China is modernizing its military and strengthens ties to Russia through the NATO-esque Shanghai Cooperation Organization (SCO), It also is becoming an increasingly large producer of greenhouse gases with predictions that it will surpass the US in its production of such pollution. And of course there is the issue of producing a plethora of cheap textiles and other low-skill factory produced goods.
However, none of the issues above will cause a risk to US security. The Chinese military has no incentive to start a war with it's largest "customer." Granted France and Germany were each other's biggest trading partners before World War I, but the importance of US-China trade dwarfs that scenario and makes the risk of a military conflict nearly non-existent. The pollution issue is a phase the US and Europe also passed through on their process of industrialization, and government officials in China are beginning the process of strengthening environmental protections. And regarding the factory goods, those low cost goods are equally beneficial as they allow consumers globally to have a higher standard of living (buy more goods for less money).
All of the points above could be discussed in more depth, but the greatest challenge to America's place in the world is less this and more in the realm of ideas and innovation. Specifically, ideas and innovation in math and science will be important in the future as the critical mass of educated engineers and scientists grows at an accelerating pace. A full 20% of the Chinese college-age popular is in higher education now. All the more impressive, in engineering there are 442,000 new undergraduates, 48,000 masters' degree students, and 8,000 Ph.D students each year. True their university system, in most cases, is not up to Western standards. However, currently they are doing their best to attract Western professors and raise the level of their university quality. Eventually they will be the innovators of science if the US does not increase its output of scientists and engineers.
How, specifically, will this impact the US? This is where we get into the Product Cycle Theory. This theory says that when a product is first developed, and needs highly skilled labor to produce it, those countries with more innovators and knowledge workers will be the ones with the ability to create and then continue to produce that product. As time goes on, and the process of making that product is simplified and standardized, the work can be sent to countries with lower-skilled labor pools. So right now, the US, Europe and Japan are creating most of the new technologies that eventually filter their way through the globe. The more developed countries produce the cutting edge products and as such receive the higher profits. When production becomes standardized, it is licensed to a lower-wage, lower-skill country to produce the goods. The risk is that a China, with more innovators, specifically more scientists and engineers, will usurp the place of the US as a world leader in innovation. In contrast to this argument, a far larger globally pool of scientists and engineers would raise global standards of living, and perhaps there would be a larger quantity of wealth for the entire world to enjoy. However, relative to the current US position of being a world leader in technology, geopolitical position could change. The way to win on this intellectually battleground is not bigger ships and stronger tanks, but rather increased spending and quality of US math and science education.
When people think of the "threat" of China, it is not the factory worker "taking" the job from a union laborer in the US. It is not their super-sized land army. And it is not even the huge amounts of pollution they create. It is the risk they will become smarter and more innovative than the US.
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