 They are the new shoppers along Oxford Street, high spenders at boutiques on the Via Condotti in Rome, hard-nosed investors in City boardrooms and avid consumers of all the luxury and wealth that western civilisation has to offer.  The Chinese are coming. Their currency, the renminbi or "people's money", is no longer a Maoist joke even though the late chairman''s head still adorns every banknote.  It buys more pounds than ever before.  Flush with cash, growing in confidence, China feels its rise is assured. Investors from Shanghai are buying up British factories and China's state bankers are buying government bonds from Greece and Portugal, helping to hold the troubled eurozone together.  In Chinese minds, western weakness after the worst financial crisis since the 1930s equals an opportunity. They believe that in 2011 China will become the decisive agent of change for the way we live and that the choices it makes will have an impact around the world.  China's businessmen lecture the West on economics. Its leaders proclaim that one-party rule is superior to the chaos of democracy. From Burma to Zimbabwe, its diplomats prop up despots. Its army follows the dictum of Deng Xiaoping to hide its strength and bide its time. a strident nationalism grows daily among its youth.  as Paul Kennedy, the historian, has warned, the rich nations of the West need to think hard and react creatively in a strong yet flexible way - or face inevitable decline as the balance of power shifts east.  When Hu Jintao, the Chinese president, appears with his waxwork smile during a state visit at the White House later this month, he will come as america's banker and manufacturer with the fate of millions of jobs - and the chances of President Barack Obama's re-election - in his manicured hands.  Obama might ruefully reflect that, in a phrase, it's the economics, stupid. Chinese factories make our iPhones and iPads, our cheap children's clothes at Tesco or Wal-Mart and almost any plastic item you care to imagine. Chinese exporters suck in billions of pounds, dollars, euros and yen. The Chinese government takes the money and issues its own currency in exchange.  It has piled up the dizzying sum of $2.65 trillion (?1.69 trillion) in foreign reserves. The money has to go somewhere. and China invests a lot of it in american government debt.  That is how China became america's biggest creditor. Its thrifty people have subsidised the spendthrift american consumer and housebuyer by keeping interest rates low. Now they are funding a good deal of Obama's controversial $600 billion plan to revive the american economy.  China's own economy may be running too hot, however. The price of pork in the street markets of Shanghai and the prices of the soaring new apartments around them are rising fast. Inflation worries the Communist party. It can lead to mass discontent, for many people are still poor and 200m exist on less than $1 a day.  When the Chinese central bank raised interest rates by just a fraction on Christmas Day, stock markets around the world trembled and the values of western pensions and investments fell. That is a warning of what may be to come.  In recent weeks there have been increasing discussions among investors, especially the giant secretive hedge funds that move billions, about what could go wrong in China.  One scenario is a sharp slowdown that could cut Chinese growth from its dazzling rate of 10% during 2010 with what economists at RBC Capital Markets call "serious implications for the global economy".  THE problem the world faces is clear. Most economists think the merry-go-round across the Pacific - american consumers paying Chinese factory owners to finance more spending on credit by american consumers - cannot last.  andy Xie, an independent economist in Shanghai, says that 2011 is "a race between the US and China to see who goes down first".  american congressmen have fired a warning shot at the Chinese president, saying the country's currency is unfairly cheap and demanding that it rise in value. Chinese businessmen have fought back, accusing the americans of printing money to stoke inflation and thus erode their debts to China.  add in a host of disputes - from Tibet to Taiwan, over Iran's nuclear programme and the North Korean bomb, about climate change and the Nobel peace prize for a Chinese dissident - and the world's most important two-way relationship is looking toxic.  Yet, to adapt Henry Kissinger's joke that the reason why academic politics is so bitter is that the stakes are so small: the stakes for america and China are so big that bitterness is not an option.  after Kissinger's secret diplomacy to Beijing in the 1970s, the reform and opening up of China changed the world. So much so that it takes a recent classified cable from an american ambassador to remind us of some astonishing facts.  The cable, published by WikiLeaks, provides a confidential view of the next three decades in the US-China relationship by Clark Randt, the longest-serving american envoy in China. Written for the incoming Obama administration in January 2009, it predicted that China would be essential to solving global problems such as climate change, poverty and war.  It is on track to become the biggest economy in the world, as it was in the centuries before the industrial revolution.  Over the next few years, 300m of its people will move from the countryside to the cities. This is the greatest mass urbanisation in human history, requiring new transit systems in 170 cities. More than 50,000 skyscrapers will be built. a billion Chinese will be city dwellers and it will no longer be a peasant nation.  By 2025 China will have the biggest middle class in the world. The aviation, tourism, fashion and luxury goods industries will never be the same again. The potential rewards for western financiers, engineers, educators, consultants and service industries are huge.  Randt's cable spells out the awesome scale and costs of such a huge leap forward.  More than a thousand cars a day are coming on to China's lethal roads. Its consumption of oil has multiplied 10 times since 1980. By 2030 it will consume a fifth of all the energy in the world. China has already become the biggest consumer of iron, copper and aluminium. In the next 20 years it will add to its electricity grid more than the total american generating capacity. Most of its power will be fuelled by coal - one reason why China surpassed the United States as the biggest polluter in the world - yet it is also developing the biggest renewable energy industry in solar and wind power.  Randt's cable is fascinating because it predicts neither a Chinese triumph nor a Chinese crash. He pointed out the terrible price it had paid for growth - a ruined environment, 656,000 deaths a year from pollution-related diseases and 95,600 deaths from poisoned water. The cost of the clean- up will be huge.  Harsh birth control policies, restricting most couples to one child, have turned China into a society that is "greying" faster than the United States. By 2050 one working person will have to support five family members.  By 2040, even though the overall size of its economy should rival the United States, its 1.3 billion people will only be one quarter as rich.  THE american ambassador warned that the People's Liberation army had turned into a lean modern force that could be a formidable adversary. and he reminded his readers in Washington that whatever their own worries about jobs, trade and debts, the toughest issue between the United States and China is still the fate of Taiwan.  Lying off the coast of China, the island became a refuge for anti-communist forces in 1949 and evolved into a vibrant industrial democracy under its own government. It is the "third rail" of Chinese politics, a litmus test for patriotism, strength and resolve. It tempted risk-takers in Beijing to consider invasion in 2003 before secret american diplomacy warned them off.  "In the years to come we will need to use every diplomatic and strategic tool we have to prevent intimidating moves toward Taiwan," said Randt.  although the idea seems unreal that anyone would risk a war that could wreck globalisation - all over a small island - the americans are prepared to think the unthinkable.  Today's leaders face huge problems, such as a bleak divide between rich and poor, mass unemployment among graduates, endemic corruption, inflated property prices and irresistible worker pressure for higher wages. So, the ambassador counselled, while the outlook for China is optimistic the United States should also "gird itself" for a worse outcome. Think tankers and academics in Beijing are already urging the leadership to get america out of China's back yard.  Intelligence sources say some Chinese leaders believe Obama is a weak president and that america would buckle in a test of morale over Taiwan or North Korea. They think the americans will be unable or unwilling to pay the price for military supremacy after the financial crisis. But the US ambassador's cable suggests this would be a dangerous miscalculation.  The americans still think China will move towards a more democratic future to become a thriving modern society that plays a responsible role in the world. It is classic US optimism writ large, but it tells of a brighter outlook tha 