Think of the world as containing three great centers of economic power -- the United States, Europe, and China. Each is intertwined with the other. President Bush is in Europe right now, trying to make amends for America's go-it-alone invasion of Iraq. But what's really upsetting Europe these days is America's go-it-alone economics. And how is Europe responding? By cozying up to China. Let me explain.

The U.S. dollar continues to drop like a slowly sinking stone in the Mediterranean Sea. This makes everything Europe sells us more expensive and everything we sell them less expensive -- meaning that European exports are taking a beating. The main reason why the dollar is sinking is the United States is going deeper into debt, as our budget deficit and trade deficit continue to widen. Dollars are just like IOUs -- worth less and less as debts mount. America's deficits represent a kind of economic unilateralism that worries Europe almost as much as America's unilateral foreign policy.

Here's where China comes in. China's central bank has been lending the United States the lion's share of the money we need to keep living beyond our means. If China stopped lending us all this money, the dollar would fall even further and faster. There might even be a run on the dollar. But how long will the Chinese keep buying drinks for the drunken American sailor? At some point, the Chinese central bank is going to decide it's just too dangerous.

Got it? It's a three-way game of economic chess. Europe needs China to keep lending money to the United States as a way of coping with America's devil-may-care economic policies. Europe also needs China as a huge potential market for European exports. So Europe is courting China these days. This explains why, despite the President's clear objections, Europe is on the way to lifting the arms embargo imposed on China in 1989 after Tiananmen Square.

So don't pay too much attention to the sweet talk this week between Washington and Europe. The real issues are economic, and they necessarily involve the world's third great economic power -- the People's Republic of China.

Robert B. Reich is co-founder of The American Prospect. A version of this column appeared on Marketplace.