China's growth prospects and the 'two' Chinas

In the first three decades of the former Soviet Union its rate of urbanisation was approximately the same as it has been in China since 1978. Yet despite plenty of platitudes from Western academics, politicians and members of the media, the Soviet Union eventually collapsed under the weight of its own contradictions. While it was easy to centrally plan urbanisation and the growth of its industrial sector from a low base, the Soviet Union never managed to take the requisite next step towards entrepreneurship and services - led growth. To do so would have necessitated abandoning much of what had worked for it in previous decades, allowing market forces and the incentives they create to respond to the tastes of consumers rather than that of the nomenklatura . This is the position that China faces today and has done since its double digit growth dipped in 2009, impacting on both its domestic economy and on global growth