1. China’s rise is marginalizing American influence in Asia.
2. China’s massive foreign exchange reserves give it huge clout.
3. The Communist Party has the Internet under control.
4. China’s regime has bought off the middle class.
5. China’s rapid economic growth shows no signs of slowing.
The pace of growth is already cooling somewhat — from above 10.3 percent in 2010 to 9.2 percent last year — and the downward shift will accelerate in future years.
Like South Korea and Taiwan, which achieved stellar growth for three decades but have slowed gradually since the 1990s, the Chinese economy will encounter strong headwinds. The population is aging; citizens 60 and older accounted for 12.5 percent of the population in 2010 and are projected to reach 17 percent in 2020. This will reduce savings and the supply of workers, and raise the costs of pensions and health care. If China wants to keep its high growth rate, it must graduate to making Chinese-designed high-tech and high-value-added products. It will need more innovation, which demands less government control and more intellectual freedom.
Most critically, the investment-driven and state-led economic model responsible for China’s rapid growth must give way to a more efficient, consumption-driven, market-oriented model. Such a shift will not be possible without downsizing the state and making the party accountable to the Chinese people.
http://www.washingtonpost.com/opinions/five-myths-about-chinas-power/2012/01/20/gIQA3CFSTQ_story.html