At this very hour, one early May, just shy of a half century ago, I married a girl from Shanghai and we launched our joint adventure.

Ever since, Bette Bao and I have practiced the precept of Adam Smith—division of labor. She manages our finances and real estate. I changed the diapers and scooped up after our frisky lab. You, clever students, have surely discerned the underlying theme to my responsibilities. I, clever Yale man, foresaw that someday my foul duties would be done and Bette’s never ending.

Happily this week our joint venture at Dartmouth bestows more uplifting roles. Reasoning together. Searching for common ground. Listening.

Courtesy of the Montgomery Fellowship, Bette and I are refreshed, as well as honored, to immerse ourselves in your community. We can tune out the manic media, the craven legislators, the pandering and polarizing. With you, students and faculty, we explore issues—often with debate but free of labeling and libeling.

We are grateful to the Steering Committee that invited us to this oasis, in particular to Richard Stamelman who shapes this program with vision, attention to detail and passion. And we are delighted to be reunited with our golden friends in our golden years, Pegge and Jim Strickler.

Civil discourse and the rejection of extremes are mandatory to dispel the clouds over America’s future at home and abroad. And nowhere are balance and nuance more essential than in dealing with China. There are no sure wagers or simple formulas. For your lifetimes, our bilateral relations will be the most consequential and the most complex in the world.

There is a torrent of information on China, but as a screenwriter once said about Hollywood, “no one knows anything.” A China expert is an oxymoron, if not a moron. He is indeed a “vox clamantis in deserto,” a voice of one crying out in the wilderness.

So why listen to me? Well, I have engaged the Chinese for over four decades. And unbeknownst to you, in 1971, after twenty-two years of mutual isolation, I and not Henry Kissinger was the first American official to visit China.* [...]

Despite all the murkiness, I can guide and instruct you for the next decade with two solid projections.

First, the economic and political model pursued by the Chinese since 1978 cannot endure. The new leaders soon ascending the stage face not just tactical adjustments but strategic choices.

Second, Sino-American relations will be mixed and fluid. We will certainly not be allies or even strong partners. We will almost certainly not be foes. Let us shed euphoria and despair at each passing phase of U.S.-China relations. Recall Mark Twain when assessing the grandiose operas of Richard Wagner. He opined that the music “is not as bad it sounds!” When judging the music of Britney Spears, he said, “it’s not as good as it looks.”

In short the fixed menu for our relations is . . . sweet and sour.

A major source of this complexity is native attitudes rooted in history.

For Americans, just since the 1940s Chinese have been allies against Japan; enemies in Korea; yellow hordes, blue ants, and Red Guards; partners against the Polar Bear; born-again capitalists; the butchers of Tiananmen Square; and the ominous new superpower.

Mark Ralston/AFP/Getty Images US Secretary of State Hillary Clinton and Chinese Vice-Premier Wang Qishan at the 2012 US-China Strategic and Economic Dialogue in Beijing, which was strained after Chinese activist Chen Guangcheng escaped from house arrest and fled to the US embassy.

Today there are two extreme camps: the apocalyptic and the apologetic.

One sees China as a dragon to slay. Because of its growing economic and military prowess, its unsavory political system and its fierce nationalism, this apocalyptic camp sees a nascent global struggle with a neo Soviet Union. China is a looming enemy to be contained.

Others see China as a panda to hug. This apologetic camp inflates Chinese virtues and downplays, even rationalizes, their transgressions at home and abroad. China is a looming comrade to be coddled.

The dragon slayers exaggerate China’s strength, ignore its vulnerabilities, and fail to understand that Beijing, for the foreseeable future, is too burdened by its huge domestic travails to mount foreign adventures. The policies of avid budgeters and ideologues would make Chinese enmity a self-fulfilling prophecy. Containment is not an option. It would brew discord, if not conflict, and strain our alliances and bonds with countries seeking good relations with this global giant. We would forfeit Chinese help on a host of issues; many of these require our joint efforts. America would further wrack its reach and its resources.

