The Jan. 11 missile defense test announced by China has potentially profound implications for U.S. security interests. This test confronts the United States with its most perplexing missile defense challenge in a generation, especially if China chooses to apply this technology to defending against long-range missiles. Such a step would force the United States to take offsetting steps to protect the credibility of its strategic nuclear deterrent, which in turn could seriously threaten nuclear arms reductions with Russia and encourage others to do the same. After the end of the Cold War, U.S. missile defense planning and policy has tacitly assumed the United States would have strategic missile defenses and others largely would not. Often America has brushed aside complaints from Russia and China about the challenge that unconstrained U.S. strategic missile defenses could pose to their nuclear deterrents, and their potential need for offensive responses. Indeed, the blue-ribbon Congressional Commission on the Strategic Posture of the United States noted in its report to Congress last year that "China may already be increasing the size of its ICBM force in response to ... U.S. missile defense." This test, while posing no near-term threat, now challenges that assumption. If China deploys even a thin strategic missile defense system, the United States could be forced to respond with greater offensive measures. Some of these measures, such as adding more nuclear warheads to nuclear missiles, could hamstring our ability to negotiate reductions in U.S.-Russian strategic nuclear forces. Most likely, China intended to demonstrate its prowess in a key defense technology important for both missile defense and anti-satellite applications, sending a loud message that China is entering the "big league" of advanced military technology. This test also signals to the United States that its nuclear forces could face a missile defense challenge it hadn't counted on, and to which it would need to respond. Recent Chinese anxieties over U.S. missile defenses can be better understood in this context. China is at least preserving the option to sow some doubt in Asia about U.S. strategic nuclear forces, which could in turn embolden China's Asian policy. This would likely drive Japan's security anxieties much higher, potentially tempting Japan to consider developing its own nuclear arsenal, which could trigger a dangerous cascade of further nuclear proliferation. There are several steps the United States should take. America must hedge against a possible substantial Chinese deployment of missile defenses to preserve the credibility of its strategic nuclear deterrent. This is not just an issue for Washington; more than 30 allies rely upon the credibility of the U.S. nuclear umbrella for their security. Preserving the continued credibility of the U.S. strategic nuclear deterrent must be a prime objective, though we need not start adding warheads to our arsenal as we did 40 years ago in response to Soviet missile defenses. Such a reaction would compel Russia to do the same, weaken world security, bring to a screeching halt the START nuclear arms control process and reignite the nuclear arms race if badly mishandled by the major players. Instead, the U.S. can ensure that the countermeasure technologies to missile defenses deployed on its nuclear missiles are sufficient to overcome possible Chinese defenses and augment if necessary. The U.S. should also negotiate verifiable limits on strategic defenses that would prevent China from deploying levels of defenses sufficient to threaten the credibility of the U.S. nuclear deterrent. Such restrictions must not impede the U.S. ability to deploy currently planned, limited levels of such defenses against regimes such as North Korea and Iran. Some in the U.S. oppose any limits on missile defense. They may hope the U.S. would deploy more missile defenses aimed at defending against an all-out Chinese or Russian attack, though even the Bush administration did not move in this direction. The Congressional Commission rightly points out that such "[U.S.] defenses sufficient to sow doubts in Moscow or Beijing about the viability of their deterrents could lead them to take actions [increasing their offensive forces] that increase the threat to the United States and its allies." We need give up nothing from current plans to adopt prudent defensive limitations. Finally, we should engage China in a dialogue about its intentions on missile defense, along with Russia, which has its own reasons to be concerned about China's foray into missile defense. So much depends on what China does, or doesn't, do next. China's growing military and economic prowess cannot be ignored. Unlike some others, China has the economic and technological ability to deploy a relatively robust missile defense network over time, and China's next steps will have great influence on U.S. responses. Only wise and considered U.S. and Chinese actions in this new chapter of the strategic era will make continued strategic stability, and further nuclear weapon reductions, possible. By Bruce MacDonald, a strategic security specialist at the U.S. Institute of Peace and former senior director of the Congressional Commission on the Strategic Posture of the United States. He served on the U.S. START delegation in Geneva.