On a chilly autumn day last year China launched two men into space. Beneath them on the ground, 135 million Chinese — almost a tenth of the population, and about 12 million more than the populations of the UK and France combined — struggled to survive on less than $1 a day. Such are the contrasts that make China’s meteoric rise so hard to grasp.

The world is paying attention to these strengths and vulnerabilities, not least because Beijing’s leaders are inviting scrutiny by stepping on to the international stage for the first time in centuries. At the end of last week, while President Hu Jintao circled Africa on a whirlwind tour to secure the oil and minerals needed to feed China’s industrial machine, his diplomats were presiding over international talks in Beijing to try to defang a nuclear North Korea, and his financial mandarins were meeting the seven richest nations to discuss an acceleration in the rise of their currency, the renminbi.

Zhang Weijun, a retired soldier living on a small pension in Beijing, puffs on a cigarette, clears his throat and spits on the road. Then he laughs. “Of course China is a great country. Why? That’s simple: it’s so big, and it has the biggest population.”

That very size is China’s boon and its bane. China has always looked big. Even when Chairman Mao cut his country off during the Cultural Revolution, outsiders looked in awe at its enormous population — the world’s biggest, at about 1.3 billion, though no one is really sure of the exact figure — and its 5,000 years of history. As Napoleon said: “When China wakes, the world will tremble.” And now China is indeed rousing itself; in a generation it has catapulted itself from economic also-ran to superpower-in-waiting.

Just look at numbers. The Chinese have always imbued numbers with a mystical importance. Uneven numbers are yang, or male and strong, while even ones are yin, thus female and balanced. Four means bad luck, six and eight prosperity. Imperial buildings were constructed on a grid of nine and its multiples.

China’s Communist Party rulers face a mesmerising array of numbers. They preside over more extremes than any other government on earth. Foreign exchange reserves are one of the many jaw-droppers: at $1.07 trillion (£544 billion), they are the biggest in the world. Markets hunger for hints as to whether China may be quietly diversifying its holdings — now believed to be held at about 70 per cent in US dollars — since such a move could trigger a dramatic shift in valuations of the pound, the dollar, the euro and the yen. If the governor of the secretive People’s Bank of China decides that he doesn’t like the dollar, then the pound in your pocket will almost certainly buy you more in the high street.

China is the largest consumer of almost every commodity: steel, iron ore, aluminium, timber, cement, grain. It’s the largest buyer of pianos in the world. No parent needs reminding that virtually every toy is “Made in China”. The ranked banks of Chinese T-shirts, cashmere sweaters and televisions on shop shelves everywhere testify to the nation’s exporting prowess. Its share of world trade jumped from less than 1 per cent in 1979 to 6.4 per cent in 2005 — the year in which it became the third-largest trading power, after the US and Germany, and it has a good chance of becoming the leading exporter by the beginning of the next decade.

China has already overtaken Britain to become the world’s fourth-biggest economy and is set to race past Germany into third place by 2009 at the latest. As the Organisation for Economic Cooperation and Development says: “China’s economic transformation is one of the most dramatic economic developments of recent decades.”

China used to grab headlines with the statistic that every year it adds as much generating capacity as the entire British power grid. That figure has just become a lot bigger: in 2006 new capacity expanded by 102 giga-watts, equivalent to the UK and Thailand put together. Energy experts were stunned.

It is little wonder that Mr Zhang feels proud. His life mirrors a process of market-oriented economic reform that has smashed the iron rice bowl of Soviet-style central planning and created a system that Communist officials like to dub “socialism with Chinese characteristics”; that is, almost capitalism, but with a veneer of Communist ideology. Whatever it is, the words of Deng Xiaoping quoting an old provincial proverb ring true – it doesn’t matter if the cat is black or yellow as long as it catches mice.

China’s economy has grown on average by nearly 10 per cent a year since 1978 in one of the single most sustained bursts of development the world has seen. That has catapulted more than 400 million Chinese out of poverty, another achievement unmatched in history. Life is now immeasurably better for just over 20 per cent of humanity.

By rights, China should be as surprised as anyone at the speed with which the perception has crystallised that it is a force to be reckoned with on the international stage. After all, China presents no pretty picture. It is home to seven of the ten most polluted cities in the world. The International Energy Agency has forecast that it could well become the world’s biggest emitter of greenhouse gases by 2009, leapfrogging the US. The World Health Organisation estimated in 2005 that 27 per cent of the 700 million rural Chinese had no access to safe water and only 51 per cent of the entire country had sanitation.

Zhang, a former People’s Liberation Army soldier, lives a stone’s throw from the sequestered, leafy compound where China’s leaders are housed behind high red walls. Down his alley indoor toilets are a rarity. But Zhang isn’t complaining. “I’ve never had it so good. You just can’t compare my life to what things were like 20 years ago. Then we had nothing; everyone was poor.”

