In terms of Gross Domestic Product, China is already heading towards a future where its GDP will match the GDP of America. If China's real GDP grows by an average of 7% while the US GDP grows by 3%, then China's economy will be as large as the US in 20 years, i.e. 2028.However, in terms of economic structure, the growth model that will propel China into that scenario will be markedly different from the growth model that has driven China's growth rate in the last 15 years. With the global economy deleveraging and America/Europe in a synchronised recession, which foreign market will be strong enough to buy Chinese consumer products?
Invariably, China needs to make a quantum leap from a state capitalist, export-oriented economy into an entrepreneur-driven economy. In order to achieve that within the next 5 to 10 years, Chinese policymakers should (1) liberalise price controls over fuel and utilities, (2) allow freedom of political dissent, (3) establish democratic freedoms such as a two-party parliamentary system and (4) encourage intellectual discourse and religious freedom without any censorship.
If Chinese policymakers are serious enough about supercharging their economy, they need to ask themselves what type of economic and social environment is conducive to nurture and groom the likes of Bill Gates, the Steve Jobs, the Warren Buffets and the Thomas Edisons of this world?
