But everything is going wrong at once. Another 600,000 Chinese-made toys have just been withdrawn by U.S. authorities for lead paint and other safety reasons. China's export miracle faces both wage inflation and new competition from India. Chinese exports may also be heading for trouble with its biggest single market, the European Union, after the EU Chamber of Commerce in China this month issued a bitterly critical report on discrimination against them by Chinese regulators.

Taiwan is thumbing its nose, preparing to display its military might (including cruise missiles that can hit Chinese targets) with its first military parade in 16 years to celebrate next week's national day. There are threats of military action if Taiwan acts on the suggestion by President Chen Shui-bian that Taipei should apply to join the United Nations under the name of Taiwan, a direct challenge to Beijing's insistence on "one China." Western military observers note with alarm China's new chief of the general staff has just been promoted from his last job as general commanding the region facing Taiwan.

China's investors are blithely ignoring official warnings to curtail the floods of savings going into the Shanghai stock market, and an ominous bubble is building, along with inflation spurred on to 8 percent by the surge in pork and other food prices.

And now a campaign is under way by human-rights groups and Western politicians to organize a boycott of next year's Olympic Games in Beijing, in protest of China's support for deeply unsavory regimes in Sudan and Myanmar. The Internet reports and grim images of the brutal clampdown of Myanmar's Buddhist monks may have been stopped, but the horror lingers on. China is paying an increasingly high price for its client states.

Most troubling of all for Hu, however, are the signs of serious dissension at the top of Chinese politics. The 17th Party Congress takes place in Beijing Oct. 15-19, and former leader Jiang Zemin appears to be opposing Hu's choice for the next generation of leaders to be anointed and prepared for the eventual succession.

This comes as a surprise, since Jiang was supposed to be sidelined since he gave up the chairmanship of the military committee, and since the purge of the party leadership in his old base of Shanghai. But Chinese commentators and China-watchers agree a tense struggle for power is under way, and that Hu may not be able to impose his own choice to replace him when he stands down in 2012. Such a sign of weakness would undermine his authority and start to make him look like a lame duck.

Hu is backing Li Keqiang, 52, the top party official in Liaoning province. Jiang is backing the new party leader in Shanghai, Xi Jinping, 54, the son of another top party official and thus known in China as a "princeling." These princelings, sons of the powerful who have taken advantage of their status to achieve high rank and wealth and key positions in the booming economy, tend to stick together. And people from Shanghai, as the place that produces so much of China's new wealth, tend to stick together against the political power center of Beijing.

Usually, Hu's choice of Li would be decisive, and Li could expect to become head of the party secretariat, the key springboard to power. But rumor is rife that Li will have to settle for the vice-premier position, which would almost certainly lead him to becoming prime minister in 2012. So Xi from Shanghai is now thought more likely to get the key party job, which will give him the inside track on the succession.

There are three interesting features of this power struggle for Western observers. The first is that this clash is about personalities, not policies. Broadly speaking, there seems to be consensus behind Hu's policy of "the harmonious society" that uses China's new wealth to improve health and social services and flatten some of the disparities in income and conditions between rural and urban societies.

There is also consensus that China's environmental problems need dramatic action -- witness the support for Hu's call last week for more than $250 billion in investment to protect the battered environment. (To put this in perspective, the Center for Strategic & International Studies in Washington last week issued a report that suggested up to 37 percent of China's remaining arable land was at dire risk from climate change.)

The second interesting feature is the difference between Beijing and Shanghai is more than a simple matter of geography, of Beijing being an inland northern city and Shanghai being a great port and open to the sea. Shanghai is about wealth and laxity, and Beijing is about power and discipline. Shanghai lives by trade and is inherently more open to the outside world, whereas the presence of the Forbidden City is carved into the history and the civic DNA of Beijing. For non-Chinese, the difference is about more than psychology.

The third and most intriguing feature is that the nature of power in Beijing is pluralist rather than dictatorial, and there is speculation among Chinese insiders that there will be so little to choose between Li and Xi in 2012, and since neither one will be strong enough to build a dominant position before then, there may have to be some form of party election. There is no other legitimate way of selecting the next leader. "This will be the start of the democratization of the Chinese Communist Party," reads the conclusion of one commentary now circulating among China-watchers.

It is ascribed (but this is not confirmed) to Li Datong, former editor of Bingdian (Freezing Point), a weekly supplement of the China Youth Daily. (Hu's own power base, by the way, was the Youth section of the Party.) If that judgment is right, and China manages to navigate the various crises that loom ahead, this could be the beginning of a great and hopeful political drama.

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