For instance, this week in US-China relations was also notable for the S. China Sea “skirmish” between several Chinese vessels and an unarmed U.S. naval survey ship in international waters that China would love to claim as its own. The U.S. has deployed a couple of (very heavily armed) destroyers in response. (Now, think of the P-3 Orion incident at the start of Bush's presidency, in which Chinese aircraft managed to force the Navy command and control aircraft to land on Chinese territory, after literally ramming it in international airspace.)

Also, on the other side of the board, the U.S. dollar has actually gotten stronger over the last month-plus, and international investors have flocked to it as a safe haven, precisely because of our bold stimulus policies. The Chinese investment in the U.S. remains the the safest investment on the planet, given the global situation. Meanwhile, the Chinese renminbi is rapidly falling, and their economy has already begun to experience the deflationary slide you mention the U.S. should be so worried about. China is *at least* as dependent on the U.S. consumer as the U.S. is dependent on Chinese investment. In short, neither can survive without one driving the other's growth. We are locked in a desperate lovers' embrace, and any hint of divorce would result in murder/suicide.

To top it off, China's elite is *deeply* fearful of popular internal rebellion, should two decades of massive, extraordinary economic growth suddenly and mercilessly come to an end, and head way south.

But there are other pieces on the board to play. Taiwan, for instance.

While it bears watching, one must remember the game being played.