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China’s rise is signalling the most profound change to the world order of the 21st century. It is driven by phenomenal economic growth as the country is poised to surpass Japan as the world's second biggest economy this year and it is just a matter of time before the dragon overtakes the US to be the largest.

China's rise poses two major questions; The first is whether it can be sustained over the coming decades? Some may wonder whether domestic economic and political weaknesses will undermine China’s prospects. Indeed, Beijing confronts a host of economic, political, and social challenges, such as over-reliance on its foreign exports and the possible decline of investment returns. Corruption, limited channels for public participation and rising public protests also supply problems. However, East Asian economies generally, or China individually, have witnessed similar or graver challenges. Japan and South Korea struggled for years against their heavy reliance on exports; both, however, experienced rapid economic growth for over three decades following the 1950s and the 1960s, respectively. This was so even though they started at a higher level of development than China. Their rapid economic growth, especially that of South Korea, continued even after they graduated from the industrializing club. As China’s current level of development lags at least two decades behind that of Japan and South Korea, Beijing can surely sustain the development until it enters the rank of the industrialized nations.

On the other hand, the Chinese Communist Party (CCP) has survived graver political and social protests than those at present. The best example have been the protests of 1989. Through the following years the CCP has shown political resilience by responding to protests through a mixture of stern, but increasingly flexible, means by reformulating its ideology and by promoting economic growth and equitable income distribution. It has by and large avoided nationwide social instability.

The sustainability of China’s growth can also be seen in the country’s relatively fast economic growth in the wake of the current financial crisis. Unlike the US, UK, Japan and Euro zone, whose economies were battered by the crisis, Beijing has maintained growth well above 5 percent, the highest among major economies around the world.

The second question for the international community is how to deal with a rising China. Sabotage and containment will only backfire on Western leaders. As China is well integrated into the world economy, it is unreasonable and self-defeating to hold back the fast movement of a mammoth economy. Doing so will only destabilize the world economy and the domestic financial system of any country that attempts to do so. Politically, an indiscriminately hawkish approach to China will only invite a strong backlash from Beijing and sow bitter seeds for excessive nationalism amongst the Chinese turning the dragon into a bitter and vengeful power. Weimar Germany is a good example. Resentment of its perceived ill-treatment and towards heavy reparations at the end of the First World War became a popular basis for extreme nationalism and later Nazism in Germany, which led to the outbreak of the Second World War.

A constructive policy toward China requires both prudence and far sight. Australia can help illuminate this point as its ruling party was initially seen as too secretive and too close to Beijing by its public. Eager to calm domestic criticism it has switched to a hard-line approach toward China in recent months. This change has caused Beijing to reverse its decade-long friendly relationship with Canberra. A freefall in bilateral ties has subsequently prompted immediate concern from certain circles and media in Australia.

Therefore, the most fruitful approach is to carefully manage ties with Beijing and avoid excessive fluctuation in relations. Prudent engagement and transparency work better in diplomacy and politics. The EU and the world can engage Beijing as well as other parties over global issues of common concern and work out a mutually-beneficial solution for pressing issues. All parties with stakes over the common issues should be given a voice but also be asked to assume responsibilities that suit their respective capacity. This approach is more likely to produce constructive ties with China as it becomes more powerful.

Hongyi Lai is lecturer at School of Contemporary Chinese Studies of University of Nottingham. He is a prolific author of academic publications and news commentaries on China’s political economy, foreign policy, and governance.

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• Man Tien Hang Tim: Must the Dragon Liberalize in Order to Rise?
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