A pair of Hong Kong and U.S. specialists on China examines the dynamic international environment China's new leadership now faces, focusing on East Asia. They first examine the complex balance the leadership seeks to strike between: (1) China's projection of increasing economic, military, and political power internationally; (2) the primary domestic goals of economic growth and stability; and (3) rising public awareness, demand for information access, and (in some quarters) nationalism among the Chinese people. The authors then proceed, in successive sections of the paper, to assess in greater detail China's international and regional security environment, Sino-American relations, China's relations with its East Asian neighbors, and the complex interconnections between the country's domestic and foreign policy. They conclude that Sino-American relations will continue to be pivotal to Beijing's foreign relations in general and its relations with countries in the East Asian region more specifically.