As an avowed capitalist, and democratist, I find myself wondering if China's hybrid econo-political system might be better than the current American system at efficiently allocating capital and pushing the special interests aside in favor of making the nation richer. Sure, there are hitches in the process, but in China there was evidence that some people would have to wait for economic gratification, while in the U.S. we seem to be dedicated to the principle that almost every special interest group has the right to gratification of the instant variety, unless it's the current handful of hateful groups (currently healthcare administrators and financiers). It would appear to me that China has about 250 million farmworkers who can ultimately be moved right into the industrial/service economy. The plan seems to be to move them off the farm as opportunities present themselves. The current global slowdown is only a minor hitch in the secular move. Some of these 250 million workers will absorb real world growth, but many will be replacing makers of physical goods in Europe and America. With PPP GDP per capita at about 1/8th of ours, we better figure out how to educate our workforce into more high-value jobs, or we won't be able to afford our health care dreams.
Despite its high savings rate, it seemed to me that China wouldn't be like Japan, and that consumer spending could grow faster than GDP as a whole as consumers upgraded from Mao-era privations to modern excess. Ads are appealing to consumerism, with bigger houses, even with golf courses, more BMWs, Audis, and Lexuses. The Chinese seem quite status-conscious. With their country making all the things that we consume in America, from stuff sold at Wal-Mart to designer apparel, the Chinese can buy the unexported goods at unexported prices, stoking the flames of a consumer inferno. It's popular in the US to blame a cheap Chinese currency for our troubles. At first glance one might think there's room for the yuan to run, with a Big Mac at less than $2 and $80 shirts for $15-20, but if the yuan rises, China will just be buying all those raw materials around the globe at cheaper prices, as well as incurring cheaper transportation costs. The increased value of the yuan would only affect local value-added.Getting back to that national asset allocation scheme, the Chinese stimulus seems better than ours in that it really seems to support industrial infrastructure. China does have it's SOEs, the state-owned enterprises that reduce the supply of capital available to real businesses, but that sector seems to be geting smaller there, while it seems to be increasing here. One could look at the Chinese SOE situation and view it as the wind-down of a system that resulted only a short time ago in the state owning all the capital. It's funny that they seem to be moving away from that while we seem to be moving toward it. And they are the ones with experience in that system.