China's phenomenal economic growth over the past three decades as a result of its policy of development at home and peace abroad has already catapulted its economy to the first position in Asia and will make it the largest economy in the world in purchasing power parity terms by the year 2020. In dollar terms, China will surpass Japan as the second largest economy in the world by 2025 and will outstrip the US in 2041 to acquire the top position in the world economies. However, in line with the historical experience of the emerging great powers which gave priority to the building up of economic strength over the acquisition of military strength at the initial stages of their development, China has stuck to a policy of modest growth in its military expenditure in the past three decades. Its military expenditure was reported to be only US$60 billion in 2003 as against US$417 billion for the US in 2003. By the year 2030, China's military expenditure is expected to increase to US$238 billion as against US$808 billion in the case of the US. Two important conclusions can be drawn from these figures. Firstly, China will acquire a preponderant weight in the world economic structure within the next two to three decades if it is able to maintain its current high growth rates. No important decision regarding global economic issues will be possible without China's concurrence. This development may entail revision of the structure of the global economic institutions and the rules governing the global economy to accommodate China's growing power and interests. Secondly, although China's military power will increase rapidly in the next two decades or so, the US will remain the dominant military power of the globe during that period. China's rise as a major economic and military power offers important lessons for Pakistan's leadership and policy makers in guiding the destiny of their nation. Perhaps the most important lesson is that if Pakistan wishes to emerge as a developed and powerful country, it must accord the highest priority to the goal of economic development to which all other national goals should be subordinated in the foreseeable future. The natural corollary of this decision would be to allocate maximum possible resources to economic growth and to limit narrowly the growth of our military expenditure. This would be in line with the policy decision taken by China under the leadership of Deng Xiaoping in 1978 and implemented skilfully in the subsequent years. The decision to accord the highest priority to the goal of economic growth in terms of allocation of resources and limit the military expenditure would be sustainable only if we pursue a low-risk foreign policy to avoid the danger of a major armed conflict by defusing tensions and adopting CBM's in our relations with India, engaging it in talks for the resolution of outstanding disputes, developing mutually beneficial cooperation with it and avoiding Kargil-type adventures. China pursued a similar low-risk approach in its relations with the Soviet Union and India after 1978. We would also have to adopt a long-term approach for the settlement of the Kashmir dispute at the right time under a favourable strategic environment rather than rushing into a settlement now or in the immediate future on the Indian terms when the strategic factors nationally, regionally and globally are arrayed against us. Our short-term objective should be to secure an arrangement whereby the Kashmiri people in IHK gain maximum possible autonomy, their human rights are safeguarded and the oppressive presence of the Indian military in the territory is substantially reduced as the militant activity declines. Our long-term objective should be a final settlement in accordance with the wishes of the Kashmiri people. Meanwhile, we should maintain our principled stand calling for the ultimate settlement of the Kashmir dispute in accordance with the relevant UN Security Council resolutions instead of compromising our position as was done by General (retd) Pervez Musharraf in his unseemly haste to secure a settlement during his rule. Pervez Musharraf's strategic errors in his dealings with India were not limited to the mishandling of the Kashmir dispute after the assumption of power in October 1999. The Kargil operation, which was ill conceived and badly planned and executed, topped the list of his strategic blunders. It was ill conceived because it ran counter to the government policy of defusing tensions and improving relations with India as reflected by the Lahore Declaration. It was badly planned and executed because it did not take into account the international strategic environment and cater for the various contingencies. In short, it was nothing less than a strategic disaster for Pakistan both internally and externally proving the well-known saying that war is too serious a business to be left to generals. The tragedy is that the architects of the Kargil military adventure, instead of being court-martialled, overthrew a constitutionally elected government a few months later. And the irony is that Pervez Musharraf, a few years after the assumption of power in violation of his oath of honour, pursued the same policy of improvement of relations with India that Nawaz Sharif had adopted earlier, only with less satisfactory results as the comparison of the Lahore Declaration with the Pakistan-India Joint Statement of January 6, 2004 would show Besides according the highest priority to the goal of economic development which we should emulate, China embarked upon a programme of rural and urban reforms subsequent to 1978 to raise the efficiency of the economy. In addition, it raised its national saving and investment rates substantially to accelerate its economic growth. In the ultimate analysis, economic growth is the function of the national savings and investment. The higher the rate of national saving and investment in productive sectors, the faster is the rate of economic growth. China now saves and invests almost 50 percent of its GDP providing the underpinning for its rapid economic growth. In contrast, Pakistan's national saving rate was estimated to be only 14 percent in 2007-08. The need, therefore, is for our leadership and the elite to adopt austerity to raise our national saving and investment rates to 30 percent of the GDP. If India can do it, why can't we? Perhaps the biggest damage inflicted by the Musharraf-Shaukat Aziz team on the country's economy was the encouragement of consumerism from whose serious consequences we are still suffering. We also need to pay more attention to human resource development, specially education and health, to improve the long-term prospects of our economic growth. In addition, our economy is in dire need of fiscal, monetary and structural reforms to unleash its energy and raise its productivity. The phenomenal rise of China's power and stature in the international community would necessarily lead to major adjustments in the world political and economic order in the coming years. These adjustments will take place both at the regional and global levels. Pakistan must closely observe these changes with a view to safeguarding its national security and promoting its political and economic interests. In particular, we should keep a close eye on the emerging trends in China's relations with the US, India and Russia which would provide a clue to the future shape of international politics in the 21st century. Above all, Pakistan-China friendship, which has served the strategic interests of both the countries through the vicissitudes of time, will assume growing importance against the background of the US efforts to contain China through building up India as its counterweight and Pakistan's necessity to balance India's growing power through a strategic partnership with China. It is, therefore, imperative for Pakistan to attach the highest importance to the development of all-round cooperation with China, particularly in political, economic, commercial, military and cultural fields. It should be a matter of some concern to our policy makers in this connection that our trade with China is lagging far behind the Sino-Indian trade which is expected to reach the target of US$60 billion by the year 2010. The writer is a retired ambassador E-mail: