China will, IMHO, remain a one party state but will morph into something more “Acceptable” on the surface, like Singapore. Singapore is actually (In reality) a one party state with no freedom of speech and state controlled media. It’s totalitarian control os more subtle and more financial than in China, but fundamentally they are identical. Yet Singapore is portrayed as, and perceived by the West as a modern democracy.

In fact, Chinese totalitarianism has managed to renew and refresh itself periodically, unlike in Russia and the other SE Asian regimens where family/military dynasties have controlled (Again including Singapore) and stifled creative change.

China will become the major world power over the next quarter century, surpassing the US. The people are very hard working (Most only take a vacation at New Year), very attuned to business and favour saving/investment over instant gratification and needless consumption. Using the technology kindly provided by the West, China will build on this and take a quantum leap forward.

China did all of the US’s manufacturing and kept very little of the value added, most of which accrues to US Corporations and was manifested in the best profit margins ever. This is typical of the short-term myopic thinking which overtook the whole system. There were three related problems with this as a sustainable model. First, many US manufacturing jobs were exported to China to take advantage of the lower labour costs and higher margins. Second, Americans can’t consume if they don’t have work. Third, it would inevitable result in an enormous trade defecit because America doesn’t have much to offer that the world wants to buy, except Boeings and food.

China did its part by recycling all the accumulated green paper into Treasuries, helping to sustain the unsustainable a little longer.

Now, I need help understanding how the inevitable outcomes can be blamed on China.

“Re: Soviet Union. I think the fact that Russia is being run by ex(?)-KGB shows what we can expect.”

Yes, perhaps if Yeltsin hadn’t been hitting the bottle so hard he would have picked a more democratic successor.

But your point is well taken; they are certainly not out of the totalitarian woods yet, and China’s path will be probably be long and circuitous as well.

Re: Soviet Union. I think the fact that Russia is being run by ex(?)-KGB shows what we can expect.

“It’s a mistake to assume monolithic thinking, even though they do a good job of presenting a unified front. China is not culturally or ethnically homogeneous (e.g. Tibet). China’s unification is a 20th century phenomenon. So there are a lot of questions about what happens as prosperity grows and the government relaxes its grip. Balkanization?”

I am not an expert in culture or anthropology, so I may be mistaken, but personally I have never known such a homogenous group of people. I am aware of the ethnic differences, but excluding Xinjiang an Tibet, they all seem to have the same national pride, even superiority. Even the Taiwanese believe they should be / want to be part of mainland China despite our view that they should be kept independent and democratic. They are all Chinese and seem to love their Chineseness.

Yes there are questions as to what will happen if the government relaxes its grip further, or perhaps more importantly, if they don’t relax it; but Balkanization? I don’t see it. These people are like ants, working together to achieve group and individual goals.

And

“How would people feel if in 15 years the Chinese premier is a former student leader of the Tianamen Square demonstrations?”

I don’t know how they would feel, but I think such a thing is possible. And it is likely that is how China’s one party system will end – from within. Just as the Soviet Union changed when Gorbachev came to power, China will change too when some enlightened person takes power and decides that competition among political parties is beneficial to the country.

I think a likely scenario is for the Chinese Communist Party to eventually split itself into two parties, perhaps with minimal differences in political philosophy at the beginning, but the differences between them growing over time.

Re: Tianamen Sq. Would be an interesting development, but unlikely. The leaders were a bit naive in thinking that some new day was dawning. The new boss is the same as the old boss. Same with Obama fanatics: they will be disappointed.

Interesting statement showing the opposing view to “Blame China?” further back in the Pettis blog back at: http://mpettis.com/2008/12/dani-rodrik-is-letting-the-cat-out-of-the-bag/

“Yesterday’s People’s Daily, for example, reported the following comments by Governor Zhou of the PBoC:

‘Zhou said excessive U.S. consumption and over-reliance on debt were key reasons for the crisis, and he urged the United States to raise its savings rate and reduce its budget and trade deficits.’ “

How would people feel if in 15 years the Chinese premier is a former student leader of the Tianamen Square demonstrations?

And, this phenomenon may take another decade or two (perhaps, a bit more) before we reach that point. Right now, we’re able to attack weak countries, such as Iraq, and be able to force them to feed our troops for the next few years. We do not have the balls to attack Russia (think our response in the context of Georgia), or China. As China and Russia join forces to expand their influence in Europe and expand their market in that region, dollar will collapse with either Euro taking on the new world currency, or perhaps a new currency which includes Europe and China (as China has voiced recently). Russia is rich with minerals but their manufacturing base is not as strong as China, hence they’ll probably have lesser say in the matter. Since dollar has already started to roll down the hill, it will struggle for its stranglehold for a few more years, as I don’t see a cliff roll for the dollar. Anyone who thinks China made a mistake is probably ignoring that China was developing a long term strategy. We may have entered the end game now, after seeing a loss of some pawns and bishops.