I hope (and bet) you're right.
It's a sure thing, actually. Heck, I'm not an economist or even a trader (I did spend 20 years on Wall Street, but that was a system's programmer.Now I'm working on my PhD in history), but it should be obvious to even a democrat what's going on here.
China's sudden transformation into a "capitalist" country which retains a "communist" government is nothing of the sort. The words "communist" and "economy" don't even belong in the same sentence. All this business being carried on is the result of politics; the Chinese saw what glastnost did to Russia and are determined to not let it happen to them. In that case, what happened is that the Russians actually did try to modernize and free up their markets -- they just couldn't control a process that took off like a runaway train (human nature took over and, according to Mao, "there is no such thing as human nature").
That led to Gorbechev being shown the door, the fall of the Berlin Wall, and Yeltsin getting his fifteen minutes of fame by standing on a tank outside the Kremlin.
The Chinese government KNOWS in it's heart of hearts that communism doesn't work, but it cannot come out and say so because of the chaos that would ensue (see Russia). So, the idea is to:
1. Modernize the Chinese economy at Western expense by allowing foreign investment (letting the barberians do the work for them)and then keeping that money at home by barring certain key markets to those same foreigners, or hedging them in with rigid regulations (i.e. heavy bribes for the privlege of getting screwed by the CCCP)
2. Allow the great mass of the population to make some money (it's not a lot in real terms, but a doubling of Chinese wages, etc would appear to people who barely have indoor plumbing that they are getting rich), and
3. Keep the old guard in power. With the people under the illusion that they are being given economic freedom (how free is a free market in which the government gets it's cut and directs every aspect of every tansaction?), which you HOPE will cause them to forget all about POLITICAL freedom. It's simplepolitics; why should you care about political freedom when you're rich, you ungrateful bastards?
It will fail because you cannot have people getting rich without them clamoring for political and legal rights to safeguard that wealth (especially from the government!), and because the whole thing is ultimately a sham which will collpase on it's own when it reaches a critical mass (you can't keep handing out free money to people who will not or cannot pay it back).
The question is not WILL it happen, but WHEN will it happen.