As China celebrates the 60th anniversary of its communist revolution, the country's international standing is the highest it has been for at least 200 years. China has the world's third-largest, and will soon have the world's second-largest, economy. Its major cities are forests of gleaming steel and glass skyscrapers, and even small towns often have smart housing estates of the sort we normally associate with north American suburban life. China is the biggest automobile market in the world. It is almost impossible to talk to ordinary urban Chinese these days without the subject of buying a car cropping up.

This is also a society where people use the most up-to-date technology to stay in constant touch with one another. There are at least 300 million regular Internet users and an astonishing 700 million out of 1.3 billion people have mobile phones. The old "sick man of Asia" with its famines, wars, divisions, grinding poverty and backwardness is becoming a distant memory, and a convenient setting for television soap operas.

China's modernization, economic growth, enormous size and population mean that no major problem facing the world, whether it is global warming, the financial crisis, or issues of international security, can be solved without its cooperation. Beijing's place at the top table in international affairs is assured and its voice is increasingly heard and, more importantly, listened to.

Naturally, not everybody is comfortable with China's growing influence. Every year a new crop of China books is published with the word "Dragon" in the title. Some warn that, behind soothing talk of "international harmony," China's ruthless and shadowy government is planning to take over the world. Others predict the imminent collapse and break-up of the country. Some books manage to creatively combine both scenarios.

Leading economists (a title that belongs with "leading clairvoyants" or "leading witch doctors") have been saying for decades that the Chinese model of development must fail. This is rather like aeronautics experts insisting that bumble bees cannot fly, while forgetting it is their job to find out just exactly how they manage to fly so well.

China has by trial and error (including not a few grievous errors) arrived at a sensible economic system that mixes Maoist state ownership and planning, with the private sector and the market introduced by Deng Xiaoping. Both the state and private sectors are dynamic and use the most modern technology thanks to embracing globalization. Chinese state-owned firms include some of the world's biggest and most successful banks and multinationals. In many ways the Chinese economy resembles the idea of a mixed economy once defended by European Social Democrats, although they were never able to implement it successfully.

This system, inadequately described by its official title of "Socialist Market Economy", is the reason China rode out the world financial crisis with so little damage, and is making such a rapid and powerful recovery. But the "leading economists," are not in the least contrite about predicting doom in China while failing to spot financial mayhem in Washington. They remain unimpressed with the flight of the bumblebee and are determined to redesign it using an American blueprint. One does not need to be a clairvoyant to see that China will think twice before taking their advice.

Those who favor the domination rather than the doom scenario found plenty of ammunition in the National Day military parade. Of a crop of silly headlines, the runaway winner appeared in the UK's Daily Mail. "Marching to world domination: China celebrates 60 years of communism with a display of military might that should worry the West," screamed their excitable reporter. "The list of border disputes that might provide a pretext for war - the Sudetenlands of the future - is disturbingly long," he frothed "Unless we are careful, what happens in 2039 could make 1939 look like a children's tea party."

It is easy to dismiss the Mail. It is a long-time purveyor of hysteria to the English middle class. If it is China this week it will be gypsy encampments or teenage pregnancies the next. A simple answer to Anglo-Saxon tabloid hyperbole is that China's military parade took place in Beijing, while the US and the UK have a habit of marching their troops through other countries' capitals. Hundreds of thousands of civilians died, and millions became refugees, as a result of the invasion of Iraq. Every week dozens of civilians are killed by NATO air strikes in Afghanistan and Pakistan. The US has 11 aircraft carriers steaming the world's oceans and over half a million troops in 600 bases worldwide. It would seem that China, with no overseas bases at all, is making a rather poor start on its march to hegemony.

But the China threat theory is not limited to the press. It is alive and kicking in the influential military-academic complex of Western (predominantly American) China-watchers, so we should take it at least a little seriously. For decades, China specialists hawked around the theory of China as a Red Menace determined to clothe the world in Mao suits and make everyone recite the little red book. Now that particular bogeyman no longer frightens the children, some have resurrected the Yellow Peril theory in modern guise.

Take for example Professor Edward Friedman, who accuses China of "pushing essentially its own state religion, a combination of Han chauvinism, in which Chinese worship the yellow emperor, and an authoritarian Confucianism. The state is building Confucian temples. It’s going to spread Confucian societies all around the world."

The idea of militarized Confucianism bent on world conquest is really quite remarkably silly. I especially like the revelation that the government is building Confucian Temples. (presumably if it were not building them, or were knocking them down, it would also be in for criticism). The only items missing from this nightmarish vision are Fu Manchu and his sinister daughter. If it seems to be paranoia beyond the call of duty, we should remember Professor Friedman's work was sponsored by the Foreign Policy Research Institute, a "non-profit organization devoted to bringing the insights of scholarship to bear on the development of policies that advance U.S. national interests."

China's main foreign policy concerns, far from having anything to do with world domination, are actually strictly regional, even parochial. The main thing Beijing wants is to be left alone inside the borders it inherited from the Republic of China (ROC). That includes Taiwan, which Beijing has seen as a rebel province since ROC forces retreated there after the civil war. But so far from wanting to expand the territory it inherited, the People's Republic of China (PRC) has made many concessions. I suspect very few people know that "plucky little Taiwan" formally claims not only the entire territory of the PRC but also (outer) Mongolia, the Russian Republic of Tyva, and around a third of Myanmar (Burma).

PRC policy on the Taiwan issue at least has the merit of clarity. The US, on the other hand, last year sold modern weapons worth US$6.5 billion to the authorities in Taipei, which it does not recognize, while maintaining an arms embargo on the Beijing government, with which it maintains diplomatic relations. No wonder the Chinese are confused.

The People's Republic, at 60, faces many complex problems. China is still a developing country, or more accurately we can say that uneven and combined development has placed the most advanced economic and social structures alongside the most backward. Regional disparities in economic development and income are huge and, by some measures, growing. The permission, famously given by Deng, for some to "get rich first" has resulted in a yawning gulf between rich and poor, billionaires and migrant workers. The price of reform and opening up has been rampant corruption as people scramble to avoid being left behind in the process of primitive accumulation. Perhaps most seriously, economic development has uprooted and thrown together nationalities and ethnic groups that had until recently lived relatively separate existences. This has almost inevitably led to friction and no doubt contributed to recent tragic outbreaks of communal violence.

But none of these problems are insurmountable and by almost any measure they are less serious than in comparable countries. There is no question that inter-communal tensions are far more deep-seated and serious in India than in China. The same probably goes for corruption and certainly for extreme poverty and inequality.

The 60 years from 1949 to 2009 are a mere blink of an eye in China's history. But in those two generations, taking everything into account, China's Red dynasty has, by most measures, made a success of the country. China watchers, both those who fear and those who underestimate China, would do well to keep a sense of perspective.

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