There's a good story on CSM about China's growing military capacity. In particular it describes a rapidly growing modern core group within the military. It predictably focuses on China's improved ability to challenge the U.S. in Taiwan, but I think the more interesting issues lie further in the future and on a much broader scope.
It's a pretty common meme at this point that China is poised to emerge as a top global rival to the U.S. Assuming that China's economy continues to grow at a rapid rate (and there are some potential problems there, particularly in the banking system) this seems almost inevitable. But I think suppositions that this would somehow mirror the Cold War are dead wrong. I'm not sure how this rivalry would unfold, but I highly doubt that it would resemble the Cold War. The contours of the Cold War were defined by the all-encompassing differences in the economic systems of the two sides that made the complete severing of ties between them possible and desirable.
The key to China's growth has been the modernizing of its economy and its embrace of free trade. The U.S. and China a crucial trade partners, and I don't see that changing. While China will undoubtedly become more assertive in its foreign policy and more apt to challenge the U.S. as its military and economic power grows, there will be a huge economic incentive for China and U.S. not to let things get out of hand. Of course, both sides will need to be wary, as nationalism can lead people to do stupid things, and no doubt there will be domestic political points to be scored by railing against the other side (indeed this is already the case in the U.S.). Flashpoints will emerge and tensions will flare. But money speaks loudly, and I think will hold things together in this case. The dynamic between the U.S. and China will likely be something we haven't seen before.