For all intents and purposes, the U.S. is financially interdependant with China and the U.S. is historically interdependant with Europe. So, in the end all these countries all need each other for various reasons. I don't think it is actually useful to think of China and the U.S. in competition with each other. Just like it is not useful to think of the European Union in competition with the U.S.
So, if we apply this to what is happening in the Flat world of Cyberspace, the biggest threats likely are not national threats but of terrorist and organize crime groups. It is true that Governments(all of them) can implicitly or explicitly allow criminal or terrorist elements to do things that the whole world would frown upon but that is what nations tend to do.
So, to actually make sense of what is happening in cyberspace one has to remember that PCs were never designed originally for the internet. No. The internet was an afterthought for PCs and for that matter all computers. Had PCs and other computers and software been designed around the internet you would see a different result. So instead what we have is a patchwork software system with "back doors" originally put in by programmers for easier "debugging" of software when the software was originally written being used for other purposes by criminals and terrorists. What was once "when writing an original software program" a useful debugging tool for programmers more and more gets misused by criminals to harm people through the theft of their information worldwide. An even bigger problem is the theft of monies from Banking institutions worldwide through the internet. However, banks buy insurance from companies like AIG to protect against this kind of thing. However, it is important to remember that the actual theft from U.S. banks and Companies over the internet has reached 1 trillion dollars a year.
Understanding this you can see why the U.S. Government is getting more and more involved in Cyber space to police all these problems. And likewise we see China starting to send to jail members of hacking groups in their country as well.
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