The small dramas of the Olympics are tending to overshadow the historic event they symbolise: China's emergence from Maoist autarky and austerity to a great power, active in the world. How did we get here, in three short decades?

Everyone knows about the 1962 Cuba crisis, but it was another near-nuclear war seven years later that did more to change the world, as I have particular reason to remember. In the spring of 1969, at the height of the Cultural Revolution, I was strolling along the hutongs (city lanes) of Beijing, a six-foot, long-nosed imperialist trying to look inconspicuous at a time of raging chauvinism. I was there to check out reports the British mission had received that the Chinese were building a network of shelters and tunnels, Vietnam-style, against a possible Soviet attack. Peering into courtyards I found that, sure enough, they were.

Tensions with Moscow had been high ever since the launch of the Cultural Revolution three years earlier. “The New Disciples of Goebbels” was a typical headline on one of the many anti-Soviet articles in The People's Daily, and Pravda was hitting back in style. To outsiders it all seemed to be so much ideological steam - till the lid blew off.

Suddenly the Sino-Soviet frontier, the longest in the world, erupted in clashes on Damansky island, a disputed stretch of the Ussuri river. According to newly released Russian military reports, 61 Soviet soldiers died in a Chinese ambush, and their corpses were mutilated. The Russians hit back so hard that, in the words of Robert Gates, CIA Director at the time, from American satellite pictures the Chinese side of the river bank was pockmarked like a moonscape.

It is a measure of the fury that the Russians felt towards Mao that Soviet reinforcements (we later learnt) had been armed with tactical nuclear weapons. And that was not all. “How would the United States react if the Soviets solved one nuclear proliferation problem by attacking China's nuclear weapon facilities?” The question was put over lunch by a Soviet GRU (military intelligence) operative to a senior American official in Washington.

The installations in question were in China's northwestern Xinjiang province, handily close to the Soviet frontier. Ironically it was Nikita Khrushchev - the biggest Russian villain in the Cultural Revolutionary canon - who had somewhat thoughtlessly supplied Mao with a nuclear capability in 1957.

Henry Kissinger took the Soviet inquiry seriously. For all the attractions of seeing China's nuclear potential eliminated (China had exploded her first device in 1964), he and President Nixon concluded that the risks of escalating nuclear exchanges outweighed the gains, and declined to give Moscow the nod. In the face of the overwhelming Soviet response Mao in any case backed down, leaving some of his Politburo members concerned about his handling of the crisis, and many a Russian general dismayed, one suspects, by the loss of a chance to hit China where it would hurt.

Still, Mao had received a reality check. “Paper tigers,” he had called nuclear weapons, but the risk of seeing his own tiger go up in flames helped to persuade him to back off smartly.

A Sino-Russian war with a nuclear dimension was averted, but the aftermath was momentous. When Zhou Enlai confirmed two years later that the Chinese were ready to welcome Richard Nixon in Beijing, the White House believed that it was fear of a Russo-American accommodation that was driving China. “They're scared of the Russians. That's got to be it,” Nixon told Kissinger. And he was right.

The Western tendency to endow Mao with superhuman qualities has obscured the truth about a turning point in modern history. Mao's reinsurance with America against Russia was another manifestation, we were gravely told, of masterly strategic resourcefulness; yet a true master of strategy does not put himself in a situation where such resourcefulness is so desperately required. A China that had opened a window to Washington was in a better diplomatic position than before, but that was because China had ceased behaving like an international leper, and had begun winding down the disastrous Cultural Revolution.

Chairman Mao, the historical figure who had seen nothing of the world beyond Moscow, had once behaved with reckless arrogance, and this time the defeat was total. For five years China had suffered appalling misery and three million dead to keep his revolution pure, and prevent Khrushchev-style contamination by capitalism (“goulash communism”). Now China's provocative behaviour towards Moscow had opened his country to attack, his semi-crazed ideological crusade was faltering, and Mao was being drawn into the very system of grubby compromise with the “imperialists” that he abhorred.

And this was only the beginning. Beyond lay - exactly as he had feared - a betrayal of his beliefs, though one brought about by the master of strategy himself. After his death in 1976 the country reacted viscerally against the bloody turmoil of his Cultural Revolution, and his arch-enemy Deng Xiaoping turned China into a global power by reversing almost everything the Great Helmsman stood for.

It is strange to reflect that both China and the West owe a debt to the manic and ultimately obtuse policies of a man many a deferential Sinologist and Western statesman regard to this day as a quasi-mystical figure, a Wise Man from the East. In Beijing in 1972 an awestruck Nixon credited the Chairman with “changing the world”. And so he had - in exactly the opposite direction to the one he wanted.

George Walden's book China: A Wolf in the World? is published this month (Gibson Square Books).

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