Margaret Thatcher arrived in Beijing famed for her handbag diplomacy.

She departed stumbling down the steps of the Great Hall of the People with her Iron Lady image dented. When it came to Hong Kong, she was stunned by the uncompromising, even “abrasive,” line adopted by China’s Paramount Leader Deng Xiaoping.

In September 1982, the then British Prime Minister thought she could cut a deal to retain the last vestige of empire. She left visibly shaken.

For once, “this Lady was for turning,” despite toppling General Galtieri’s junta abroad and later breaking the trade unions at home. Just months earlier, a UK expeditionary force had defeated Argentinian troops to retake the Falkland Islands in the South Atlantic.

“He [Deng] said that the Chinese could walk in and take Hong Kong back later today if they wanted to,” Thatcher said in her memoirs, The Downing Street Years, which were published in 1993. “I retorted that they could indeed do so; I could not stop them. But this would bring about Hong Kong’s collapse. The world would then see what followed a change from British to Chinese rule.”

Eventually, a joint declaration was signed in 1984 and the “One Country, Two Systems” model was put in place before the handover three years later. The state-run Global Times reported that it was inevitable and prophesied China’s emergence on the international stage. The dragon was awakening.

“Thatcher managed to understand that China is not Argentina and Hong Kong is not the Falklands,” the tabloid owned by the People’s Daily, the official organ of the ruling Communist Party, recalled. “The spirit China brings to international politics is expanding.”

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Fast forward three decades and the country’s amazing economic rise has been mirrored by a more hard-boiled foreign policy after the “century of humiliation.”

With wealth comes responsibility and at times President Xi Jinping’s diplomatic dance has resembled a ballroom blitz rather than a bossa nova.

Confrontation with the United States over trade is only matched by a growing military presence in the South China Sea and beyond. Flashpoints also exist amid rising tensions in Hong Kong over pro-democracy protests and human rights issues surrounding the Muslim detention camps in the Xinjiang region.

“What does China want? Economic supremacy,” Jonathan D T Ward, the founder of the consultancy Atlas Organization, and the author of China’s Vision of Victory, wrote.

“China can become, in many of our lifetimes, a global power ‘second to none’ … The Chinese Communist Party’s strategy is intended to deliver the creation of a new world system with China at its center – and the de facto end of an American-led world,” he continued.

“The United States and other democratic powers must strengthen connectivity, and economic, military, technological, education, and innovation potential, in ways which enable us to build ourselves and build each other, while closing China off from access to the things that pave its way to power,” Ward added.

“The rise of China reminds us of something both very new and very old: the age of empire is not over,” he pointed out in China’s Vision of Victory, which was published earlier this year.

While his “age of empire” analogy is debatable, Beijing’s global ambitions are not. The US$1 trillion Belt and Road Initiative is a testament to China’s economic might and global reach.

Epic in scale, these ‘New Silk Road’ superhighways will connect China with 70 countries and 4.4 billion people across Asia, Africa, the Middle East and Europe in a maze of multi-billion-dollar infrastructure projects, including a web of digital links.

High-tech strands

At the heart of the project will be high-tech strands to showcase, and expand the nation’s prowess. They will include 5G, AI, or artificial intelligence, and the BeiDou Navigation Satellite System, the country’s answer to GPS.

Spare capacity from state-owned conglomerates and innovation from private sector juggernauts will be poured into overseas projects, symbols of the country’s economic and research rejuvenation.

“The Digital Silk Road has become the focal point of the BRI as controlling the flow of data becomes increasingly important for shifting the balance of geopolitical power in China’s favor,” Andrew Kitson, the head of technology research, and Kenny Liew, a technology analyst at Fitch Solutions, wrote in a report earlier this year.

Yet the program’s speed and scope are staggering. Beijing has not only exported its technical skills for building vast infrastructure developments but also its single party state-run model.

Propaganda and projects appear to run on the same tracks like the new rail networks sprouting up in developing African and Asia nations.

So how will this play out? Yan Xuetong, the dean of the Institute of International Relations at Tsinghua University, outlined a complex scenario in his seminal paper, The Age of Uneasy Peace:

“China’s ambitions for the coming years are much narrower than many in the Western foreign policy establishment tend to assume. Rather than unseating the United States as the world’s premier superpower, Chinese foreign policy in the coming decade will largely focus on maintaining the conditions necessary for the country’s continued economic growth.

“Both sides will build up their militaries but remain careful to manage tensions before they boil over into outright conflict. And rather than vie for global supremacy through opposing alliances, Beijing and Washington will largely carry out their competition in the economic and technological realms.

“At the same time, US-Chinese bipolarity will likely spell the end of sustained multilateralism outside strictly economic realms, as the combination of nationalist populism in the West and China’s commitment to national sovereignty will leave little space for the kind of political integration and norm-setting that was once the hallmark of liberal internationalism.”

Part of that assessment can be seen through the prism of the state-run media, complete with censors, making sure the Communist Party line is articulated in sound bites.

A more assertive foreign policy is also pushed by the China Global Television Network, or CGTN, through its worldwide bureaus, the Xinhua news agency and the rapidly expanding global edition of China Daily. The “China Dream” is packaged and repackaged into soft power cultural morsels.

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“The Middle Kingdom projects its power and secures its national interests in three ways: exercising might, spending money and expressing its own mindset. Each of these relates to one another, and each has somewhat inhibited China’s pursuit of international order in its own vision,” Yu Jie, of the Asia-Pacific program at Chatham House in London, said.

“In terms of might, China’s sheer size and self-perception of its own interests will inevitably lead to expectations that the rules of international politics will change around China, even without President Xi in power,” she continued.

“Deng Xiaoping’s approach – to ‘keep a low profile’ and ‘hide capability’ – is being replaced by Xi’s much more proactive approach, which seeks to promote China’s core interests more forcefully while asserting its ‘rightful’ place in the global order. Whether China’s bureaucracy and government are yet fully equipped with the skills to meet the new challenges remains to be seen,” Yu added.

More than two decades earlier, the late Margaret Thatcher expressed sorry and hope after the 1997 handover of Hong Kong. She believed that the freewheeling and vibrant city would act as a catalyst for change. It simply has not happened.

”The Chinese belief that the benefits of a liberal economic system can be had without a liberal political system seems to be false in the long term,’’ she said.

Twenty years later, political control in China has been refined and tighten even further with the aid of the Great Firewall, which suppresses online discussion. Not even handbag diplomacy will alter that situation any time soon.