Beginning in 1979, however, China embarked on reforms that changed the face of the country. These began with the most massive agricultural reform in human history, reforms which effectively ended food poverty in China in five years. After that, policies that welcomed long-term direct investment, that fostered township and village enterprises, joint ventures and private enterprises, put into place a vast and continuing improvement in human living standards. Unlike Russia, China made the mistake of the Great Leap Forward only once. And it never liberalized its capital markets or its capital account, for fear that such actions would prove a fatal lure, unleashing a cycle of boom and bust that a poor nation cannot tolerate for long.
China is today no democracy.
It is not politically free. But one must also acknowledge that the Chinese government has delivered on the essential economic demands of the Chinese people, namely food and housing, and that an alternative regime which did not deliver on these needs would not have been able to deliver internal peace, democracy or human rights either. To begin with we can, recognize that globalized finance makes the Federal Reserve central banker to much of the developing world. Interest rate cuts last fall had an important stabilizing effect on global markets. There is a strong case for lower interest rates, but we must also remember that that the long term arrives when such short term policies run out of steam.