The rise of China is one of the great seismic and seminal events of our times. An isolated, introverted backwater less than 30 years ago, China is now one of the most robust and open economies in the world. Whether measured at market exchange rates or in purchasing-power terms, China now ranks among the largest economies in the world, with the nation’s annual output greater than most European nations.

Today, China’s global influence is ubiquitous and evident daily in the global currency, commodities, and credit markets. China’s rise has had a direct bearing on global wages, prices, interest rates, and profits, all of which, in turn, has challenged and benefited the transatlantic economy. The Middle Kingdom alone has accounted for roughly one-third of the growth in global oil demand since 2000, resulting in higher energy prices for consumers and business on both sides of the Atlantic. Concurrently, however, low-cost Chinese imports have helped stretch the incomes of consumers in both the U.S. and Europe.

Parallel with China’s economic ascent has been the nation’s rising geopolitical influence in the Middle East, Central Asia, Africa, and Latin America. In many cases, China’s own self interest — securing a stable supply of natural resources, for instance — increasingly runs counter to the foreign policy objectives and strategic interests of the transatlantic partnership. The Middle Kingdom, in other words, represents not only an economic challenge to the transatlantic partnership. China’s rise also threatens the existing geopolitical order and may trigger geopolitical rivalries in certain regions of the world long under the sphere of influence of either the United States or Europe.

Not surprisingly, China’s rapid ascent over the past few decades has spawned fear and alarm in the United States and Europe in particular, and the transatlantic community in general. The U.S. continues to threaten punitive trade sanctions against the mainland on account of China’s “currency manipulation,” or China’s resistance to allow its currency to float freely. In Europe, the rise of China has triggered similar levels of confusion and angst. Indeed, while pledging a cooperative relationship with Beijing, the European Union has gone so far as impose trade tariffs on Chinese shoe imports.

Broadly speaking, there is still no consensus in Washington on how to view and approach China. Friend or foe — that the jury is still out is evident by the shifting lens by which Washington views China. During the Clinton administration, China was dubbed a “strategic partner.” Upon taking office, however, the Bush administration branded the mainland a “strategic competitor,” although this antagonist label shifted after the events of September 11, 2001. Subsequently, China has morphed into a “peer competitor” and, more recently, has been urged by some in the current administration to become a “responsible stakeholder.”

This paper examines — albeit briefly — the re-emergence of China and the Middle Kingdom’s rising sway in the global economy. One key assumption is that China’s rise — both in economic and geopolitical terms — is neither cyclical nor fleeting. Rather, it’s a secular and transforming event that offers both risks and rewards to the United States and Europe. Another assumption is the following: a strong China, as opposed to a weak China, better aligns with the long-term objectives of both the United States and Europe. As such, the transatlantic partnership needs to identify areas of mutual interest with China (energy security, global climate change, etc.) and work toward common solutions that would benefit all parties. The bottom line is that China’s rise does not represent a zero-sum game. Rather, the rise of China has been largely beneficial to all parties, with more economic gains in the offing assuming the right policies are pursued and adopted by the United States, Europe, and China.