“Peaceful Rise” was a response to a school of thought among some Western scholars and policymakers known as the China Threat Theory, which suggested that China’s emergence at the start of the 21st century resembled nothing so much as Germany’s bristling, angry rise at the start of the 20th century. The implication was that conflict, even war, between China and the United States was inevitable just as war between Germany and Britain had been an unavoidable overture to the 20th century. The gathering of scholars in Hainan was part of a carefully planned series of events to test, strengthen and market the Peaceful Rise idea, called heping jueqi in Mandarin, which Zheng and his advisers hoped would counter the negative image of China abroad.

But there was a problem: the Chinese participants couldn’t agree on a translation of “jueqi.” Some thought the word “rise” suggested a China that was too aggressive; others said translating jueqi as “emergence” missed the importance of the change to the world order that China’s new strength represented. The Chinese character for jue , which, like all Chinese figures, is a pictogram of sorts, shows a mountain being pushed out of the way by a rising plate: an earthquake. But “Peaceful Earthquake” was not, of course, what Zheng had in mind.

That debate, which might have seemed little more than a minor etymological detour, was more important than it seemed at the time. As the phrase “Peaceful Rise” began to make its way into international intellectual circles, it often had the opposite effect of what Zheng had hoped. Rather than feeling reassured, China’s critics instead used the slogan to demonstrate China’s untrustworthiness. “How can they claim a peaceful rise while threatening to attack Taiwan?” they pointed out. When Zheng pushed the idea in an article in Foreign Affairs, one op-ed writer in a U.S. newspaper looked right past peaceful to rise: “As Zheng’s essay makes clear, China’s main goal continues to be amassing national power.” U.S. Secretary of Defense Donald Rumsfeld observed in the summer of 2005, “Since no nation threatens China, one must wonder: Why this growing investment? Why these continuing large and expanding arms purchases?”

What was most surprising about this was that the phrase “The Rise of China” had been around for more than a decade. But when Zheng added an essentially positive adjective– peaceful –it made international observers more nervous, not less. Peaceful rise simply wasn’t credible. It ran counter to decades of Western ideas about China and, as a result, felt more like propaganda than honest insight. No one knew what China was thinking or planning, and most press coverage of China still made the country appear dangerous and unstable. Zheng had stumbled into an intractable paradox: because China wasn’t trusted, talking about a “peaceful rise” had the effect of further eroding trust in China. It was like trying to convince people they were, in fact, about to experience a peaceful earthquake. It was bound to leave you branded as untrustworthy at best and crazy at worst.

The paradox Zheng tripped into is an expression of what may be China’s greatest strategic threat–its national image. The country is not, in the short term, likely to be invaded. Its most important strategic issues, challenges that include its economic health and the threat of Taiwanese independence, have at their root a shared connection to China’s national image. Other issues, such as the quality of foreign investment the country attracts, the willingness of other nations to share their latest technology with China and the spread of Chinese firms into international markets, all to some extent feel the chill breeze of a national image that is burdened with mistrust and misunderstanding.

The challenges facing Beijing are immense–everything from urbanizing tens of millions of peasants to caring for hundreds of millions of pensionless retirees must happen on a scale never before seen in human history. But each of those steps will require the world’s support. For one of the few times in its history, this famously inward-looking nation is vulnerable to how it’s seen abroad.

China’s problem is more complex than whether its national image is “good” or “bad.” The larger challenge is that China’s image of herself and others’ image of her are out of alignment. A study to be released this week by the Foreign Policy Centre in the U.K. (and available on their Web site at fpc.org.uk) uses data from the largest survey ever undertaken on what one might call China’s national “brand.” The work was done as part of advertising company Young & Rubicam’s Brand Asset Valuator survey which looks at consumer feelings in more than 30 countries every year. The results point to two strong conclusions. First, despite all the attention being paid to China, its brand is weak: the country is not trusted overseas, still scares off the most sophisticated foreign investors and is seen mostly in terms of its economic prowess. Second, Chinese see themselves far differently than the rest of the world sees them.

This is perhaps no surprise. In the last 30 years China has changed faster than any nation in history. Economic growth has lifted hundreds of millions out of poverty and remade the cultural and political environment of the country. A new generation of optimistic, engaged and worldly Chinese is planning a future that would have been unimaginable in their childhoods. At the same time, the government and the Communist Party have oscillated between moments of cutting-edge ambition and innovation, and old-style ideological control and corruption. Faced with a relentless demand for stability, China’s leaders still often resort to measures that rattle Western onlookers and many liberal Chinese. This combination of new-style change and old-style politics has made it hard for China to project a coherent image.

But the split between how citizens and foreigners see China is still dangerous. Chinese, for instance, consider theirs among the most trustworthy nations on earth; foreigners rate China as among the least trustworthy. That “best/worst” split persists across a number of elements in the new research: Chinese think of themselves as reliable, open and dependable; foreigners see China as unapproachable, a source of low-quality imports. Positive views of the country tend to be associated with China’s blistering economic growth as an (often overly optimistic) opportunity for moneymaking. Outside of specialist circles, there is little understanding of the immense reform challenges the country still faces.

