The second is the end of the "peace dividend." America's political and moral influence peaked shortly after the Cold War. It effectively cut military spending by strengthening and expanding its alliances. As it pursued globalization, the United States achieved sustainable economic expansion. It also enjoyed unparalleled political prestige and soft power as the winner of the Cold War and the only superpower in the world. With the worsening of the international situation and the rise of emerging powers, the United States has found it difficult to maintain this position in recent years. The war in Iraq, in particular, has severely undermined its soft power.

The third is the increasing costs of U.S. hegemony. Before the September 11 terrorist attacks in 2001, the United States maintained its hegemony mainly by ensuring the unity of the international market and the stability of the international order. Today, however, it has to pay a heavy cost for homeland security. While deploying more troops and intelligence agents overseas and sponsoring pro-U.S. regimes, the United States has strengthened monitoring of its citizens at the expense of their highly valued freedoms.

Last but not least, potential risks deriving from Obama's election victory may prevent him from working effectively in the White House. With its firm grip on power, the Democratic Party could be tempted to go to extremes on some policies, putting Obama in an awkward situation. The high expectations of the general public are another double-edged sword. Obama's victory was partly attributed to support from idealists and minority groups. They may become disillusioned because Obama, in essence, is a pragmatic politician.

What's ahead?

Obama has something in common with epoch-making presidents such as Franklin Roosevelt, Ronald Reagan and Abraham Lincoln. For example, he was elected at a time when the United States is mired in crises and the Americans are looking forward to reform. At the same time, he faces distinct challenges and additional burdens. Presumably, he might introduce the following changes:

Addressing the financial crisis will be at the top of Obama's domestic agenda. The economy is the first item listed in the "issues" menu on Obama's campaign website. Obama supports George W. Bush's rescue plan and is in favor of government intervention in the economy. Although his long-term economic policy is still unclear, he has promised to raise taxes on high-income people to subsidize low-income people as well as fund health care and other social services. Efforts to enhance the government's role in economic intervention and wealth redistribution should be the focus of the Obama administration's economic and social reforms.

In terms of foreign policy, Obama may make bigger changes than expected. Some critics believe that he might choose foreign policy, which was overshadowed by economic issues during the election campaign, as the first area for change. Unlike complex economic and social problems, diplomatic affairs can be handled without much resistance at home. Also, progress in this regard could help boost the president's approval ratings. Since he has been considered to be inexperienced, especially in foreign affairs, Obama needs to prove his leadership ability with achievements on the diplomatic front.

One of the most pressing issues is to rebuild America's soft power and rehabilitate its tainted moral image. Obama could strengthen coordination with Europe and Japan. He might change America's hard-line policy on international environmental cooperation to accept the Kyoto Protocol. He could also return to the UN platform and embrace multilateral cooperation.

Obama has vowed to withdraw U.S. troops from Iraq in 16 months. If he could not honor his promise, he would come up with a compromise plan. The United States might shift the focus of its antiterrorism campaign from Iraq to Afghanistan to concentrate on combating Osama bin Laden and his Al Qaeda. Obama would strengthen international cooperation to address the U.S. financial crisis. He also needs to cope with the North Korean nuclear issue and Iranian nuclear issue and stabilize relations between the United States and Russia. In a nutshell, the Obama administration should be more flexible and moderate than the Republicans when it comes to foreign policy.

Relations between China and the United States are projected to remain stable under the Obama administration. China-U.S. relations have matured thanks to their deepening economic interdependence, increasing social exchanges and improved intergovernmental communication. The power transition in the United States is unlikely to affect their bilateral relations. Given the myriad of problems he faces at home and abroad, Obama needs China badly. Despite his occasional criticisms of China during the election campaign, Obama recognized China's importance in an article published in September by the American Chamber of Commerce in China. In the article, he underlined the goal of working together with China, demonstrating his positive stance.

The next U.S. president may spark fresh disputes with China as well. Obama holds different views from Bush on at least three issues-trade, human rights and climate change. Trade, in particular, calls for close attention, as radical Democrats may wreak havoc on the two countries' trade relations. Trade frictions between China and the United States are bound to increase under the Obama administration. Overall stability and increasing squabbles will characterize China-U.S. relations over the next few years.

The author is deputy dean of the School of International Studies, Renmin University of China