A New East-West Alliance Starts to Emerge

China seems to be accumulating most of its additional foreign trade surpluses in euros, rather than dollars. But there could be more behind this policy than asset diversification, or support for Europe's struggling economy - which takes 18 per cent of China's exports, more than does the US.

Imagine for a moment that you are sitting in Beijing, thinking through long-term strategy for your nation's climb-back to the global dominance its economy held, then lost, just two centuries ago.

Which is your most dangerous competitor? And which would be your most promising partner?

The US is obviously the most formidable rival because it is the only military superpower (11 naval battle groups based on aircraft carriers to your none at all), with the largest national economy and global leadership in technological development.

It already has a close alliance with your disliked and feared neighbour Japan, with its own huge economy and impressive technological resources.

To your west lies India, a rising power in its own right, with a population whose growth will soon take it greater than yours, and a nation clearly targeted by the Americans as a future major ally in Asia.

To your north lies Russia, a nuclear power in its own right and a traditional enemy that seized much of Siberia, with its great mineral resources, that were once part of China.

So you are surrounded by rivals, potential enemies, combining immense military, economic and technological power.

Beyond that ring of power one natural ally… Europe.

Its economy, aggregated through the 27-nation membership of the European Union, is the world's largest… even bigger than the US. Its core economy, Germany, is second only to China's as a dynamic exporting power. It has a pool of high-level scientific, technological, engineering and financial skills comparable to America's.

It has no strategic interests that conflict with yours. Indeed, its strategic weaknesses of dependence on the US for defence and on Russia for energy reso

David Fuller's view Do not miss the second half of this feature: Global political power, under-exploited assets.

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