The Olympic torch’s journey to the Beijing Olympics is threatening to turn from triumphal progress into marathon humiliation. Protesters are rushing like moths to the Olympic flame.

The lighting of the torch in Athens was awkward enough. It took arrests and heavy-handed policing to keep pro-Tibet demonstrators at bay. Things could get worse this weekend, when the torch will reach London to be greeted by a combustible mix of police, demonstrators and patriotic Chinese students. Other potential trouble spots on the route to the Olympic opening ceremony in August include San Francisco and New Delhi. Then there is the trip across Tibet itself. The one spot on the Olympic torch’s progress where we can be guaranteed that there will be no public demonstrations is Pyongyang.

Is the Chinese government beginning to regret its triumph in securing the Olympics for Beijing? The games were meant to be a coming-out party for modern China – playing a similar role to that of the Tokyo Olympics of 1964 and the Seoul Olympics of 1988.

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I suppose it was inevitable. Events in Tibet have sparked calls for a boycott of the Olympics. Hans-Gert Poettering, the president of the European Parliament is speculating aloud about the possibility - and the parliament is due to debate Tibet later in the week.

Personally, I think it was a mistake to give the Olympics to China. It was inevitable that they would be used for political purposes, to bolster the Chinese government’s legitimacy and to herald China’s arrival as an international player. And I think its always preferable to hold the games somewhere small, rich and sunny - and without aspirations to global leadership: Barcelona and Sydney were perfect.

But now that the Chinese have been awarded the games, I think it would be an even bigger mistake to boycott them. Much as the West would insist that the boycott was aimed only at the Chinese government, it would be both portrayed and percieved as an insult aimed at the entire Chinese people. The great task of international relations over the next generation is going to be managing the rise of China. Picking symbolic fights - and so whipping up Chinese nationalism - is the wrong way to go about things, I think. (more…)

Earlier this year Goldman Sachs caused a stir when they predicted that China would have a larger economy than America by 2027. But this week China overtook America in one area that is of particular interest to the likes of Goldman Sachs. PetroChina became the most valuable company in the world. After its stockmarket debut in Shanghai the firm is now valued at over $1 trillion - slightly more than double the value of the world’s second biggest company, ExxonMobil.

PetroChina is no anomaly. Three of the five most valuable companies in the world are now Chinese - China Mobile and the Industrial and Commercial Bank of China (ICBC) are the other two. If you take the top 10 companies as your preferred measure, it is four-all between China and America. Sinopec is China’s other entry. The US has Exxon, GE, Altria and Microsoft.

There is an argument that this tells you more about a bubble in the Chinese stock market than about shifts in global economic power. It could just be the equivalent of the moment when the Japanese property bubble grew so extreme that the grounds of the Royal Palace in Tokyo were deemed to be more valuable than the entire state of California. (I always wondered how people worked that out, but you heard it said a lot at the time.)

The bubble argument has something to it. PetroChina’s shares shot up partly because there is huge demand and only 2.2% of the company was floated. As the FT’s Geoff Dyer pointed out earlier this week, it is now trading at 54 times earnings, compared to an industry average of 18 times earnings. But the valuation of other huge Chinese companies - like China Mobile - is much closer to an accurate reflection of the size of the market.

Maybe the PetroChina float will one day seem like a historic curiousity. But in the week in which the dollar sank to new lows against the euro, it certainly feels like something is shifting.

I got lots of correspondence about my column last week – in which I suggested that the era of American global dominance is coming to a close. Some of it was rank abuse – accusing me of everything from “penis envy” to loathing of the United States.

But there was also a much more reasoned line of argument. This was essentially that I had been much too credulous about Goldman Sachs’s projection that the Chinese economy will be larger than that of the US by 2027. I got lots of e-mails making this point. Here is one (the author prefers to remain anonymous):

“You should go back and read the pieces in the 80’s on Japan overtaking US, before that there was a Brazilian miracle, and the 50s the Soviets were going to take over the world because THEY have figured out how to get things done."

Linear earnings projections did wonders for the internet stock valuations in the 1990s (you just had to extrapolate the same growth rate 10 years into the future), and it seems like political scientists are guilty of the same sin. All of a sudden structural issues in the Chinese society do not matter, (of course 15 years ago the orthodox view was that sustainable long-term economic growth was impossible without democracy and this was why China simply could not grow without an extensive political reform).

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Over the past few days I’ve been in Beijing, talking to Chinese officials, generals and academics. I was with a small group of Americans and Europeans. Three of the Americans had worked in top foreign-policy jobs in the Clinton administration, and the Europeans included people who currently hold senior positions in the French foreign ministry and the European Commission.

The quasi-diplomatic nature of our “delegation” had a couple of effects. The first was that we got very good access. It also meant that the dialogue often had a curiously formal, indeed formulaic quality to it. The Chinese side were often laying out official positions – much as they would with a visiting government delegation. That can be useful and informative. But it also means that sometimes the real insights come when your hosts stray off their script. It is the stray remark, the occasional flash of temper, the unexpected question and the subtle change in wording that can be the most interesting bits of the discussion.

Anyway, here are some of the impressions I gathered about official Chinese thinking:

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In Singapore, I kept being told how fast China is modernising and changing. And it is true that the first thing that you see as you come out into the arrival hall at Beijing airport is that symbol of American-led globalisation – a giant Starbucks.

But yesterday evening I went to an official banquet, where the official style was very Communist – and the food was like something from Britain in the 1950s.

I should explain that I’m travelling with a small group of American and European think-tankers, sprinkled with a couple of diplomats. I am the lone journalist. Last night we had dinner with Zheng Bijian, who is chairman of the China Reform Forum and the man who coined the famous phrase “peaceful rise” to describe China’s emergence on the world stage. But apparently these days even “peaceful rise” is deemed to be too provocative, so the new formulation is “peaceful development with harmonious characteristics”. I feel more re-assured already.

Verbal formulas are pretty important round here. On a couple of occasions last night, Mr Zheng told us gravely: “Taiwan is a core national interest for China. We have no room for manoeuvre on this issue.” In other words - if the bastards declare independence, we’re invading. Otherwise, he was affability itself. We got the usual toasts of friendship. And we also got nine courses of food – starting with cream of mushroom soup and ending with banana split; all washed down by a cabernet sauvignon with Chinese characteristics.

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