Far from being a homogenous entity, China is a collection of disparate lands and diverse peoples united under the rule of a single party as powerful as the emperors it replaced. In a Shanghai hospital, resignation is etched on the face of an elderly peasant farmer cradling his grandson as he waits in the hope that, one day, a passing doctor will take pity on the ailing child and accept his life savings in exchange for a medical examination. He has no health insurance: no welfare state to speak of exists to help the rural masses. Just a few hundred yards away a bullet train crowded with chattering holidaymakers, with city girls in high heels and tight leather jackets, pulls slowly out of a futuristic station, a dramatic circular building capped with a glass dome and balanced on steel struts. Within minutes the train picks up speed to 250kmph (155mph) and soon empties its passengers out in Hangzhou, where they can stroll beside one of the most scenic city lakes in China and dine on sweet lotus-root soup and steamed eel. China’s city residents are prospering from an explosion of en-trepreneurial bravado.

Yet China also confronts the same challenges that emperors and their mandarins faced, and shied from, for centuries: whether and how to engage with the rest of the world. President Hu’s reluctance to snub his oil-exporting ally Sudan and support an international solution to the crisis in Darfur is a case in point Yet in other ways, China has made an unambiguous choice. Joining the World Trade Organisation in 2001 was a landmark. A country so isolated two decades ago that a bunch of bananas was an exotic rarity is now a honey pot for Audi, Hermãs and other luxury brands. China is now so integrated into the global economy that traders in the City of London and on Wall Street hang on every word from Beijing.

It is barely an exaggeration to say that America owes its recent prosperity — in the face of terrorist attacks, the end of the dot-com boom and record oil prices — to China. The latter’s huge purchases of US government bonds help to underwrite the world’s biggest economy by holding down interest rates for homebuyers and businessmen alike. A flight by China from the dollar could send global markets into a tailspin. Yet therein lies China’s dilemma: by integrating into a system from which it was entirely cut off as recently as 1976, it has become a victim of its own success — no one would lose more than China if its actions triggered a slump in dollar assets.

In the military sphere,governments also worry about China; after all, it still boasts the world’s largest standing army. They speak in anxious tones about the rise of China and its possible international ambitions.

No country has witnessed such a sweeping transformation. It has 160 cities with a population of more than one million and more are planned. In 1980 the economies of China and India were at a similar level. To-day China is two and a half times richer, per head of the population, than India. More than 400 million people have a mobile telephone. Two decades ago private enterprise did not exist; now five million firms flourish. In 1986 China had perhaps a single millionaire compared with current estimates that 10,000 people are worth more than $10 million each. All this is just the beginning.

Yet China remains an enigma to much of the world. The language is one barrier, but the far greater mystery lies in a regime distinguished by its intense secrecy. In the age of the internet, how can a government central to the workings of the world pretend that outsiders have no right to know what happens in the Middle Kingdom? Just last month official China waited two weeks to tell the world what was already public knowledge: that it had proved its capability to compete in any arms race in space by firing a missile to destroy one of its satellites. Such a lack of transparency leaves the world guessing about its intentions — whether military, diplomatic or economic.

Secrecy makes other governments jittery. Neighbours wonder whether the ruling Communist Party is so powerful that it has no need for candour, or so weak that it must hide its fragility. Yes, China can boast of emerging as a leading economy while remaining communist. But will the one-party state be for ever viable once China’s fast-rising middle classes have sated their immediate economic appetite and start hungering for a say in their destiny? For the rest of the world, the risks of a destabilised China are alarming. A cornered government could lash out, spreading regional conflict. Or it could turn inwards once more, snapping the sinews of global commerce. A sea of refugees might even flood the planet.

And yet . . . The vast majority of Chinese see no need, for now, to question their leaders. They were accustomed to imperial rule for thousands of years, and the current administration has ensured an age of prosperity and stability unmatched for nearly two centuries — if ever. The middle classes are grateful to the party for their good fortune. Poor migrant farmers selling their labour on some of the world’s largest building sites see China’s polluted cities as an opportunity that affords them a better life than their parents had and will pay for an education for their children that is the ticket to ever greater riches.Along an ancient tea route in southwestern Yun-nan province, an illiterate rice farmer-turned-muleteer explains how he plans to spend almost his entire annual income on sending his son to school and even to university. Perhaps his son will be the first millionaire from Tiger Leaping Gorge.

The risk for China,and for the world, is that one day people may lose this hope. They may find that the burden of corruption, the need to grease every palm, from the local police and housing bureau to the mayor and his lackeys, is too high a price to pay for a share of China’s prosperity.

In the Beijing alley, Zhang offers his view. “What do I know about the lives of officials? They have nothing to do with me. But if I had the chance, I’d do the same. I’d line my pockets, no doubt. We all want to get rich.”

Or what if the income gap widens into such a yawning chasm that China’s “have-nots” cease to see a chance to join the “haves”? China’s Communist Party rulers, determined to maintain their grip on power, keep an eagle eye out for that tipping point. When Premier Wen Jiabao returns from an overseas trip or completes an important policy speech, his first order to aides is to browse the internet to gauge the public response. China’s Government may not be one that is representative of its people, but it is one that listens to its people.

John Thornton, a former president of Goldman Sachs and now a professor at Beijing’s prestigious Tsinghua University, summed up the headache that is the job of leading China. In a recent issue of Foreign Affairs he cited challenges that would prompt many a leader to pour a stiff drink. Popular dissatisfaction with local government, environmental degradation, scarce natural resources, an underdeveloped financial system, an inadequate health service, a restless rural population, urbanisation on a massive scale and increasing social inequality. He wrote: “Solving any one of these problems by itself would be a formidable task. But Beijing must deal with them all at once.”

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