The panda-huggers overlook the darker features of the Chinese landscape. Contract-hungry entrepreneurs, visa-anxious academics, fawning former government officials tiptoe around, if not condone, Beijing’s suppression. They shrug at its mercantilism, military surge, and screening of rogue regimes. Such indulgence betrays American values, harms our interests, and loses Congressional and public backing.

These extreme camps are not solely Democratic or Republican. They lodge within the parties. Fortunately the center of gravity rests with those who anchor a balanced approach. Eight successive Presidents, from Nixon to Obama, have pursued essentially the same course, a blend of cooperation, competition, and contention.

China, in turn, has been the Middle Kingdom for thousands of years, and for eighteen of the past twenty centuries the most powerful nation on the planet. It suffered one century of foreign humiliation and invasion. Only in recent decades has it met the world as an equal. China is not rising. It is returning. And it returns with a volatile mix of arrogance and insecurity, envy and xenophobia.

There are multiple voices and two basic clusters in China’s foreign policy debate. One continues to endorse Deng Xiaoping’s dictum to focus on domestic challenges, refrain from overseas bravado and project a calibrated “peaceful rise.” The other, touted by many in the military and nationalistic bloggers, asserts that it’s time to stand up and supplant the world’s declining, hostile superpower.

On our long march together, how to review this great nation? Policy hinges on four fundamental questions.

Is China’s military power a threat?

Is China’s economic power a juggernaut?

Is China’s global reach a menace?

Is China’s domestic system a model?

Let me not torture you with suspense but reveal my brave, unequivocal answers to all of the above: yes ... and no.

Military power. China sees real security concerns. It is flanked by fourteen neighbors—the most in the world—with an unsettling medley of historic enmity, instability, large militaries, and nuclear weapons. In Tibet and Xinjiang, forty percent of the Middle Kingdom, reside sullen souls.

After twenty years of double-digit increases, China’s defense budget will continue to leap. It now equals the total budget of the next twelve Asian countries. Its priorities aim at crippling American information systems and denying our access to Chinese spheres of influence.

In contrast: the U.S. military is decades ahead in almost every category. Our defense budget is five times larger and worth almost all the rest of the world’s put together.

Our neighbors are Mexico, Canada, and two vast oceans. We have a sprawling network of allies. In recent decades, we have—sadly—had extensive combat experience, while the People’s Liberation Army last fought in 1979 and was bloodied.

Economic power. China merits ovations for the greatest, fastest growth in history, pulling hundreds of millions out of poverty. It is the global leader in exports and foreign reserves, as well as the second largest economy. Within a decade or two, it will surpass the United States.

Every day, we pay China a billion dollars in trade. Wal-Mart alone imports more from China than all but five nations. Chinese hands grasp most of our awesome debt. How? In part because Beijing subsidizes its industries, manipulates its currency, and steals our intellectual property through rip-offs and cyber attacks.

In contrast: Winning the race for GDP is not so taxing when the baton is passed among 1.3 billion runners. China’s per capita income equals ours—in 1932. It ranks 99th in the world, nestled between Angola and Bosnia. The Chinese landscape is corrupted, polluted, draining resources, thirsty for water, shorn of justice. A demographic specter of historic proportions darkens its horizon: China will grow old before it grows rich.

Moreover, leverage and advantage flow both ways. Our economies will mutually flourish or mutually destruct. China’s reserves plunge if the dollar plunges. Its goods temper our inflation. Both nations are fueled by trade and investment.

Global reach. Clearly Chinese influence is spreading, aided by sorry spectacles in Washington and Brussels, New Delhi and Tokyo. China is the prime economic partner for Asia and scaling higher elsewhere. It siphons resources in Africa and Latin America through no-strings-attached deals. With the lure of its gigantic market, it inhibits capitals and companies from protesting unfair practices. Its navy badgers rival claimants in disputed waters. Its diplomatic heat singes book fairs, sporting events, and museums overseas. It forbids governments from elevating Taiwan, hosting the Dalai Lama, or heralding human rights.

Wielding its UN Security Council veto and commercial links, Beijing shelters appalling regimes and sabotages sanctions. It props up the murderous North Korean dynasty and dilutes the campaign against Iran’s nuclear program. On climate change, it calls on advanced countries to do the heavy lifting.

