Four more years

If Chinese President Hu Jintao was effusive in his congratulatory message, it could be because of the furore caused by the re-publication by China Daily of an article by Qian Qichen, the former vice-premier and foreign minister, which accused Bush of recklessness and advancing policies to further America's domination of the planet.

Acting fast, the Foreign Ministry said the opinion did not reflect Beijing's views, an official adding that Qian had neither written anything for China Daily, nor given it permission to publish anything – and that much was true: the article had originally run weeks earlier in a People's Liberation Army weekly called Study Times, sparking no public reaction at all.

It is possible the leadership hoped the issue would die before ever seeing translation into English. It is even possible Study Times was privately rapped on the knuckles. But what seems most plausible is that Beijing shares Qian's views and just wishes they had been left unsaid.

Beijing would have much preferred to see John Kerry in the White House if only for his position on Iraq, which was less to do with making Iraq safe for the United States, and more to do with multilateral action to solve the problem.

China seeks stability in the Gulf, now more than ever. With oil deals piling up, it has interests in Sudan. Iraq's next-door neighbor, Iran, is China's second largest source of foreign oil and Tehran has just signed up Chinese companies to develop the country's biggest oil field and pursue petrochemical projects (Q&A, page 14).

The US president's new mandate has implications for Iraq, its neighbors and the wider world. Bush has accused Iran of being part of the so-called "axis of evil." The US may yet ask the United Nations Security Council to impose sanctions on the Islamic state if it does not stop its nuclear enrichment program, the proceeds of which can be used for both power generation and bomb-making. It is hoped European diplomats negotiating with Tehran may succeed in brokering a suspension – but what if they fail, or the UN fails to meet Bush's requirements again, as happened before the US led the invasion of Iraq?

Powder kegs
Post-Arafat Palestine is another powder keg that could ignite. There are other powder kegs in Africa, Asia, and Latin America – all regions where China has growing interests.

The world has gone very brittle, and the lone moderate voice in the Bush administration, Secretary of State Colin Powell, is leaving – to be replaced by a principal author of the Bush "doctrine" of preemption, National Security Adviser Condoleezza Rice.

At this distance, it seems likely there will be a hardening of positions that came into force in his first administration. While some might hope that Bush's slim electoral victory would induce him to give weight to more moderate voices, the reality is that Bush won office the second time not by a judicial decision, but by getting more votes, which, like it or not, gave legitimacy to actions taken in his first administration. If he swaggered like a global sheriff with only a minority of voters behind him the first time round, there is no reason to think President Bush will swagger any less with a majority supporting him.

One aspect of the Iraq situation is that it has so depleted America's resources that it can't realistically try a similar approach elsewhere. If the US House and Senate accede to the administration's October request for an additional US$75bn, the Iraq bill will top US$225bn.

As the US confronts this black hole, tensions will intensify over the mounting trade deficit with China (2004's to end-September stood at US$114.3bn) and rising competition for global commodities as American and Chinese sides bid up prices.

Pressure for safeguards
The pressure on the Bush administration to invoke safeguards to protect American textile and garment makers will intensify in parallel as the impact of quota-free trade rips through America's already devastated manufacturing sector.

Wal-Mart now sources 80% of its products sold in the US in China and every quarter it reports earnings, the trade picture gets a little worse. In mid-November, for example, the retailer posted a 12% third-quarter increase (to US$2.29bn) year on year.

Will the US try to get China on side, for example, on the trade issue by threatening to renege on its commitment to "One China" or play negotiations with the nuclear-charged North Koreans in a way that forces some give on China's part? Both issues would be treading very close to the edge, even for a president with an abundance of swagger.

The US might more plausibly convince China to write a big Boeing order. (Cover Story, page 22). It might even get Beijing to advance plans a little for moving towards a market-made yuan – although how a higher yuan, even a 20% or 30% higher yuan, would slow movement of US manufacturing and service jobs offshore when US wages are 10 times China's is far from clear.

China, for its part, holds over US$150bn in US Treasury notes; add in Hong Kong, and it holds close to 10% of all foreign-held treasuries. Beijing does not have to jump at America's command, or anyone else's for that matter.

As China rises up the economic ladder, coercion loses its punch.