Of far greater concern to chief executives than beltway brouhahas are the fragile state of China's economy and the ability of its leaders to manage the transition from Communist central planning to a market-oriented system. That daunting task, which has humbled Russia, requires growth fast enough to absorb tens of millions of Chinese who are losing their jobs as grossly inefficient state-owned enterprises are allowed to wither or even go bankrupt. As it is, an estimated 150 million Chinese are looking for work. And China's torrid economic expansion, which had averaged between 7 percent and 8 percent annually for two decades, is slowing as a result of Asia's overall economic woes and the dropoff in foreign investment. Indeed, if China had a full market economy, it might have collapsed long ago.
Chinese consumers are clearly jittery.
Apartment and office blocks stand empty. China has weathered the storm thanks in part to remaining economic controls. The Chinese currency, for example, is not fully convertible, which helped insulate the economy from Asia's financial crisis. The government also compensates for slack consumer demand by spending on big infrastructure projects like the Three Gorges Dam. As a result, Lardy and other experts believe that China can achieve at least 6 percent growth this year, still the fastest of any major economy.