In contrast: A fair accounting of China’s global behavior must also record its positive contributions. Unlike the former Soviet Union, Beijing does not station troops overseas or export its ideology. Its trade and investments enrich as well as exploit. Beijing joins—to a degree—in negotiations, condemnation, and pressures against North Korea and Iran. While pursuing a more robust clean energy policy than ours, it recently agreed to assume its own international commitments. It cooperates on terrorism, narcotics, and crime. It supports efforts in Afghanistan and is a major source of UN peacekeeping forces.

Meanwhile, its skillful diplomacy since the 1989 Tiananmen Square massacre is fraying. Unease grows about just how “peaceful” its rise will be. Some developing countries are beginning to view Chinese investments as neo-colonialist, bleeding resources and jobs, abetting corruption and pollution. Commercial exploitation and patronage of dictators costs Beijing in Burma, in Sudan and Zambia, in the Arab Spring. Chinese provocations in Asian seas drive its neighbors closer to the United States.

The Chinese model. To date their mix of capitalism, socialism, and repression defies history. Unlike Chile, South Korea, or Taiwan, China’s prosperity has not led to political liberalization. Bankrolls co-opt the middle class and bewitch the young. The leaders invoke nationalism, foreign devils, and the fear of break-up to thwart reforms. The regime squashes any challenge to the Party or stirring for freedom with censorship, bullying, detentions, and prison. Spending on internal security now exceeds the defense budget.

The amalgam of economic growth and social control appeals to authoritarians around the globe, as well as frustrated voters and panda huggers in democracies. Sympathizers echo Chinese themes: The people cherish order and downgrade freedom. China’s size, culture, and legacy of horrific chaos cannot afford the luxury of democratic rule. Moreover, the Chinese model works better. As the West stumbles, China launches bullet trains faster than the Big Apple plugs potholes. Watch Beijing win the future. Watch the democracies choke in gridlock.

In contrast: The Chinese system looks increasingly unsustainable. Don’t take my word for it. That is the emphatic conclusion of the present Chinese Premier and the World Bank. China cannot live by exports and investments alone. It must boost domestic consumption. It must liberalize its financial controls, reform the banks, raise interest rates. It must weave safety nets so wary Chinese can save less and buy more. It must stop pampering state enterprises and stimulate the nimbler private sector.

Serious unrest looms if coming leaders do not tackle such reforms.

The sacking of a potential ruler from Chongqing is much more than a murder mystery or a delicious spoof of Party unity or testament to the spoils of Princelings and the perils of charisma. It dismembers the façade of an orderly, tranquil transition. Bo Xilai’s fall may signal a victory for reformers or merely the opportune defeat of a rival. Outsiders study the stage but will never see what actually happened behind the scenes. Bo’s rise exposes what citizens witness and manifest day by day, cradle to grave, in their own lives. Without favors, bribes, connections, and loss of dignity, little is accomplished—from emergency surgery to parking a car.

Like Americans, Chinese only resent the rich if the odds are fixed. Thanks to social media, the rigging is no longer swallowed in silence but bundled and broadcast to cell phones throughout the provinces.

Such issues fuel demonstrations—500 per day, even by official count. They erupt not just among Tibetans or Uighurs but a broader populace chafing at corruption, nepotism, pollution, and land grabs. What recourse but to take to the streets? Courts answer to the Party. Lawyers must swear loyalty oaths. The media are bridled by censors or themselves. Officials, hand-picked and unelected, mock accountability.

The miraculous escape of a blind and wounded man from paid thugs in Shandong sprang from the vindictiveness of a lawless system, was guided by his inspired vision and aided by his brave fans.

A worthy ending hovers for Chen Guangcheng and his immediate family, though sinister fates await others.

What is authentic?

Chen is a mythic hero for every region and season.

China’s security forces are outrageous.

On the most sensitive areas, amidst elections and transitions, anger and agony, plagued by faulty interpretations and ticking clocks, and all the while exposed in a fishbowl, both countries wrestled, manipulated, and maneuvered to keep our bilateral relations on track. Too big to fail.

What is shameless?

Monday morning quarterbacks who can’t even shut their traps until the game is over and the home team off the field.

