Two interesting definitions of capitalist China today

First one ("In China,That Ivy League Degree Isn't Gold: Some Venture Firms Seeking Talent Favor Homegrown Entrepreneurs,", by Rebecca Buckman, p. A1) speaks to trend that VCs (venture capitalists) looking for investment opportunities are increasingly favoring young-and-tough local capitalists over the returnees from the States, armed with their top school degrees.

I will admit, when I saw the headline, I feared I would read some piece that contradicted what I wrote about Chinese business generations in my China piece for the November issue of Esquire. There I basically said that Western businessmen tend to favor younger Chinese capitalists (second generation, so to speak) over the first generation unleashed by Deng's reforms, the older generation being too tainted by their socialist upbringing.

Rather than subverting my point, this piece only emphasizes it more, by saying that this second generation of younger, more pure Chinese capitalists is considered by the VCs as being superior to even their Western-educated contemporaries.

That means China has already become so capitalist generally that local knowledge trumps education--all other capitalist instincts being equal. Impressive, say I. China keeps surprising: stuff you figured you wouldn't be able to say for decades you end up being able to say in years--sometimes even months!

Second article tackles the question quite literally: "China's Private Sector Can Be a Boast--If It Has One," by Andrew Browne, p. C4). The first-ever Organization for Economic Cooperation and Development (OECD) report on China's economy says the prviate-sector's share of GDP rose from 50% fin 1998 to 59% in 2003, suggesting an historic tipping point that makes a real turning point in the history of globalization.

Financial analysts from various firms pick numbers to the north and south of that total, going as high as 70% or as low as 30%. Naturally, much depends on definitions. There is the tendency of many true private-sector firms to "wear a red hat" for protection, thus calling themselves state-owned and taking on the appearances of one when really they're not.

Why this debate matters? Question is, Who owns the business cycle in China? State or companies?

One thing no one doubts: the private sector share is growing dramatically with time.

One scary factoid: Chinese passenger car factories are currently operating at just over 50% capacity. God help Detroit when those first Chinese-made cars start showing up.