China isn't monolithic anymore - i.e., all communist - like the old Soviet Union was. It is schizophrenic. They appear to have given the green light to nearly unregulated capitalism in large portions of the country (if you can call it capitalism when it requires permission). Marxist-leaning academicians call it "state socialism" or "state capitalism" (go figure!) China makes use of the combination of some stolen technology/patents/copyrights, very low production costs (especially wages), and a global market. Everything depends on selling into the Western consumer markets thanks to lower prices than these other countries can match. But, as that brings money in, they are faced with higher costs of production (due to increasing internal competition for all of the needed resources, including labor). The day laborer, the cheapest factory worker, has to be imported to the manufacturing cities from more and more remote regions. The cost of factory space is rapidly increasing. And the increasing need for highly educated workers (engineers, for example) becomes a great cost. This puts them in a historical internal economic race. They must form their own large middle-class consumer market BEFORE their increasing costs of production reduce the demand for exported goods too far. If they don't do this, they will lose the huge export revenues before those revenues can be replaced with internal sales. That will lead to something worse than a credit collapse - it will be a "productivity" collapse (I just made that name up, but what I'm saying is that the collapse will have deeper roots than financial market corrrections). Even if they grow a middle class that can purchase enough of what they produce, they run into a key rule that applies to all nations. The portion of the gross national product consumed by the government must be less than the required profit-margins/surplus-capital needed to sustain production (much less to grow it). And globalism's world market will become competitors instead of just consumers. (The government can hinder imports, but that just builds in weaknesses and postpones the inevitable.) The broader theme is individualism and liberty. Those will determine the long-term prospects - and those will look like Anthem. 1984 is what it will look like along the way - for some period. Tyranny will use any technology available to further its ends, but that technology can only exist in the absence of liberty for so long before deteriorating. It is the timing that is an issue. And the more socialist the Western markets are (50% socialist - 50% free?), the less long-term competition for Chinese products. In the long run, socialism has an ideological strain that eats the generation that spawned it. The governing forces end up going one of two ways: either going totally corrupt and the "good of the people" becomes just a front. Or it destroys itself in fires of moral outrage over who is the most politically correct (it gets nutty - disconnected too far from reason to continue functioning - think of Po Pot's regime or North Korea). I don't quite know how to factor in corruption. Some portion of the Chinese factories is owned by high ranking party members and high ranking military people. It is like there are three players in the marketplace: capitalism, socialism, and corruption (which hides behind the pretense of free enterprise or behind the pretense of an altruistic collectivist structure).
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