In the first years of the twentieth century, the passage of hegemonic power from British to American world leadership did not lead to a direct confrontation between the declining and the rising great powers. Historians of international relations are still debating why this is the case: because of cultural similarity and shared historical experience; or because London saw Washington as a lesser evil compared to Germany, Japan and the USSR; or because the competition within the Anglo-American sphere of influence was economic rather than military (Hugill 2009).

There were important reasons for the two great powers not to fight one another. Competition and mistrust also characterized this relationship, but for Washington and London it was easier to overcome the contradictions caused by the liberal international order (LIO). Managing a power transition, however, is more challenging when it comes to Sino-western relations in today's globalized world.

The intersection between capitalism and an international system of states is the backdrop to two important historical processes which are fundamental to understanding why China poses a challenge to the West. In particular, this chapter deals with the combination between western capitalism and national political systems that are not capitalist or predate capitalism and that have contributed to socio-political hybridity in the international system; it also seeks to make sense of the geoeconomic unevenness caused by a globalized capitalist order which is the source of great powers’ rise and fall.

Two main points emerge from this discussion. First, China's hybridity is not a unique phenomenon but has to be contextualized in a world order and a region – Asia – which is diverse and where democracy has not put down solid roots, as many liberal thinkers had hoped. Second, the rise of the People's Republic of China (PRC) confirms patterns that have characterized the ascent of other capitalist states, albeit with certain Chinese peculiarities and on a remarkable scale.