FOR THE FIRST in history, a communist country is in a position to bring down global capitalism. The Chinese Communist Party, if it were to sell the $763 billion in US Treasury bonds it holds, would trigger a massive devaluation in those bonds and the value of the American dollar, thereby bringing the world economy to its knees. This situation occurs only twenty years after sledgehammers broke down the Berlin Wall, supposedly heralding the triumph of liberal democracy; and only a decade after the Asian financial crisis, which supposedly proved the superiority of western models of capitalism.

Of course, China’s Communism Version 2.0 will do nothing of the sort. The health of China’s economy, and ultimately the ability of the Chinese Communist Party to stay in power, depends on the health of global capitalism. In September 2008, as Japan reduced its exposure to US Treasury bonds by $12 billion, China increased its exposure by $43.6 billion. In the meantime, Chinese leaders have plaintively urged the American government to bolster the US economy and safeguard the value of China’s investments. As the American budget deficit rattles towards a trillion dollars, it is China’s two trillion dollars in foreign-exchange reserves that are seen as the salvation for the world economy. An often-repeated verse in China these days observes: