It will be funded by John Thornton, former chairman of Goldman Sachs who quit the investment bank in 2003 to teach at Tsinghua University in Beijing. He has committed $2.5m (£¿m, ¡ê1.3m) a year for the next five years.

Brookings says the initiative - the first time it has launched a centre devoted to one country and its first centre outside the US - is aimed at improving the US's understanding of what is seen as the world's foremost emerging power.

"China's rise is the most important geopolitical event of our lifetime," said Mr Thornton during an interview.

"American policymakers need to acquire a much more sophisticated understanding of what is happening in China domestically and why - a grasp that is often lacking in Washington."

Strobe Talbott - the head of Brookings, who was deputy secretary of state during the Clinton administration - said that it would scrutinise China¡¯s growing diplomatic, economic and military power and analyse questions such as the impact of China on global warming.

"It is clear we are living in a post-Kyoto [the climate change agreement] world," said Mr Talbott.

"One of the most pressing questions is how and whether China will become part of the solution to the crunch between its energy needs and global warming. What we need is a Shanghai protocol on climate change."

Mr Talbott said the other two pressing questions about China were how it would manage its political system as it opened up to the world, and what impact China's rise would have on international institutions such as the United Nations and the World Trade Organisation.

Brookings is also planning a centre dedicated to India, the world's other emerging economic superpower.

"The triangular relationship between the US, China and India will shape the world in the coming decades," Mr Talbott said.

He said the evolution in the Bush administration's stance - from branding China a "strategic competitor" in 2001, to calling on it to become a "responsible stakeholder" - was positive.

"China talks of its own 'peaceful rise'," he said. "It is important America engages with China in a way that assists that process."

But the US should be wary of exaggerating China's military clout and painting it into a corner on other disputes, such as its currency overvaluation and growing trade surplus with the US, he said.

Mr Thornton said the approach of Hank Paulson, the US treasury secretary and a former colleague of his at Goldman Sachs, who visited China last month, set a benchmark for how US officials should interact with their Chinese counterparts.