First, she uses the dollars to create ties of dependency in Free Asia by buying more from these nations than she sells to them. Australia, whose natural resources are pouring into China, is becoming dependent for her prosperity on China.
Second, she invests her dollars strategically in energy projects outside of China and in nations America has declared off-limits: Sudan, Iran, Burma.
Third, she buys weapons and weapons technology from Russia, Israel and Europe to modernize her armed forces. And while her GDP growth was 10 percent last year, her defense budget has been steadily rising by more than 10 percent a year.
"Since no nation threatens China, one wonders: Why this growing investment (in her military)?" asks Donald Rumsfeld.
Good question. The configuration of China's forces gives us the answer. China has implanted 600 missiles opposite Taiwan, which can have only two plausible purposes: to intimidate Taiwan, or to attack Taiwan.
China is also investing in warships, submarines, modern fighter-bombers and space technology. As there is only one great air and sea power out there, there is no doubt at whom this buildup is directed.
Diplomatically, Beijing is drawing to her side all the nations that are on the outs with George Bush's America -- from Russia to Burma to Iran to Sudan to Venezuela to the new nations of Central Asia.
China today calls to mind the Kaiser's Germany. As the Kaiser's Germany built a High Seas Fleet to rival the Royal Navy, so China builds up a military to rival ours in Asia. As the Kaiser saw British-backed plots to isolate and surround her, so China sees the United States organizing Japan, Taiwan, Australia, Vietnam, India, Pakistan, Afghanistan and the old Russian provinces of Central Asia against her. Encirclement -- in her eyes.
There is no greater work for today's statesmen than ensuring that what happened to Germany and Britain in the first half of the 20th century is not replicated by America and China in the first half of the 21st.