After five years of erratic course changes in China policy, the Bush administration has finally set its rudder amidships to steer a middle-of-the-road, pragmatic, and balanced approach in U.S. relations with Beijing.

In an unvarnished warning, the administration said in its Quadrennial Defense Review, published by the Pentagon: "Of the major and emerging powers, China has the greatest potential to compete militarily with the United States."

In a more accommodating tone, however, the document said: "U.S. policy seeks to encourage China to choose a path of peaceful economic growth and political liberalization, rather than military threat and intimidation."

The Chinese, in response, choose to emphasize the arrow brandished rather than the olive branch proffered by the defense review. A spokesman for the Foreign Ministry in Beijing, Kong Quan, said his government had made "solemn representations to the U.S. side."

"We are an important force that promotes the peace and stability of the Asia-Pacific region and the world," the spokesman contended. "We have not, do not and will not pose a threat."

In relations with China, Americans are divided. On the right are demonizers who see China as a threat. On the left are panda huggers who would appease China. In the center are pragmatists who assert that Washington should keep its guard up even as it tries to build better relations with Beijing.

A fourth group includes business executives and investors who are generally apolitical as they go about trading with or investing in China.

When President Bush took office in 2001, he surrounded himself with foreign-policy and national-security advisers who called themselves the Vulcans, after the Roman god of fire. Chief among them: Vice President Dick Cheney and Secretary of Defense Donald Rumsfeld.

An essential element of their doctrine pertinent to China, wrote James Mann, a longtime China watcher, drew on the U.S. experience in defeating the Soviet Union in the Cold War: "America would build up its military power to such an extent that it would be fruitless and financially crippling for any other country to hope to compete with it."

The president underscored this point early in his tenure by declaring that the United States would do "whatever it takes" to maintain the freedom of Taiwan, the island off the coast of China over which Beijing claims sovereignty but whose people have shown, in poll after poll, that they prefer to remain apart from the mainland.

In contrast, Bush shifted course to go far toward accommodating the Chinese when Premier Wen Jiabao visited Washington in December 2004. The president publicly rebuked the president of Taiwan, Chen Shui-bian, in the presence of Wen.

"We oppose any unilateral decision by either China or Taiwan to change the status quo," Bush said. "And the comments and actions made by the leader of Taiwan indicate that he may be willing to make decisions unilaterally to change the status quo, which we oppose."

In the last eight months, the Bush policy has evolved between those courses. Rumsfeld said at an international forum in Singapore last June: "China appears to be expanding its missile forces, allowing them to reach targets in many areas of the world, not just the Pacific region, while also expanding its missile capabilities within this region."

"Since no nation threatens China," Rumsfeld said, "one must wonder: Why this growing investment? Why these continuing large and expanding arms purchases? Why these continuing robust deployments?" He added, however, that he did not see China as an immediate danger.

Then Robert Zoellick, the deputy secretary of state, set a tone in September that was echoed in the quadrennial review. "Many Americans worry that the Chinese dragon will prove to be a fire-breather. There is a cauldron of anxiety about China," he said in New York, adding: "If China wants to lessen anxieties, it should openly explain its defense spending, intentions, doctrine and military exercises."

The Quadrennial Defense Review, issued on Feb. 3, carried that argument forward, saying the United States would "attempt to dissuade any military competitor from developing disruptive or other capabilities that could enable regional hegemony or hostile action against the United States or other friendly countries, and it will seek to deter aggression or coercion."

The review, which has been many months in the drafting, concluded on an upbeat note: "Shaping the choices of major and emerging powers requires a balanced approach, one that seeks cooperation but also creates prudent hedges against the possibility that cooperative approaches by themselves may fail to preclude future conflict."