New decade for China will affect the entire world

The man expected to be China's next president visits the US this week. The two countries, and the world, have a lot to gain from a stable relationship.

Xi Jinping, the vice president of the People's Republic of China, is 58 years old. Before he turns 60, he is expected to replace Hu Jintao as president of the world's most populous country.

So Mr Xi's visit to the US this week is widely seen as an opportunity for the world's two most important states to open a new chapter in their crucial relationship.

Here is the product of decades of globalisation: the $500 billion in annual merchandise trade between China and America - to say nothing of services, tourism and other ties - is so large that both countries have an abiding interest in economic and political stability. During the long decades of the Cold War, US trade with the Soviet Union was minuscule; today China and the US are almost inextricably intertwined.

To be sure, the relationship is not symmetrical. The US imports and owes, China exports and holds US debt. This has led to political friction, especially over the value of the Chinese currency, which the US - and many of China's other trade partners - want to see increased, to nudge trade figures towards balance. Other trade issues include what the US sees as unfair restraints on American corporate investment in China.

In the long run, the trade imbalance will have to be reduced in some fashion, or the volume of trade will prove to be unsustainable.

Global trade is not a zero-sum game; efficient exploitation of competitive advantage enriches all players. China's role as the world's workshop has already lifted hundreds of millions out of utter poverty.

China's new status as a trade superpower is also leading to a military build-up that worries some. For the foreseeable future, however, China will be a regional military power but not a global one; US defence spending still far outstrips China's.

As Mr Xi prepares to take office - which he could hold for a decade - China's biggest problems are not in trade or defence, but in domestic policy. Regional inequality and local corruption can disturb social stability. Government failures on human rights may become a larger domestic issue.

There are new concerns, as well, especially the self-serving power of large state and quasi-state companies, many with monopolies in key sectors of the economy and friends in high places. These firms managed China's industrialisation effectively, but some of them have now become potent enough to ignore or resist policy changes.

China has made enormous strides in recent decades, becoming an engine of the world economy. Its growth and stability over the next decade will have far-reaching effects, including in our own region. Managing the next steps will be a formidable challenge; the world will be watching to see how Mr Xi handles the job.