The New York Times published an essay by Francis Fukuyama called 'Re-envisioning Asia'.

Fukuyama was the guy who predicted the 'end of history' during the 1990s, after the fall of the Soviet Union, when there didn't seem to be anyone really evil left, at least when observed from the green and pleasant lands of New Haven, Connecticut, Cambridge MA etc.

This is a layman's reading of Fukuyama's theories:

Liberal democracy is so groovy that everyone on the planet wants it, thus no more great wars of ideology are going to take place as we all find our place in the happy free market global village.

Nice idea. Really sucks that it didn't work out. So perhaps you should take his essay in the New York Times with a pinch of salt, but this is what Fukuyama had to say about China:

China has always presented a great conundrum for the United States. It is the kind of power Washington deals with the least well: a nation that is neither clearly friend nor clearly foe, simultaneously a strategic threat and a critical trade and investment partner. The result has been an inconsistent relationship of pragmatic cooperation punctuated by periodic crises, such as the U.S. bombing of the Chinese embassy in Belgrade in 1999 and the Chinese downing of a U.S. spy plane in 2001. The future of this relationship depends on how Chinese politics evolve: whether China provokes a showdown with Taiwan and uses its economic might to achieve Asian hegemony, or develops into an increasingly pluralistic society in which economic interests dictate continuing good relations with its neighbors.

In the meantime, the United States can adopt one of two approaches: either it can seek to isolate China and mobilize the rest of Asia into a coalition to contain growing Chinese power, or it can try to incorporate China into a series of international institutions designed to channel Chinese ambitions and elicit cooperation.

Despite its appeal among U.S. conservatives, isolating Beijing is a nonstarter. Even if the United States somehow knew that China were a long-term strategic threat on a par with the former Soviet Union, no U.S. ally would enlist in an anti-Chinese coalition any time in the near future. Japan, South Korea, Australia, and ASEAN members all have complex relationships with China that involve varying degrees of cooperation and conflict; absent overt Chinese aggression, none is going to be willing to jeopardize those ties.

Incorporating China into existing global institutions has already proved very effective. In 2001, when the question of Chinese membership in the WTO came up, some argued that China would only subvert the WTO by breaking its rules. As it is, being a part of the WTO has promoted the rule of law by giving Chinese reformers an excuse to make systemic domestic changes.

The whole article is on the New York Times' website here.

Funnily enough, Fukuyama is a longstanding member of the neocon Project for the New American Century, although he was apparently against the invasion of Iraq.