Give the neo-cons who flit between the think-tanks and the lobbyists' offices on Washington's K Street their due: they like to think big. Despite the billions spent and stolen, despite the accumulation of corpses, despite the horrible damage to America's image and the will, once sacred, of the people, they have never pretended that Iraq was ever the real issue. For a decade and more they have answered anyone who asked with a one-word response: China.

The Strangeloves at Foggy Bottom and beyond will be beside themselves with delight today. The old men in Beijing have done their job for them, in dramatic fashion. Suddenly, Star Wars has ceased to be Reaganite lunacy and become the real deal. The Chinese, with rather more skill than the Pentagon ever mustered, can take down a satellite. So the authentic superpower rivalry of the 21st century begins.

One faintly endearing trait of the ancients who claim to speak for Chinese communism is that they say what they mean, mean what they say, and act accordingly. In a country so vast and powerful, the racist slur of "inscrutability" is irrelevant. Last October, to general indifference, the Americans annexed outer space. China answered with - I paraphrase roughly, and translate freely - something that sounded like: "You think so?"

The Bush White House, in the President's name, had declared that "freedom of action in space is as important to the United States as air power and sea power". Any attempt to ban "space weapons" was rejected. Moreover, Team Bush added that "the United States will preserve its rights, capabilities and freedom of action in space - and deny, if necessary, adversaries the use of space capabilities hostile to US national interests". Hardly provocative at all, really, in feisty neo-con language.

But who were these "adversaries"? Surely not the Chinese, valued trading partners and suppliers of cheap shoes whose influence over mad North Koreans should never be demeaned? Think of it this way: only three nations have ever succeeded in putting men into space. These days the Russians despatch their ancient tin cans for the sake of hard currency. Mao's successors boast, in contrast, that with their Shenzhou VI manned missions "history is returning dignity and sanctity to the Chinese nation". What's your definition of serious intent?

As 2006 drew to its end, nevertheless, the problematical proponents of historical materialism offered more than rhetoric. Last September, for example, the US alleged that China had employed a ground-based laser to "paint" - to mark as a target - an American "intelligence asset" that happened to be orbiting over its territory. Now Beijing has demonstrated that such satellites can be removed with missiles, and at will. The Washington neo-cons, having suffered a dry spell in the prophecy business, can scarcely believe their luck.

They thrive on superpower rivalries. They define history - Kissinger's malign tutelage is the key to this - in such terms. While Europe has fretted over trade disputes and the awakening of an economic giant lacking the semblance of a democracy, the people paid to think for Bush have been more robust. Their reading of the twentieth century says American capitalism is always energised by threats and menaces. Just as JFK once alighted on a fictitious "missile gap" between the US and the USSR, so Obi-Wan Bush will discover a new red menace in the stars. For the defence contractors, another pay-day looms.

Satellites are important. That truth applies as much to the transmission of this bit of copy as it does to military intelligence or your ability to catch The Simpsons. No responsible superpower can afford to neglect the technology, and China might, just might, have identified a chink in America's expensive armour. Pentagon futurologists are probably hard at work on the scenarios even now. How could the US and its military function if Beijing downed the birds before invading Taiwan?

In that sense, the neo-cons are right. How much economic space is there for an emergent China and a fantastically indebted America? Come to that, what is tolerable for the US when the commie generals are showing off their satellite-killing capacity while the Bank of China holds most of Washington's IOUs? That last truth goes to the heart of our latest reality.

The neo-cons want to pick a fight with the Chinese not for the sake of democracy, or for worthy dissidents, or because China's economic growth is based on thuggish habits. The fight is invited because America's debts, private and public, federal and domestic, have been underwritten by Beijing. They hold the paper and the plug could always be pulled. Who then becomes humanity's copper?

You can get carried away with this sort of thing, of course. Thinking the worst is an essential skill, in reason's stead, in think-tank world. There are many good reasons to believe that the hyper-puissance of China is more apparent than real. Will Hutton, formerly editor of The Observer, has even published a book in an attempt to set western minds at rest about dysfunctional frontier capitalism, Chinese-style.

I agree with much of it. The thing looks precarious indeed. It resembles a bubble. It lacks democratic legitimacy, palpably, and without legitimacy there can be no trust. Without trust, and with an excess of corruption, the whole casino grinds to a halt.

So that's a relief, eh? It misses two important points, however. First, the overthrow of China's oligarchs will not feel like a blessing to the global economy. It will feel like a shot heard around the world. Like America, China is simply too big, and too important, to allow a neat and just resolution to its totalitarian episodes. Beijing has a very big say in the planet's money supply, to put it no higher.

Secondly, China's military is not controlled by generals as we understand them. These are entrepreneurs, with fingers in every pie. Government survives at their behest, but only if they are placated and sweetened. Regional politicians go to the firing squad, now and then, when their thefts become too blatant. The proletariat's army, air force and navy suffer no such indignities. In every important sense, they run the country, and grow disgustingly rich in the process.

Clearing near-space of one old weather satellite has made them even more powerful than before. They have demonstrated, with a single gesture, that playing hard to get in trade talks is mere trivia. America and Russia halted experiments in this field of technology, none of them too successful, back in the 1980s. China has worked quietly, noted and discounted the posturing of the US, and announced its own arrival in the arena. A new front has been opened in an undeclared war. The neo-cons could not have hoped for better. Unending conflict is their staple and starting point. History may yet show that last October's decision to claim space in America's name suited China and the US alike. But here's the actually important thing.

Conflict when no need for conflict existed. War when no cause for war could be found. Two discredited political systems seeking rejuvenation from the charade of antipathy. China's pride is at stake; America's security is at risk: either proposition is only true if it is made to seem true. Money and power, not missiles, form the beginning and end to this new, but very old, story.