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China Slows

Worker riots at Foxconn. The Chinese economy slowing; We’ll look at the future of  “state capitalism” in China.

In this Monday Sept. 24, 2012 mobile phone photo, windows of a Foxconn workers' dormitory building are broken after a brawl in Taiyuan, capital of Northern China's Shanxi province. The company that makes Apple's iPhones suspended production at a factory in China on Monday after a brawl by as many as 2,000 employees at the nearby dormitory injured 40 people. The facility will reopen Tuesday. (AP)

In this Monday Sept. 24, 2012 mobile phone photo, windows of a Foxconn workers’ dormitory building are broken after a brawl in Taiyuan, capital of Northern China’s Shanxi province. The company that makes Apple’s iPhones suspended production at a factory in China on Monday after a brawl by as many as 2,000 employees at the nearby dormitory injured 40 people. The facility will reopen Tuesday. (AP)

The United States isn’t the only mega-power about to choose new top leadership. So is China. Here, millions will vote. There, a relative handful will decide. Next month, just like us. And it’s momentous – just the second peaceful transfer of power in China since its 1949 revolution.

And, like us, China has big decisions to make. My guest today says China’s “state capitalism” is now strangling the Chinese economy it once drove. And maybe strangling ours as well. We saw the Foxconn riot. What next?

This hour, On Point: China’s leadership, China’s economy, and ours.

-Tom Ashbrook

Guests

James McGregor, author of No Ancient Wisdom, No Followers: The Challenges of Chinese Authoritarian Capitalism.

From Tom’s Reading List

New York Times “Two of the largest economies in the world, Chinaand Japan, presented fresh data on Monday that underscored the persistent economic drag on the global economy despite the efforts of policy makers and central bankers around the world.”

China Daily “The official purchasing managers’ index, released by the National Bureau of Statistics and the China Federation of Logistics and Purchasing, improved to 49.8 percent last month from 49.2 percent in August. However, it remained below the 50-percent threshold that divides expansion from contraction.”

Project Syndicate “China’s 12th Five-Year Plan calls for a shift in the country’s economic model from export-led growth toward greater reliance on domestic demand, particularly household consumption. Since the Plan’s introduction, China’s current-account surplus as a share of GDP has indeed fallen. But does that mean that China’s adjustment is on track?”

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