Well, who saw that one coming? China blasts an old weather satellite with an MRBM. There's a lot to say about this, but here's one of the most important things. One of the classic examples of cooperation in an adversarial relationship is the understanding between the US and the Soviet Union, and then everyone else, that nobody would try to extend their sovereignty into low earth-orbit. John Lewis Gaddis devoted a whole chapter of The Long Peace to this idea. Originally, it wasn't clear that satellites could actually orbit without the permission of states they passed over. But, even though it was soon obvious how useful they would be for spying, the superpowers tacitly agreed to tolerate each other's sats.
Partly this was because it was clear that, without a cut-off point, it would be extremely annoying to get anything done in space. Partly it was because satellite reconnaissance was seen as a useful precaution against surprise attack, and hence a stabilising influence on superpower politics. So, although both sides researched the possibilities of shooting down satellites, and both the US and USSR carried out successful tests, they quietly agreed to put up with the other side's birds in time of peace. (There's a good post here at RussianForces.org about their ASAT program.)
The Outer Space Treaty of 1967 added to, but was really just built on top of, this tacit understanding. It's important to understand that US (or anyone else's) complaining about the Chinese is not an argument that "We own space", or rather, it isn't one with that particular "we". The existing position is that anyone who can get to space can use space, and this includes a lot of military or related activity. But all agree not to interfere with each other's satellites. This is actually quite a good solution.
Many of the things civilians want to do in space are indistinguishable from things the military would like to do in space - the telecoms industry's activities up there are not very different from military signals operations up there, scientists and cartographers carrying out photographic surveys and some forms of Earth-monitoring are not very different from military intelligence personnel doing photo-reconnaissance, GPS and GLONASS are used by all kinds of people.
This way, all the users are catered for with a degree of security. "We" own space, where the "we" is the community of space users. It's rather like the high seas. Anyone trying to destroy satellites is effectively enclosing the commons, especially given the debris problem. Whichever way you cut it, it's an act aimed at changing the status quo in space, and not in a direction I think anyone needs.
It's also worrying exactly how it was done. The Chinese seem to have used a bloody big rocket fired directly into its path, like a huge SAM. They don't seem to have told anyone beforehand. Now, firing a bloody big rocket on a ballistic trajectory is an act that can be dangerous. There are longstanding arrangements under which any state that is going to let off a bloody big rocket tells everyone else first. This is because if it goes high enough, it will be detected by early-warning radars looking for ballistic missiles. (The launch will also show up on the US's Defence Support Program infrared satellites.) A rocket that can put a satellite into orbit can also be at least an MRBM.
That's not good. In this case the launcher wasn't big enough to be an ICBM, but it would have been big enough to target India or Japan or parts of Russia. I think all can agree that unacknowledged ballistic missile tests are not a boon to humanity.
Why would China want such a capability? It's well known that the US armed forces love satellites, for intelligence, communications, weather forecasting, and navigation. A lot of these are in low earth-orbit, like the one the Chinese rocket smashed. There's clearly a show of strength going on here, but the foxing question is why they found it necessary to do it in the way they did. There's no point signalling a capability secretly. It's impossible to do something in LEO secretly, anyway, as all kinds of governments and research organisations from many countries observe it routinely and their data is available on the Net, which is how the news of the hit got out.
The Americans are presumably being put on notice that their LEO constellation can be held in jeopardy. There's another point, though - satellites are a field in which new countries are rapidly gaining capabilities. Taiwan, for example, rents a share in an Israeli satellite. Nigeria is working on one. It makes sense, I suppose, for the Chinese to keep ahead of states nearer to being peers than the US.
It's also worth keeping in mind that the UK is one of few comparable states that has no satellite capability of its own. You might remember this post and the difference of opinion on Iraq between the countries without satellites, and France, which has its own. Surrey University and Astrium in Stevenage are good at making them. Arianespace are pretty good at launching any satellite someone will pay for.