At a time when Islamic terrorism captures the headlines, another equally ominous threat to our national security is quietly on the rise. China is undergoing a sustained effort to strengthen its military. So much so, in fact, that their annual defense spending has tripled over the past decade.

China already has the largest standing army in the world. And since no nation threatens them, why are they growing their military so fast? Well, because they can. And secondly, because they intend to become a dominant world power.

By mid-century, China will likely surpass the United States to become the world's largest economy. Their rapidly expanding economy has enabled them to finance a rapidly expanding military.

They already consume more industrial resources than any other nation, and they are the world’s second-largest user of oil. This enormous thirst for raw materials is changing the direction of their diplomatic and military strategy, and it may be cause for us to change our diplomatic and military strategy as well.

Extensive investment in a Chinese blue-water navy will soon enable the projection of power far beyond their shores. That, and their strategic relationships with countries along their sea-routes from the Middle East to allow passage of ships through choke points suggest concern about protecting their energy supply.

China already breaks copyrights and many other trade protocols. It isn't difficult to imagine scenarios in which Beijing would offer military hardware to Iran in exchange for favored rights to their oil.

The Chinese leadership see themselves as a power on the rise, and the U.S. as a power on the wane. Many in the military hierarchy, moreover, see the U.S. as their inevitable enemy, and are preparing accordingly.

We once believed Beijing would not attack Taiwan knowing such action would endanger their relationship with America. As their power grows, our relationship may be of lesser importance to them.

For Washington, independence of Taiwan remains vital, but the consequences of China's ravenous appetite for raw materials and growing military power have become equally important.

What if China's power grew so dominant that all the other countries in the region began to acquiesce to it? Japan and South Korea are probably already concerned the U.S. might back away if armed trouble with China arises.

Beijing has established an integrated economy with surrounding Asian nations equal in size to that of the U.S. They have the technological and financial advantages of a modern economy, and with their huge population, the cost advantages of a developing one.

What's more, they sell more than 40 percent of their exports to America, and own more than $200 billion in U.S. debt. While the Chinese save as much as 40 percent of their GDP, our savings rate is less than 2 percent of our GDP.

Domestic U.S. manufacturing companies, moreover, must deal with labor rates, health care and retirement plans, and environmental and regulatory burdens that are not found in China. In ever more sectors, consequently, competing against them has become a losing proposition.

Perhaps we have been a bit naïve to believe we can hasten democratic reform in China by opening to our markets to them. Over time, we have developed huge trade deficits with them, and have become ever more dependent on their capital to finance our federal debt.

We have also assumed that greater access to information technology and free markets would move them toward democracy. Instead, they have used the internet and other technologies to expand surveillance over their people.

Individual autonomy and elective government must go along with free markets, and in the case of Mainland China, that just isn't happening. Our economic interaction cannot be a substitute for their political inaction.

How we respond to the Chinese challenge will be difficult to formulate. We can always hope that our past strategy will eventually come to fruition. We must be open, however, to the possibility that present policy is not working and only strengthening a regime that represses their people and threatens other nations.

We need to develop a strategic response that addresses our economic competitiveness in terms of debt-based growth and domestic manufacturing. And we will also need to strengthen our relationships with Japan, India, and even Russia to ensure a balance of power in the region.

We cannot assume Chinese and American interests are the same. No one knows when some chance incident might trigger a showdown over control of Taiwan, or another Tiananmen Square type bloodbath. 

With every passing day, China's economic and military power continues to grow. It may become an unmanageable problem. Now is the time for American policy-makers to plan accordingly.

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