'The Biggest Political Blunder in Modern History'

Today's NY Times op-ed page features a warning against the advent of an all out US-China trade war. How did we get to this point where China holds so many cards? The same way that Max Baucus came up with his outrageous health 'reform' bill, by putting the interests of huge corporate contributors over the well being of the people. Some history:

The West, as defined by G-7 or the OECD, back in 1989 struck a Faustian deal that they would 'engage' China like they never would have the Soviet Union.
COCOM, which had very successfully kept western technologies out of Soviet hands, denying them a source of economic growth, was allowed to die in the early '90s.
G-7, at that time, controlled over 75% of the world's economy and could have used that primacy to engender real change in the remaining non-democratic countries. That was supposed to have been the real 'peace dividend'.
Instead, western leaders kowtowed to their respective corporate constituents and set of a race to the bottom in pursuit of China's cheap, compliant labor force.
The rationale given to the gullible public was the 'engagement' theory in which we would 'change China from within' because 'economic reforms would lead to political reforms.'
Now, in 2009, China blocks almost all UN Security Council initiatives aimed at stemming corruption, oppression of minorities and women, sanctions on despotic regimes, etc. The Central Commitee is stronger(and richer) than ever.
China is a champion of 'no strings' investment in myriad bad regimes in Africa and we can't complain because the West did the very same thing with China!
The decision of our leaders to trade with China in hopes of changing it instead of the other way around will eventually be recognized as their biggest political blunder in modern history. Even bigger than abandonning Afghanistan after we expelled the Soviets. Talk about 'blowback'!