When i was growing up, we had the Mutual Assured Destruction doctrine which meant that the Soviets and Americans would effectively annihilate each other in the event of a nuclear war, therefore assuring that both kept their most potent weapons pointed at each other but safely stored in their silos. It also kept each other from dominating on the World stage.
With the demise of the Soviet Union in 1991, the threat dissolved and America went on to aggressively push its agenda across the globe for the next 15 or so years but now it finds itself being stared down by a country with a very different sort of threat.
In a relatively short space of time, China has rapidly strengthened and is becoming a serious block on American global hegemony.
China scuppered the Copenhagen climate change meeting, is refusing to even entertain Obamas lectures over their currency and has taken a firm oppositional stand against US policies on Iran. America, in return, has recently sold $6 billion worth of Patriot anti-missile systems, helicopters, mine-sweeping ships and communications equipment to Taiwan.
Starting from such a long way back, China is far behind America economically and militarily although it is gaining fast but the main hold it has over the US is the amount of US debt it holds. If it dumped the US treasury bonds and shares, China could trigger a collapse of the dollar, world markets, and cause another global recession which it showed recently, only slowed its economy as everyone else's fell through the floor.
If it did collapse the American economic system, it would harm itself as it is not strong enough yet to survive without exports to America, its top trade partner.
So the US and China find themselves in a financial case of MAD. Both with the ability to crash each others economy as China would suffer without US exports and the US is dependent upon China buying its debt.
Interesting times ahead as the US and Chinese compete and begin to knock up against each other in other realms. Americas free run as unchallenged global top dog seems to have come to an end.