has no such ambitions.

Back in November, senior Chinese officials really appeared to believe this narrative. Things had changed so suddenly: at the June ASEAN Regional Forum in Hanoi, normally pliable Southeast Asian nations began standing up to China over the disputed South China Sea; after years of diverging with the United States on North Korea policy, Korea was now pushing China to do more to punish Pyongyang; and the Democratic Party of Japan suddenly went from loopy talk of counterbalancing the United States to actually arresting a Chinese fishing-boat captain near the disputed Senkaku/Diaoyu islands and citing China as its major threat in Tokyo’s new five-year defense plan. For Beijing, this change was all too sudden to have been a coincidence—it had to be part of a larger U.S. strategy to encircle China. After all, China had surpassed the United States as the lead trade partner for most of these states and America was clearly a diminished force after the financial crisis. Until Hillary Clinton’s “smart power” and “return to Asia” strategies, Asia’s future was on the way to becoming Asia’s past: a Sinic system that welcomed China’s rise.

That was in November. But in a People’s Daily editorial this week, the theme was how China’s peaceful development and pursuit of harmonious society could create “win-win” relations with the United States in Asia. What happened?

First, it became obvious that independent of anything the Obama administration was doing, China was continuing to hemorrhage credibility in its neighborhood. A forthcoming Gallup/Yomiuri poll in Japan shows that a whopping 87 percent of Japanese don’t trust China, while 92 percent of Koreans in a new Asan Institute for Policy Studies poll expressed frustration with China’s handling of North Korea and 58 percent wanted Seoul to pressure Beijing even if it hurts bilateral economic ties with China. Similar negative trends in views of China are also continuing across Southeast Asia and India.

Second, the Chinese side began focusing on President Hu Jintao’s January 2011 visit to Washington. Hu is essentially a Dengist and thus recognizes the wisdom of prioritizing stable relations with the United States and seeking a low profile while China builds its power. Hu’s foreign policy has also been characterized by efforts to consolidate China’s “strongholds” in Asia, but not yet at the cost of direct confrontation with Washington. The Obama administration started off presenting the United States as the demander in the U.S.-China relationship, but has since made it clear to Beijing that the financial crisis did not change the fundamentals of American power in Asia all that much. As a result, Hu now needs the summit in Washington to be “win-win” perhaps more than Obama does.

That raises an obvious question: are these tactical changes in China’s approach o­r a deeper recognition in Beijing of China’s damaged position. For now they are probably more tactical than strategic. Beijing can adjust the tone of foreign-ministry statements and People’s Daily editorials, but Hu and Prime Minister Wen Jiabao are lame ducks and there is enormous internal pressure on the next generation of leaders after 2012 to take a stronger stand for China’s sovereignty and territorial integrity. Structurally, the PLA and other maritime arms have operational latitude that is increasingly problematic as they operate in and around territorial waters claimed by Japan, Vietnam, Malaysia and the Philippines, and along the border with India. There is little indication that this internal decision-making dynamic will change with new leadership in 2012. Worse, the hardening stance of Japan, Korea, Vietnam, Malaysia and others may look tactical from Beijing’s perspective. As the November 2010 People’s Daily editorial warned the rest of Asia­­­—you will have to decide how many resources you want to waste in this balance-of-power game. For the dialectical materialists in Beijing, history still favors the inexorable growth of Chinese influence.

All of this means that the administration will need a longer-term strategy for managing relations with China: one premised not only on the positive, constructive and cooperative relations with Beijing promised initially by the Obama administration, but also a clear U.S. commitment to sustaining a stable strategic equilibrium in Asia­—or as Condoleezza Rice put it before the 2008 election made values-based foreign policy uncool—“a balance of power that favors freedom.”