Secretary of State Hillary Clinton invoked a heated response from Chinese officials last Friday. Clinton stated that America might step in to referee a long-simmering territorial dispute between China and its smaller neighbors in the South China Sea.

Speaking at a forum of Southeast Asian countries in Vietnam, Mrs. Clinton surprised Beijing by saying America had a “national interest” in mediating the dispute of the Spratly Islands between China, Vietnam, the Philippines, Brunei, Malaysia, Taiwan and Indonesia.

The islands and surrounding sea floor supposedly contain large oil and gas deposits.

Clinton’s assertion may have evoked an abnormally heated response due to the fact that 20 U.S. and South Korean warships and 200 aircraft are currently conducting war games in seas between Korea and China.

Although the war games are officially aimed at sending a message to North Korea, many in China feel that they are really intended to signal to China that America is still the dominant naval power in the region.

One Chinese academic says that America is playing the last card it has to stay relevant to Asian affairs—military supremacy. America can no longer compete with China economically, so it is getting desperate to maintain its influence.

State-run news media described Mrs. Clinton’s speech as “an attack” and an effort to limit Chinese power. “America hopes to contain a China with growing military capabilities,” said the state-owned People’s Daily newspaper.

China’s Foreign Minister Yang Jiechi was more direct, specifically warning the United States against interfering in the dispute. Earlier this year, China told American officials that it wouldn’t tolerate U.S. meddling in an area it considered a “core interest.”

For now, America holds the most powerful military cards. And for now, America’s aircraft carriers allow it to go where it wants.

But as America’s allies in the region surely recognize, when a country’s economy collapses, militaries often get slashed first. When the collapse is dramatic enough that living standards are severely compromised (as is occurring in America now), military budgets could face extreme cutbacks.

U.S. power projection in the Pacific has peaked. And American friends and foes alike know it—even if it is still not recognized by the American public.