Is China really blocking all the US search engines?
readwriteweb.com
The answer seems to be unclear!
readwriteweb.com
There is nothing about the way China is acting, as a country, to indicate that they have any real ability to scale.
It has been said, (and I happen to agree) that the thing that makes the US so attractive from a standpoint of innovation is the government. I have a lot of issues with the US Government (and I don't just mean in a me-too anti-Bush sort of way), but overall in the US are not limited to the information you can access, in your opportunity to create wealth, and in your ability to keep that wealth and do with it what you please. At least as compared to the rest of the world. I recognize the obvious problems with various FOIA requests, taxes, patents, etc. But overall you are free in the US to design, develop and sell any product or service that you feel will have a value.
Then you look at China, and the government of a few is trying to manage the efforts of billions. This is like taking everything you should have learned from "The Mythical Man Month", and extrapolating out to the worst possible case.
It may take 20 years, but China is going to implode from their own lack of management. OR, they will get smart and make massive changes to the way things are done, so that they can become something other than just another lowest-cost-bidder.
I cannot think of any case in history where their "model" has been successful.
Right now 3 out of 4 of the world's super cranes are in China, constructing new office towers. The Chinese are holding something like a trillion dollars that we've traded them for TVs and such. The Chinese military is building a deep-water navy, and China keeps making no-so-subtle threats against Taiwan. In addition, the Chinese have a tendency to build up a lot of nationalistic anger whenever they feel threatened, whether the threat is real or imagined.
Now the kicker is exactly as you describe: they cannot scale. Their system is rotten and broken, and the only reason it's still working is that they "sold out" to capitalism, effectively creating an oligarchy just like in the bad old days.
But how would an implosion occur? There's good money that says that the worse things get, the more China is going to be looking for somebody else to get into a tangle with -- what better way to keep people's attention elsewhere. The blame has to go somewhere, and it can't be the leadership. There's an easy case to be made that China could blame it's impeding implosion on lack of cheap resources, favored-trading status of Taiwan, Japanese hegemony, United States imperialism -- pick your bad guy. In a pressure cooker the steam has to go somewhere.
That's the worry.