China’s Achilles’ heal: Its industry is entirely state-owned and controlled.

The true private sector in China has actually shrunk in the past 10 years. The country is testing the economic limits of a socialist dictatorship. It is reasonable to expect it will eventually come to an impasse. From the WSJ, Nov. 17, 2010:

“According to China's Ministry of Finance, assets of all state enterprises in 2008 totaled about $6 trillion, equal to 133% of annual economic output that year. By comparison, total assets of the agency that controls government enterprises in France, whose dirigiste policies give it one of the biggest state sectors among major Western economies, were €539 billion ($686 billion) in 2008, about 28% of the size of France's economy.”

http://online.wsj.com/article/SB10001424052748703514904575602731006315198.html?mod=ITP_pageone_0