An innovative economy, flourishing culture, stable society need pluralism, transparency, rule of law, freedoms of expression and assembly.

As my friend Joe Nye observed, the Chinese assemble iPhones, not invent them. Movies focus on the past because the present is white-washed. Leaders send their pride and joy and treasure to America.

When no safety valves for dissent exist, the down-trodden gather in squares—or climb walls.

Until artists and Nobel Prize winners are nurtured and not locked away, Chinese talents will smolder; mimic, not imagine the impossible. The billions spent on Olympics and opera houses at home, TV stations and cultural extravaganzas abroad, will not accrue soft power.

I am not predicting imminent Tiananmen Squares. But in 1989 China, bullhorns were state of the art, while today even colossal censorship cannot track and curb the weapons of mass dissemination—600 million Internet users, with 90 million bloggers. Proxy servers, crafty techies, and clever wordsmiths breach even the greatest firewalls.

And so the core question is whether China will alter its thirty-year-old model of growth and governance.

Despite all the yeses and nos I’ve given you, my sixth sense tells me:

First, Chinese swagger abroad masks paranoia at home.

Second, China has been more a free rider than contributor to the international system.

Third, despite China’s flush hand and the current American paralysis, I’d rather hold our cards.

How to play our hand in this high stakes game against an unreadable challenger bending rules to amass chips but beginning to perspire?

Above all, rebuild America. Policy toward China begins at home. Domestic vigor ordains our leverage and radiance in the world.

Rule out both futile containment and slippery accommodation. Don’t demonize or sanitize China. Don’t cast it bellicose or benign.

Steer a steadfast course through both sunshine and storms. Summon Chinese self-interests. Without them, carrots, sticks, and spinach will count for little.

Maintain military muscle befitting contingencies. Keep our alliances strong. Bolster ties with other rising nations as ends in themselves, but also for insurance. We live in an era not of a classic transition from one great power to another, but of a broad diffusion of strength. Shape China policy in an Asian framework. Constant focus, military deployments, trade initiatives, regional leadership, should not be portrayed as a scheme to encircle China but as an invitation to build a Pacific community.

Finally, do not squander our financial and psychological resources on foolhardy expeditions and quixotic nation-building.

These principles are vital when distrust haunts our vast agenda. Washington professes to welcome China’s rise. Beijing professes to welcome America’s role in Asia. Neither governments nor publics are converted.

True, Americans have ample grounds for wariness. But take a seat on the Politburo. You sniff containment as you sight Americans patrolling close to your borders; executing an Asian “pivot”; brandishing deployments, bases, and joint exercises in your neighborhood; renaming part of the South China Sea; and pushing an Asian free trade area minus your presence.

Our leaders should meet regularly in private, discard their entourages and scripts, and explore future directions. Such exchanges would form the context for the dialogues—like last week in Beijing—on economic, political, and military topics. These are designed to avoid miscalculation, manage differences, and cultivate cooperation. Mutual trust cannot be won through declarations. It can only be sown, issue by issue, over time.

Economic concerns are paramount. Through the projected trajectories on both sides, tensions and imbalances should ease. China spurs consumer spending. Labor costs rise. The currency appreciates. Beijing lessens its financial controls. As it innovates, it begins to respect intellectual property. Such steps should shrink our trade deficit and benefit American companies in China.

The United States, in turn, aspires to spend less and invest more. Meanwhile, we must oppose Chinese subsidies and technology theft. Focus on access to the Chinese market in competitive sectors like services. Negotiate a bilateral investment treaty and encourage Chinese investment in America. Except on clear-cut military items, loosen controls on technology export. And frustrate massive cyber attacks—led by China—which the leader of our Cyber Command terms “the greatest transfer of wealth in history.”

While neither side seeks military conflict, we could lurch into one by accident or miscalculation. We need rules of the road. Our ships and planes track and harass each other in Pacific waters. Treaty ties could suck us into disputes in the South or East China Sea. Cyber attacks, difficult to source, disrupting a key industry or military capability could provoke a crisis. Instability and loose nuclear weapons in North Korea could draw in our two armies. We need more transparency in nuclear doctrine, missile defense, and space.

We can map confidence between our militaries through easier issues such as combating piracy and responding to natural disasters.

