Last week China launched a missile from a base in remote western China and destroyed one of its ageing weather satellites 864km into space. It was an eloquent statement of its developing capacity to blind the entire US military system which is dependent on up to 200 satellites -- and has sent a cold shiver down the spine of the Japanese, US and Taiwanese military establishments.If ever there is a war in Asia, this will be seen as a critical moment. China is the second-largest military power in the world; it spends more than the UK, Germany and France combined.

And the spending is very targeted. China is building up the arsenal it would need to invade Taiwan and hold off an attempt by the US and Japanese to relieve it, igniting one of the world's great flash points. No other explanation is possible. China protests that it wants to continue to rise peacefully and does not want to disturb the current world order. It has renounced Maoism, proclaim Western intellectuals, and its aims are surely capitalist economic growth, not mounting invasions. Thus both its neighbors and the West comfort themselves.

The problem is that China has only partially renounced Maoism; the apparatus of dictatorship and one-party rule remain firmly in place but with no viable ideology to justify it. It is a highly unstable, wasteful and inefficient system which is becoming increasingly difficult to sustain. The party's first claim to legitimacy is that so far it has worked. And its second claim to legitimacy is its appeal to Chinese nationalism. It is the custodian of a strong China that keeps foreigners at bay.

In February 2005, China issued an ultimatum to Japan over its occupation of the oil-rich Senkaku Islands; withdraw or face the consequences, sending a five-strong fleet to the islands. Japan responded by putting 55,000 men on alert. Both sides backed off. But China distrusts renascent Japanese nationalism, especially with Japan's now stated wish to change its pacifist Constitution. On top, the US is increasingly focusing its military effort in the Middle East. All China needs is a fortnight.

China says it wants treaties it claims to want a treaty to prevent the militarization of space, while pursuing balance-of-power politics. It will block India and Japan winning seats on the UN Security Council, thereby guaranteeing the ongoing dysfunctionality of the UN.

Bush then plays Bismarkian politics in Asia, backing Japan, but with dwindling military power. Talk of building a defense mechanism against a Chinese attack on US satellites is for the birds; the expense, given Iraq, and technological complexity make it impossible. The pass has been sold. China can do what it wants. If there is unrest within, the party will turn increasingly to nationalism and perhaps even war.

The US reaction to last week should not be a Star Wars arms race, but to comprehend the new realities and to respond by multilateral engagement.It won't, so it is no longer scaremongering to warn of the small, but growing risk, of a devastating Asian war.