[A]..mix of political control and market reform has yielded huge benefits. China\u2019s rise over the past two decades has been more impressive than any burst of economic development ever. Annual economic growth has averaged 10% a year and 440m Chinese have lifted themselves out of poverty\u201d\u201dthe biggest reduction of poverty in history.<\/p>\n
Yet for China\u2019s rise to continue, the model cannot remain the same. That\u2019s because China, and the world, are changing.<\/p>\n
China is weathering the global crisis well. But to sustain a high growth rate, the economy needs to shift away from investment and exports towards domestic consumption. That transition depends on a fairer division of the spoils of growth. At present, China\u2019s banks shovel workers\u2019 savings into state-owned enterprises, depriving workers of spending power and private companies of capital. As a result, just when some of the other ingredients of China\u2019s boom, such as cheap land and labour, are becoming scarcer, the government is wasting capital on a vast scale. Freeing up the financial system would give consumers more spending power and improve the allocation of capital.<\/p>\n