"Let China sleep," warned Napoleon, "for when she wakes she will shake the world." Roughly two hundred years later, a look at the global economy shows China has not only woken up but perhaps also pumped some iron and had some strong coffee.

Since Deng Xiaoping launched reform in 1979, China has lifted hundreds of millions of its citizens out of poverty. In 2011, it became a majority urban country, and hundreds of millions more Chinese are expected to move to cities in coming years. And although the global financial crisis has put the brakes on the country's phenomenal GDP growth, it is still expected to grow by about 8 percent while Western countries stagnate.

In 2010, China overtook Japan to become the world's second-largest economy. Before the financial crisis, China was projected by Goldman Sachs to overtake the US in 2027, an estimate that has now been revised to 2018.

All of this means an increasing number of observers, both Western and Asian, see East Asia, which has a third of the world's population, as the future--and the West as the past.

China is at the core of this shift. It is now the biggest trading partner for an increasing number of countries all over the world. Its appetite for raw materials has seen prices rise, bringing booms for resource-rich countries such as Australia and those in Africa. China's involvement in Africa is viewed with suspicion by Westerners, but it is building much-needed infrastructure there and its big state-owned enterprises (SOEs) are using the opportunity to gain international experience.

China's huge trade surpluses have posed the question of what to do with the money--so far it has spent billions on infrastructure at home and is the biggest buyer of US treasury bonds, propping up America's vast debt. It has been allowing its currency, the yuan renminbi, to appreciate slowly against the dollar and is experimenting with making the yuan a reserve currency that can be used for trade, which could affect the dollar's primacy as a reserve currency.

There are still huge challenges--the country may be sitting on a mountain of toxic local government debt, inefficient SOEs still dominate the economy, its environment will cost billions to clean up--if that's even possible--and the plummeting euro is a concern for its exporters. China's strategy for getting through all this is to stop making cheap widgets for export and, instead, manufacture high-end innovative products for consumption both at home and abroad. Its ability to achieve this aim may define its future.