It went from being just another country to a world power in just a few decades. The world's leading manufacturer, it was also one of the great traders. It boded well for peace and stability, some said. The extensive trade ties and business connections reduced the likelihood of future war to all but nil. Until the first shot was fired.

In 1914, the German Empire declared war on two of its largest trading partners: France and Britain. The first modern age of globalization gave way to global war, followed by a global pandemic, a global depression and, finally, another world war.

The lesson? It takes more than a robust economy to make a peaceful nation.

Today, China's economic rise ought to be cold comfort for those laboring to keep Washington and Beijing off a collision course.

A few weeks ago my fellow Examiner columnist, the Cato Institute's Gene Healy, highlighted the work of political scientist Erik Gartzke, the university professor who "found that the statistical correlation between economic freedom and peace is vastly greater than the relationship between representative government and peace."

In other words, Gartzke suggests the more economic freedom the less the propensity for conflict between antagonists. If correct, Gartzke's theory makes the outlook for U.S.-China relations particularly troubling.

The 2011 Index of Economic Freedom recently published by the Wall Street Journal and the Heritage Foundation shows economic freedom continues to drop in the U.S. For the second year in the row, our economy ranks as just "mostly free." Nevertheless, compared to China, the U.S. and our closest allies are doing great.

China may have one of the world's largest economies -- but free it is not. Starting some eight years ago, the People's Republic of China reversed the slow but steady market-oriented reforms inaugurated in late 1978.

Beijing has been slowly distancing itself from economic freedom since then. Today, China ranks 135th in the index's global rankings -- two spots behind earthquake-ravaged Haiti.

China scores no better in the arena of personal freedom. The 2010 Freedom House index of Freedom in the World rates the nation a solid "not free."

By almost any measure the United States and China are two very different nations. While President Obama and Chinese President Hu Jintao played well with the likes of Jackie Chan and Vera Wang at the White House state dinner a few weeks ago, it is foolish to believe their two nations will easily accommodate the interests of the other in the years to come.

Frankly, unless China significantly expands economic and political freedoms, it's difficult to envision how long-term trust and confidence can ever endure between the two nations.

And that situation makes the Obama administration's propensity to downplay the seriousness of military trends in Beijing -- and here in the U.S. -- particularly troubling. China is modernizing its military -- sea, air, land and space -- at breakneck speed. Meanwhile, the Pentagon's modernization program is on life support, even as our aging arsenal hollows out.

Trade alone cannot prevent war. Neither can fancy dinner parties and diplomacy. But, as Thomas Jefferson observed, "the power of making war often prevents it."

Likewise in his farewell address as president, George Washington reminded the American people that "timely disbursements to prepare for danger frequently prevent much greater disbursements to repel it."

Both Jefferson and Washington believed that security is the true foundation of peace, freedom and prosperity. That will always be the case so long as we live in a world where nations do not share the cause of fostering liberty.

Examiner Columnist James Jay Carafano is a senior research fellow for national security at the Heritage Foundation.