If I held China in my hand, I would examine this Oriental jewel with some suspicion. For what at first sight appeared a trinket of rare value, proves upon closer inspection to have flaw within flaw within flaw. Yet, when it is held up to the light, so few care to see beyond the polished surface.
China is an excellent case study for examining how freedom interacts with economic action at a collective scale. We have been told, repeatedly, that freedom is not required in economic growth: a Faustian pact between party and people replaces the social contract of democracy. Freedom from fear is not a principle in this polity.
China has grown at a dizzying rate, with huge rates of investment and a radical transition to a market economy. Despite the leading role of the communist party, the law, economy and society have all been restructured along capitalist lines. The price mechanism and market investments have been allowed space to develop. But the boundaries of this space are arbitrarily carved out and prone to political direction via state control of financal investment at national and municipal level. China, as an economy, lacks the true ingredient of a free market: individuals and companies investing or spending according to their own needs. The free market has been replaced by the guiding hand of a technocracy, self-confident in their ability to read the economy and adjust lending requirements as appropriate.
Planning may have been streamlined but it has not gone away. In such a system, planning decisions are magnified by an authoritarian regime. Bad decisions cannot be corrected via checks and balances or reversed at the ballot box. Malinvestment and bubbles are distorting waves that prevent any true understanding of the country's economic growth.
China is a test of how far authoritarian planning will disfigure and harm itself. Some argue that the country has the ability to shift from an exporting to a consumption model, while others view the political economy of party and planning as too difficult to reform. This political economy is increasingly febrile, and even China's leaders have started to compensate for this potential weakness.
The nationalist rhetoric and sabre rattling are compensations for a leadership that rests on two legs: foursquare for prosperity and national pride. One leg is crumbling under the auspices of the bubble, the other takes root as a new skin for the old men from another country. Bubbles burst and when they have no safety valve: blood beckons.