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while most karaoke evenings might be innocent affairs, the risk of finding yourself in a compromising situation was not worth it. He advised me to make a polite excuse to avoid them.

By contrast it is precisely when you ignore your own culture and principles that you risk losing face or risk your Chinese partners thinking you are so weak you can easily be taken advantage of.

Central bank purchases of traditional reserve assets still dwarf sovereign wealth fund purchases of riskier assets -- as well as central bank purchases of equities. But over time, it is reasonable to expect that many over-reserved sovereigns will diversify their portfolios. The recent decision to increase the share of the CIC's initial $205-210 billion in capital that it can invest abroad and SAFE's increased willingness to purchase equities as well as bonds are examples.

A far more challenging issue is how the huge increase in financial assets managed by potentially non-economic agents will affect the efficiency of the global capital market and the allocation of risk and resources. ….

And then there is China. China enormous foreign asset growth in the first quarter implies that it might be able to add more to its reserves and sovereign fund in 2008 than all the oil-exporters combined even if oil stays at its current levels.

Three of the circumvention tools — DynaWeb FreeGate, GPass, and FirePhoenix — used most widely to get around China’s Great Firewall are tracking and selling the individual web browsing histories of their users. Data about aggregate usage of users of the tools is published freely. You can see, for example, that the three sites most visited by users of these circumvention tools are live.com, google.com, and secretchina.com. Aggregate data like this is a terrific resource for those of us interested in researching circumvention tool usage, and not much of a privacy risk for the circumventing users if it is only stored (as well as displayed) in the aggregate.

We have to be aware of the fact that the Internet has given the youth living in controlled societies infinite venues for digital entertainment - without any religious or social censorship - that may not necessarily be enhancing their digital sense of citizenship and civic engagement. Risking the comfort of their bedrooms - with their hard-drives full of digital goodies - for the gloom of a prison cell does not appeal to many of them. The governments are all too happy to promote this new cult of "cyber-hedonism." Whatever keeps these troubled youths from the streets is inherently a good thing.

The fact that existing political activists embraced the Internet as a tool of mobilization is fairly noncontroversial. What's less obvious is how many digital natives the Internet has turned into digital renegades - and how many into digital captives. It's precisely this balance that will determine what the political landscape of Russia, China or Iran will look like in 10 years.

Prof Spence does not ignore the risks, but sees more grounds for optimism. He points to the ballooning number of university graduates, the emergence of grassroots civil groups, and the vast improvement in the education levels of top leaders as evidence that change will have to come. "The whole idea of representation is being explored. Remember China had a hard time with representative government, which fell apart under the warlord era [in 1915]. "China is backtracking into the past, looking for ways of making changes. We could wish they changed much faster, but we should be glad they are changing at the speed they are," he says. Hear Professor Jonathan Spence deliver the 2008 Reith lectures: BBC Radio 4, Tuesdays from 3 June, 0900BST

The government now faces a tricky predicament: Having loosened its restraints on information flow this time, a return to its old ways at the next sign of difficulty could backfire. “The government should learn a positive lesson: When it allows freer information flow it is better for its image and legitimacy,” Mr. Xiao said. “But this will not always be a case, especially if the next crisis is man-made

China’s online censors can be merciless in their deletion of blog postings or forum comments that are deemed “too sensitive,” particularly involving anything to do with the so-called “Three T’s”: Tiananmen, Tibet and Taiwan. Post-earthquake negativity, though, has been tolerated. “Nine billion yuan [$1.3 billion] has been raised but how much will actually get to the disaster zone?” one skeptical commenter asked on a forum on Baidu, China’s leading search engine. Discussions focusing on discrepancies between the amount of donations declared by the Chinese Red Cross and the corresponding numbers issued by the Ministry of Civil Affairs also have met with minimal interference, Mr. Kennedy said. However, the government has not turned a blind eye. More than a dozen people have been arrested for “spreading rumors” online, and political blogger Guo Quan was detained for questioning the risks posed by cracked dams and damaged nuclear facilities.

It is commonly argued that growing economic ties tend to create common interests that will reduce tension between nations (see FT's Alphaville). The enormous amount China has lent to the US -- a total that the US data (which tends to underestimate Chinese holdings) now puts above $1 trillion -- will, according to this view, prevent other sources of conflict from getting out of hand. Alas, relations between creditors and debtors are rarely quite so free of tension. Creditors want to get paid back in full. Debtors would rather pay back at little as possible. Mei Xinyu, a senior researcher under the Chinese commerce ministry writing in a personal capacity for the Shanghai Daily, argues that China needs to put pressure on the US at the Strategic Economic Dialogue to do more defend the dollar. With the dollar at 1.60 against the euro, it isn't hard to see why. Mei goes on to argue that if the US doesn't do more to defend the dollar, it is effectively defaulting on China.

Mei's complaint, in other words, should be directed in part at China's own policy makers. When they bought long-term US dollar-denominated debt they took the risk that the dollar would depreciate over time. They effectively gave the US the option to pay China back in depreciated dollars. What's more, they didn't charge a premium for the option. That was China's own choice. China wanted to keep the RMB down even if that meant over-paying for US assets.

China, for complicated reasons, has decided to lend to the US in US dollars and to lend to Europe in euros and pounds. China's European lending - incidentally -- could prove to be as risky as lending to the US in dollars; SAFE and the CIC are really over paying for euros.

The past 10 days will be remembered as the time the U.S. government discarded a half-century of rules to save American financial capitalism from collapse.

In ordinary times, a capitalist economy lets prices -- such as those of homes, mortgage-backed securities and stocks -- fall to the point where the big-bucks crowd rushes in, hoping to make a killing. But if the big money remains on the sidelines, unpersuaded that a bottom is near, the wait for bargain hunters to take the plunge could be very long and very painful.

But something big just happened. It happened without an explicit vote by Congress. And, though the Treasury hasn't cut any checks for housing or Wall Street rescues, billions of dollars of taxpayer money were put at risk. A Republican administration, not eager to be viewed as the second coming of the Hoover administration, showed it no longer believes the market can sort out the mess.