Thanks to enlightened policies in Taipei, Beijing, and Washington, the Taiwan situation—always a potential flash point—is the most stable since 1949. Consensus now exists to maintain the status quo of no unification, no independence, and no use of force. Today there are sixteen economic agreements and counting, five hundred weekly cross-strait flights, and $200 billion of Taiwan investment on the mainland. So long as Beijing exerts Leninist rule, democratic Taiwan will adhere to its de facto independence. It will neither be seduced nor absorbed by economic integration.

Successive Republican and Democratic presidents have pursued a remarkably successful balancing act of bolstering Taiwan’s security and improving relations with China. Why fix what has not been broken?

While promoting freedom cannot dominate our agenda, it must hold a prominent place. Advancing liberty reflects our values, marshals domestic support, encourages Chinese reformers, serves our concrete national interests. Democracies do not war with each other, foster terrorism, cover up disasters, or spawn refugees.

We should appeal to Beijing’s self-interest. Political reform would serve its five most vital goals—economic growth, political stability, attracting Taiwan, improved relations with America, and greater global stature.

Private efforts reinforce official ones. Particularly promising is the growing number of students like you flying both ways.

Without Sino-American cooperation, many regional and global challenges are difficult, if not insurmountable. Common endeavors provide a framework to manage our enduring frictions over Taiwan, human rights, Tibet, and economics.

Teaming up with Moscow, Beijing too often foils international efforts. With North Korea, does it want to risk military clashes and enhance allied missile defense? On Iran, does it want to spike oil prices and alienate Sunni regimes? In Syria, does it want once again to deny the Arab Spring?

Prospects are brighter for the world’s two largest oil importers and consumers to collaborate on energy and the environment. Both of us seek greener pastures, stable prices, new energy sources, secure sea lanes, and commercial opportunities. Both are indispensable to tame climate change.

Our interests naturally converge on some global issues—drugs, crime, health, food safety, to name a few. On others China’s posture will not ease until it reckons the costs. Most glaring is its protection of depraved regimes, driven by its economic stakes and fears that international pressures on others will set precedents for China.

The central policy theme is encouraging China to be a responsible stakeholder in the international system. Too often it lags or subverts. China should engage not as a concession to others, but as a favor to its future.

To be sure, all rising nations have earned the opening to reshape the global structure they inherited. Witness the shift from seven nations steering the world economy to the Group of Twenty. The UN Security Council needs updating. But Beijing has no license to ignore or upend accepted international law—human rights covenants, WTO rules, the Law of the Sea, resolutions of the United Nations.

America, in turn, has the urgent duty to get its own house in order. While our relative power in the world will decline, our absolute power need not.

We face three overlapping imperatives. Fortify the fragile economic recovery. Slash our mountainous debt. Invest in America’s future.

Until the election in November, we are stuck. Let us hope that soon after our leaders will cross aisles, not swords; the media will instruct, not inflame; Americans will once more embark on a bold and common enterprise.

Given our current political impasse, economic angst, and mood of melancholy, optimists are rare. Still, American police chiefs and human rights activists do not seek Chinese asylum. And I concur with Alexis de Tocqueville who applauded America’s ability to address tangled tribulations. He said, and I quote, “the greatness of America lies not in being more enlightened than any other nation, but rather in her ability to repair her faults.”

For we have seen this drama before. Sputnik and the missile gap. The Vietnam War, assassinations, riots and Watergate. Hostages, energy crisis and malaise. Japan number one and the invasion of Rockefeller Center. Crumbling towers.

I recall the late sixties as if it were yesterday. This country was in the most dire straits, whiplashed by domestic turmoil, and mired in a foreign quagmire. America, as always, rebounded. Out of trials we derive strength. Now, our uniquely immigrant society should flourish in a shrunken world, its fabric much sturdier thanks to movement on the bus and shattered ceilings and the new look of campuses like Dartmouth.

What about China? How will it look?

While we might as well consult fortune cookies, I prefer to rely on Lord Tennyson to reprise my overture:

“Far away beyond her myriad coming changes,

China will be

Something other than the wildest modern guess

Of you and me.

Thank you.