Throughout 2010, China made steady strategic headway on numerous fronts, while the United States and Great Britain continued in steady descent. From significantly bolstered ties with India and Pakistan to substantial military upgrades and dollar downgrades, Beijing has entered into 2011 with a high hand.

Military Might

2010 saw China aggressively assert territorial claims to the Japanese Senkaku Islands and other disputed territories in the South China Sea. Just as the UK’s Royal Navy is being hacked down to its smallest size in almost 500 years, China has announced that it will launch its first aircraft carrier in 2011. The launch comes a year earlier than U.S. analysts had expected, underscoring the rapidly expanding maritime power and assertiveness of China. In addition to the refurbished Russian vessel, China is also building its own aircraft carrier. Especially since the news came just weeks after British Prime Minister David Cameron scrapped Britain’s carrier fleet and halved its overall number of warships, it reflects the rapidly changing tides of geopolitics.

China has also made great strides in cyberwarfare capability and anti-satellite weaponry, and is on the brink of unveiling “carrier-killing” ballistic missiles that will be able to sink American aircraft carriers and other vessels from far off. These missiles will effectively reorder the balance of power in Southeast Asia, which has been dominated by the U.S. since World War ii’s end. It’s no wonder that Vietnam, the Philippines and other Asian nations are reviewing their policies of relying on America to impose stability in the region.

The Dragon and the Elephant Begin to Tango

The relationship between India and China, long marked by suspicion and rivalry, veered into new harmonious territory in December when the two sides moved toward an overarching bilateral trade deal. These Asian giants, which together are home to two fifths of the world’s population, are now prepared to work together in an alliance that will deeply impact the global power balance.

Chinese Premier Wen Jiabao undertook a rare visit to New Delhi December 15 to 17 to promote bilateral trade. During his previous trip to India in 2005, Wen had set the goal of boosting combined Sino-Indian trade from $18 billion to $30 billion by 2010. But Wen’s goal has been far exceeded: Last year’s bilateral commerce totaled around $60 billion. In the last decade, trade between these two economic behemoths has increased a staggering 30-fold, and they have now set the goal of boosting trade to $100 billion annually. China already ranks as India’s largest trading partner, and that commercial relationship is gearing up to get much deeper.

Besides being home to two fifths of the planet’s population, China and India are the world’s two fastest-growing major economies. Having overtaken Japan last year, China is now the second-largest economy and India is ranked at number four. The giants of the East are replacing heavily indebted Western nations as the motor of global growth.

The favor India is showing China has deep implications, particularly in light of the less fruitful trip American President Barack Obama made to India earlier in December. While Obama left Delhi with $14 billion in investment project contracts, Wen obtained $23 billion.

During his visit, Wen expressed his belief that China and India should come closer together, saying “the dragon and the elephant should tango.”

Beijing Bolsters Ties With “China’s Israel”

Before heading back to Beijing, Wen made a separate visit to Pakistan, where his ornate language again blossomed. “The China-Pakistan friendship is full of vigor and vitality, like a tree with thick roots and lush foliage,” Wen said.

During the trip, Wen inked a series of agreements with the nation that has been called “China’s Israel.” He pledged closer strategic ties between the two sides, praised Islamabad’s battle against militancy, and emphasized Beijing’s commitment to aiding Pakistan.

The trade deals will pump as much as $15 billion of aid into beleaguered Pakistan. Many Pakistanis view Wen’s approach to Pakistan as more amiable than that of Western nations, which are often perceived as slighting Pakistan in favor of India. In recent months, U.S. President Obama, German Chancellor Angela Merkel and British Prime Minister David Cameron all visited India without going to Pakistan.

Beijing also signed contracts to build two nuclear reactors for Pakistan in a move analysts believe was designed to one-up the U.S. In a clear reference to American influence in the region, Wen praised Pakistan for having “withstood foreign interference” and “maintained an independent foreign policy.”

Mushahid Hussain, chairman of the Pakistan China Institute think tank, said Wen’s trip “instills confidence in the Pakistani leadership and the Pakistani nation. Even through these hard times, the world’s second-largest economy is standing with us.”

China has much to gain from tightening ties with Pakistan. The relationship gives Beijing access to Pakistani resources and strong influence over the Pakistani port city of Gwadar. The importance of the Gwadar project, a sophisticated deep-water port at the intersection of empires, cannot be overstated. Zia Haider of the Stimson Center said the strategic Gwadar hub provides China with a “listening post” from where it is able to “monitor U.S. naval activity in the Persian Gulf, Indian activity in the Arabian Sea, and future U.S.-Indian maritime cooperation in the Indian Ocean.” Gwadar is a key square on the Asian board, and China already has de facto control over it.

Down With the Dollar

Economically, Beijing is looking ahead five or six moves while the U.S. can’t see beyond the first. By the time China decides whether or not it will yield to international pressures to allow the yuan to appreciate, it will have accomplished its key goal of stockpiling enough American debt to bolster Chinese influence over Washington’s foreign policy. If Beijing were to dump U.S. dollars and treasuries, it would diminish the value of China’s dollar-denominated assets, but, in working toward its long-term objectives, that’s a sacrifice Beijing will be willing to make: a rook given up in pursuit of the checkmate.

The November 23 announcement that Russia and China plan to abandon the U.S. dollar in favor of using their own currencies for bilateral trade provides evidence that the dollar’s ruin is well underway thanks in no small part to Beijing’s economic maneuverings.

Add all of this to Beijing’s rapidly expanding resource drive in Africa, Latin America and the Middle East, and its stranglehold on rare earth minerals, and it’s obvious that China is entering 2011 as a grandmaster on the geopolitical chessboard. The U.S. still has more pieces on the board, but, as the endgame approaches, the tables are rapidly turning, and it’s clear this match will be no stalemate.

To learn more about China’s ascendancy and its prophetic connection to an incredibly hope-filled future, read Russia and China in Prophecy.