China's state capitalism
The Wall Street Journal takes an in depth look at how "state capitalism" works in China:
'Central to China's approach are policies that champion state-owned firms and other so-called national champions, seek aggressively to obtain advanced technology, and manage its exchange rate to benefit exporters. It leverages state control of the financial system to channel low-cost capital to domestic industriesâ??and to resource-rich foreign nations whose oil and minerals China needs to maintain rapid growth.China's policies are partly a product of its unique status: a developing country that is also a rising superpower. Its leaders don't assume the market is preeminent. Rather, they see state power as essential to maintaining stability and growth, and thereby ensuring continued Communist Party rule.
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The article notes that Japan pursued a similar strategy during its economic ascendancy, so it's too soon to worry that the sky is falling. If Chinese growth stalls (and you have to imagine at some point it will), they may be forced to rethink some elements of "state capitalism."
(AP Photo)