Simon Letch

Illustration: Simon Letch

The father of China's modernisation, Deng Xiaoping, gave his colleagues a famous piece of advice: "Hide your strength, bide your time, and do what you can." China's leaders have kept to Deng's advice, modernising at breakneck speed without calling too much attention to the Middle Kingdom's gathering power.

In a momentary slip, the leadership declared a new slogan in 2003, announcing China's "peaceful rise". But the word "rise" was considered too provocative to American ears, perhaps even threatening. In 2004 it was revised to "peaceful development".

In the meantime, China has been doing what it can. The world has watched, mesmerised, as China overtook Germany this year to become the world's third-biggest economy with an annual output of $US3.4 trillion ($3.9 trillion).

It is still behind Japan's $US4.3 trillion economy and is far smaller than America's $US14 trillion economic behemoth, yet it is commonly projected to vault over Japan within a few years and the US by 2030 or 2040.

Last year China's military decided it had been demure and self-effacing for long enough. The Military Digest, published by China's armed forces, carried a commentary in April 2008 titled "Phase of Exercising Restraint in National Defence is Over."

Under Deng, China in 1978 had launched its famous "four modernisations" to build China into a modern state by the early part of the 21st century. The last of the four was the modernisation of the military.

But the Military Digest set out that, under the current President, Hu Jintao, the modernisation of the armed forces would be given equal emphasis to the country's economic renovation.

The US Defence Department had long been troubled by the pace of Beijing's military build-up, but China was considered to be some 30 years behind the American forces and not any real competitor for the US as the hegemon of the Pacific Ocean.

The unchallengeable dominance of the US Seventh Fleet was starkly demonstrated in the crisis of 1996 when China seemed to be preparing to attack Taiwan, the country Beijing deems a "renegade province".

The US sent two aircraft carrier battle groups to stand off the Taiwan Straits. Each is a high-tech armada of ships and planes and missiles, with the aircraft carrier as a big waterborne base for the fleet. The deployment was an unmistakeable warning that the US would defend Taiwan. Beijing backed down. So surely Chinese braggadocio about a new military era was rhetoric, not real.

But Washington had been using the wrong yardstick, according to a former senior official in the US State Department who made a close study of China's military. "There's been a tendency to compare China's military to our own," says the analyst Randy Schriver, "but it's the wrong metric."

Washington had been reassured by the fact the Chinese had not reached parity with the US. "But we shouldn't be lulled into that thinking; we need to think about what cost China can inflict on us, and this goes for all our allies too," Schriver told me recently.

And when looked at this way, China suddenly becomes a much more potent military force. Indeed, China is in advanced state of developing a new weapon which Schriver describes as "a huge game-changer".

In March, an analyst with the US Navy Institute, Raymond Pritchett, wrote that the news of this new weapon had "created a panic" in the US Navy.

The weapon? It is a ballistic missile designed to strike ships at sea. The US Navy Institute's headline on the report was more dramatic: "Chinese Develop Special 'Kill Weapon' to Destroy US Aircraft Carriers."

The institute's report said the Dong Feng missile was thought to have a range of about 2000 kilometres and a speed of Mach 10: "The size of the missile enables it to carry a warhead big enough to inflict significant damage on a large vessel, providing the Chinese the capability of destroying a US supercarrier in one strike."

Schriver, a former navy intelligence officer who went on to become deputy assistant secretary of state for East Asia and Pacific in the second Bush administration, says the implications are profound: "After the Taiwan crisis in 1996, the Chinese looked at it and said, 'what do we need to do to prevent the US intervening like this again?'"

The result, 13 years later, is the Dong Feng 21. "It's a technological leap that's never [before] been made," says Schriver, now the head of a non-partisan research body, Project 2049 Institute, and a founding partner of the consulting firm Armitage International.

"The Russians couldn't do it. If it works, it will have the range of a ballistic missile and the accuracy of a cruise missile.

"The Chinese would have the ability to hold our carriers at a great distance - it almost makes the aircraft carriers obsolete.

"What did we do in 1996? We sent carriers. What are the Chinese doing? Taking the carriers out of the equation." He thinks it prudent to expect such missiles to be operating within a couple of years.

No wonder the US Navy is in a panic. If this weapon takes the field, and unless the US can quickly develop a countermeasure, it is a deeply troubling development.

The US Navy, the peacekeeper and guarantor of strategic stability in the Pacific since World War II, will lose its ability to operate anywhere near the Chinese mainland. It is a development of historic significance with which China can celebrate its 60 years under communist rule.

The US kept the Pacific peaceful and its sea lanes open. What will China do?