There is no doubt the West is being challenged by the East for world economic domination. The Chinese economy has grown on average 10.85% over the past four years according to the World Bank. The US on the other hand grew 0.35% over the same four year period. This double digit growth of China is a recent phenomenon and can be attributed to central economic planning and specifically the 6th Five Year Plan adopted by the Peoples State Council in February of 1980.
Key parts of the plan call for average annual growth rate of at least 5% for agricultural and industrial sectors, an increase in consumer products consumption, price stability, conservation of energy resources, technology upgrades and key construction and communications projects. Controversial programs such as the one child program to control population growth were also implemented in the 6th plan.
The West on the other hand until the 20th century held firm to the tenets proposed by Adam Smith who proposed minimal government intervention as the best way to develop a competitive market economy. Keynesian Economics took hold in the West as an economic planning policy after the end of World War II. The basic principle described by Keynesian theory is active government intervention is required to maintain growth and prosperity. Central planning may not be able to anticipate real market forces. As prices and wages rise in China, direct foreign investment has leveled off because multinational enterprises who located production facilities in China have been moving to other low-wage countries. Capitalism is a dynamic force with no respect for central planning.