China's Gold-Medal Moment

So productive economic forces continue to be hampered by political ones. For example, factory owners and local officials don't enforce laws designed to ensure clean water, even though 200 million Chinese are sick from contamination and related health threats.

The most famous social dictate, the one-child policy to control population, has produced its own problem. In a generation, China's labor force, with fewer younger people, will be smaller than today's. Senior citizens are living longer, producing an inverted population pyramid. The 65-plus age group will more than double in a generation from around 110 million today to 235 million or more. There is no national pension system to support it. Instead, the support system that has evolved is the Chinese family in which almost every woman gave birth to at least one son, reflecting the Confucian tradition that it was the son upon whom older parents would rely for their first line of support. The sad result has been an explosion in abortions of girls to preserve the possibility of a son. But because of the one-child policy, the future imbalance between boys and girls will create a massive distortion in the marriage market and the challenge of coping with the emergence of tens of millions of essentially unmarriageable young men. The one-child policy has prevented more than 300 million births over the past nearly 30 years. But the growing population of the elderly has raised the concern that China may grow old before it grows rich.

Toxic legacy. China also faces severe ecological and health dangers far more serious than people realize. Air pollution is a huge threat to the quality of life in cities like Beijing and Shanghai, among others: 16 cities rank among the 20 most polluted in the world. In major cities, much of the water is too toxic to drink. Only 1 percent of the surface water available in Shanghai is safe. All told, nearly 700 million Chinese people drink water contaminated with animal and human waste.

Land degradation has turned much of the country into a desert. The Gobi Desert, which covers much of western and northern China, is growing by about 1,900 square miles annually, turning millions of Chinese into environmental refugees in search of homes and jobs. All this—and global warming—will worsen when the country brings hundreds of coal-fired electric plants into service and quadruples car ownership so that within 15 years almost 130 million autos will be on China's roads.

Yes, China is still growing—and dramatically—sustained by a remarkable savings rate of 40 percent, a prodigious work ethic, and $1 trillion of foreign capital. The rapid improvement in the standard of living has helped justify the one-party system in a country that has always perceived chaos as the greatest societal danger.

As China concentrates on internal development and on the education of its people, it is gradually evolving towards a looser, more open society. Having visited China a dozen times from the mid-1979s to the mid-1990s, I found this constructive evolution of China's policies manifest. But the Chinese Communist Party needs its political institutions to keep pace with the forces unleashed by economic change. China is consumed by wireless communications and the Internet, with 150 million-plus "netizens" and approximately 50 million bloggers. They can hold a nationwide conversation for the first time. A text message can reach 100 million citizens within an hour. Its Internet-connected, trend-obsessed young people are changing the country at warp speed.

The result is that the Chinese people have become much more socially active, with thousands of mass protests involving 100 people or more every year. The Chinese leadership has tried to channel the unrest by whipping up extremely nationalistic feelings directed particularly at the Japanese and also at Americans. But as the people emerge from millenniums of autocratic rule, they acknowledge, as their premier put it, "We need peace, we need friends, and we need time." Hence, China's behavior in the international arena is generally cooperative. It has helped to deal with North Korea's nuclear ambitions, and it has settled its numerous border disputes with all of its many neighbors, except perhaps for India. China understands that it is not a resource-rich country and must depend on imported materials, especially oil—one reason that it shares with us an interest in the stability of the Persian Gulf region. Taiwan alone remains the last symbol of its humiliation, such that no Chinese leader can afford to be seen as the one who lost it. Seven U.S. presidents have recognized that Taiwan is a part of China, but the Chinese look to Washington to discourage arms sales to Taiwan that would increase resistance to a Taiwan-China link.