[kabar]

In regard to China's political system, foreign investors agree that China's one-party government is a hell of a lot more effective and efficient in enacting crucial economic reforms than any other Third World republic's usually gridlock-plagued legislature. This is the reason foreign investors pour $50 bil. into China every year, while Third World republics can't seem to get their act together and mostly seem to require IMF bailouts.

I don't share your sanguine evaluation of the Communist regime's ability to enact economic reforms even compard to third world regimes. China has indeed benefited from foreign investment, in fact, they have the 4th highest foreign debt in the world. The Economist rates China 31st in Global competitiveness with the US being number 1. In terms of the innovation index, China is not among the top 44; information and communications technology index not rated among the top 44; total expenditures on R&D as a percent of GDP-China is 26th. The US is 5th

It remains to be seen how China's polity will evolve as it becomes more prosperous and more dependent on global trade. Time is on our side as long as we contain their military. There will be more Tian'anmen Squares in the future. Communist governments have not proven to be havens or bastions of capitalism.

[taiwansemi]

I think it's fair to say that, for whatever reason, foreign investors tend not to invest in Third World republics but in China instead. This blows a huge hole in the argument that democracy is a prerequisite for a prosperous economy. Third World republics are generally basketcases with dysfunctional legislatures and societies that require one IMF bailout after another. China today is following the one-party path of development that most of E. Asia used before with unquestioned success. After 50 years of democracy, India hasn't become a mirror image of America yet, while one-party Japan, Korea, Singapore, etc. all became First World countries.

Japan, Korea, etc. didn't score high in competitiveness or innovation several decades ago either. For that matter, America didn't score high about 100 years ago either. As manufacturing continues to flow into China, however, it too will gradually improve over time. Microsoft's Steve Ballmer recently said China's low wages aren't its primary threat but the fact it graduates more computer science graduates than any other country. In America itself, the next generation of America's own science college professors will be Chinese and Indian.

I read recently that China actually has very low foreign debt because, among other things, China's currency is non-covertible so foreigners cannot buy Chinese debt denominated in the yuan. In any case, China's got enough money to spare to loan America money to fund its budget deficits.

History is fluid. Americans think America has been #1 since the beginning of time, but 100 years ago, America wasn't even considered one of the great powers of its time. The UK, Germany, Austria-Hungary, Russia, and France were all the leading powers, while America and Japan were the "emerging" economies, just like how China is considered today. Over time in history, countries can play musical chairs. One thing is for sure: no country can maintain its dominance forever, especially one burdened with neverending, empire-killing war debts.