At the same time, Chinese people themselves find their identity in transition as never before. Traditional Chinese values are straining under the pressures of change, urbanization and development. Divorce rates are at record levels, challenging the role of the family as the center of Chinese life. New immigrants to cities are trying to reshape both their economic and their cultural lives. Inside the new skyscrapers of those cities, a fresh generation of Chinese entrepreneurs are pressing ahead with rapid, indigenous technology development. Chinese companies are skipping past simple copying of Western ideas. Text-messaging firm Linktone, for instance, is a global leader in mobile applications; Haier, the Chinese home-electronics firm, is developing household products that may be the world’s most energy efficient. Chinese women, once pulled between the poles of Confucian subservience and Maoist equality, now face blank slates on which to imagine their lives. And China’s vital, compelling contemporary culture is drawing fans from around the world. Three Chinese films are among the 10 highest-grossing foreign films in U.S. history, a list that contains no Indian or Japanese movies.

This divergence of “real China” and “imagined China” is dangerous for both China and the world. Already conflicts with the West have emerged over everything from trade and weapons proliferation to energy. But such differences, difficult as they may be, can usually be resolved given enough time and good will. Differing values, on the other hand, present the sorts of challenges that lead to serious collisions, with historical implications. If China thinks it is the most trustworthy nation on earth and the rest of the world feels exactly the opposite, it’s not too difficult to predict many years of fundamental and dangerous misunderstanding.

The shape of some of the collisions is already easy to discern. In economic terms, for instance, China’s lack of clarity about future demand for natural resources has led firms to charge a “China premium,” tacking on additional costs to cover the risks they incur in building mines, shipping capacity and other infrastructure to serve an unpredictable Chinese market. Similarly, China’s economic expansion overseas has given rise to charges of expansionist or mercantilist aims. In places like Latin America, joy at Chinese demand for raw materials is balanced by worries that cheap Chinese goods will destroy local businesses. China’s support of Venezuela’s Hugo Chávez or its purchase of oil from Sudan and Iran are sometimes cast not as economic necessities but as expressions of a set of national values, principles that rank growth above human rights.

At the same time, the common trope among foreigners that “no one makes money in China” has hurt inflows of investment into the country. China is still hugely attractive to foreign investors, but on a per capita basis it trails may other nations–and it continues to draw a disproportionate share of that investment from Overseas Chinese. The fact is that world-class investors don’t just invest, they also reform and build value–two areas where China’s struggling firms desperately need help.

For all the energy China has put into accumulating financial capital in recent years–it now has nearly $1 trillion in currency reserves–the country must begin to build a similar cache of reputational capital. The idea of some Chinese scholars that “If we become strong we will be liked” is too simplistic. Strength without trust is just dangerous. And power and a healthy national image don’t always go hand in hand–a fact demonstrated every day by the United States, which is both strong and, in many corners, hated.

So what options remain for China’s leaders and its people? How can they help the world see China as it is, contradictions and all, instead of suffering from too-simple and -dangerous analogies that compare China with the U.S.S.R., North Korea or Wilhelmine Germany? Of course the 2008 Olympics is a great hope, a chance to show the world a modern, progressive China. But it’s rare that any one event is enough to transform a nation’s image.

What is missing in China is an easy way to explain what is happening inside the country. Part of this problem is that growth, by definition, means change and contradiction. It is no easy challenge to find a single idea that can contain both the bustling prosperity of Shanghai and the grinding poverty of a place like landlocked Gansu province in western China. How do you explain a country that has both the world’s most aggressive Internet police and some of the planet’s fastest-moving bloggers? And, most challenging of all, how do you explain a political system that holds onto deeply socialist values even as it relies on market forces to reshape the economic landscape of the country?

At a conference in Beijing this past spring, Chinese scholars debated the idea of a “Chinese Dream,” modeled on the American Dream. In a way, this was a good start. After all, the idea of an American Dream has served for decades as a way to capture for Americans and foreigners the energy of modern American life, the possibility of self-invention that marks figures from Horatio Alger to Bill Gates. Similarly, the very newness of modern China–the unceasing change that makes maps of Beijing out of date every two weeks or that will move 100 million peasants to cities in the next decade –is the country’s most salient feature. For as much as China prides itself on an ancient culture, its future will be determined far more by “new” than “old”–from new ideas to solve the conundrums of reform to the new opportunities its citizens are creating and embracing. That idea of invention and reinvention is precisely what makes the country, for both its leaders and its citizens, both exciting and terrifying.

Communicating that simple message, or any message, for that matter, is not easy, as Zheng Bijian’s experience suggests. Part of the problem is that most of the time the way China talks to the world echoes its old past, not its promising present. CCTV9, for instance, the country’s national English-language television station, was started as a way to help project a more “accurate” view of China to the world. But its airwaves are generally filled with old-style propaganda programs that fail to reflect the country’s new energy.

Part of the problem is that when asked to talk about China, Chinese leaders themselves too often project either a starchy public image or fall back on tired old ideas and old language when talking about China’s rise. The government’s plan to open dozens of “Confucius Institutes” around the world–modeled on Germany’s Goethe Institutes–to help explain China to the world is a good idea. But the institutes should draw less from the old teachings of the Sage and more from the vibrant innovation of China’s rising generation of artists, thinkers and politicians. The world knows China is ancient; that information hasn’t helped increase anyone’s understanding of the country.

The appeal of talking about a “new” China, of emphasizing the country’s constant self-invention as the heart of a Chinese “brand,” is that it immediately forces listeners to challenge their long-held ideas about the country. It also helps resolve that inside/outside split between what Chinese and foreigners see when they look at the Middle Kingdom, a place whose freshness is among its most immediately apprehensible traits. Most important, however, the idea of a China that is still inventing itself helps cement the one thing that is both truest about the country and most often forgotten: no one knows what kind of place China will be in 20 years. China is perhaps the most dynamic part of the international order at the moment, and that, to many people, makes it the most frightening. Changing the impression could be China’s biggest challenge.