Rupert Cornwell: The question is when, not if, America will be eclipsed

Outwardly all will be measured, polite, and probably inconclusive. But for US policymakers, the summit between George Bush and Hu Jintao is an unsettling glimpse into a not very distant future - when America's unchallenged post-Cold War supremacy is over.

Two huge issues overshadow the meeting. The smaller (if it may be called such) of them is economic. If present trends hold, China's economy will overtake that of the US within a generation. Almost certainly, they will not; President Hu and his government admit the Chinese growth rate, of more than 10 per cent in the first quarter of 2006, is unsustainable. But even the target growth of 7.5 per cent is more than double the long-term growth of the US.

More important, argues Washington, this surge has largely been made possible by an artificially low exchange rate. Economists say that, despite a 3 per cent rise in the value of the renminbi permitted under the tightly managed float operated by the Beijing authorities, the Chinese currency is between 20 and 40 per cent undervalued.

Chinese labour costs are thus far lower than those of the US and other industrial countries. It is a disparity that US politicians blame both for the loss of millions of American jobs, as companies switch production to China, and the colossal and potentially destabilising bilateral trade imbalance.

The US deficit with China currently runs at $200bn (£113bn), accounting for a quarter of the entire US trade deficit. China has reinvested hundreds of billions of surplus dollars in US securities and stocks - meaning that, in a crisis, Washington's monetary policy could be held hostage by Beijing.

Finally, the two countries are in undeclared competition for scarce energy resources around the world - fuelling the political uproar here that forced CNOOC, the Chinese National Offshore Oil Company, to drop its 2005 bid to buy the US oil company Unocal. That too will be a subtext of the Bush-Hu talks.

Even more important in the long run, however, may be Washington's efforts to turn China into what the foreign policy professionals here call "a responsible player" on the geo-political stage.

The issues are in part economic, starting with China's often blatant disregard for intellectual property rules. But they embrace China's emergence as a regional and increasingly global superpower.

More clearly by the day, Beijing is seen here as a potential rival to the US. President Clinton used to evoke a future "partnership" between the two countries. His successor prefers to talk of "peaceful competition". China today is to all intents and purposes integrated into the international system. But, asks Washington, to what end? The complaints range from China's human rights record - actually worsening, according to the State Department - to its increasing assertiveness in the region and beyond.

An acid test, for the White House, will be China's readiness to lend a serious hand in curbing Iran's nuclear ambitions, most crucially by supporting tough sanctions against Tehran. Washington was encouraged, however, by Beijing's decision not to extend an invitation to the new Hamas leadership to visit.