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Most libertarians and liberals are completely unprepared for the sort of racism and chauvinism they're likely to see in China. One could argue, though, that the nationalism of the Chinese has played a key role in keeping their country's culture going for so long. Unlike the West, the Chinese are quite confident in their own culture and people.
Just look at what is being done to Africa by the Chinese if you want to see what we're up against. It's a combination of colonization, trade and military intervention that is triangulated nearly perfectly to expand Chinese wealth and territory abroad.
Although I believe "technologies of freedom" will *tend* to reduce nationalistic impulses, I think the question of nationalism in China is mostly governed by other factors. Clearly we've seen quasi-democracies and non-democracies exhibit nationalism. But very recently we've also witnessed the most modern of democracies exhibit fierce nationalism.
China is emerging from 500 years of backward underperformance, and there is a distinct sense of national mission and pride. Whether these sentiments turn into some form of dangerous nationalism is another question. Politicians will use whatever emotions they can muster in times of distress. Nationalism seems to me often to be a form of defensiveness, usually under the perception of threat -- to one's territory or culture or economic security, etc. The most obvious way to stoke nationalist embers in China would be for America, Europe, Japan, or India to mount rhetorical or policy attacks on China. Engagement, while imperfectly influential, is still the best way to build the links and trust that muffle widespread outbreaks. Saving the counterproductive policies of withdrawal or attack from the outside, I don't see mass nationalism flaming out of control.