A tale of two different systems really.
The threat Americans see in Chinese system is that it is actually a viable alternative model that will inevitably surpass and overtake their own where it hurts them most, money and its attendant power. The political layer of American system is, at the most abstract level, decided by votes, whereas Chinese one is decided by results. At economic layer, Chinese one knows their books and controls it to her advantage much much better than Fed, a very large employer of economists, or any groupings of economic advisers American executive branch do.
Case in point is Lehman vs. Evergrande. In Lehman case, US had no idea what was the actual books of all those intertwined contracts and counter parties, which was why US sleepwalked into that sub prime crisis. At the superficial theoretical level, every economic ideas are supposedly self-evident, observable and predictable to the point everyone can understand them reasonably well given some readings and subscription of some magazines and news papers. As sub prime crisis showed, no economists, especially at the Feds and Treasury, really understood anything, still don't know a lot about a lot of things, and even don’t recognize it necessarily when it appears to be happening, ie, transitional nature of inflation, and for sure can’t predict it as economic theories hold, ie, the current inflation saga we're in now.
Evergrande. China GDP was around a trillion dollars mark before she joined WTO. Combined books of all her banks was around a trillion dollars as well. She had to recapitalize 40 percents of that books due to NPL's. 40 percents ! Let that sink in. But she did it. Again the strength of knowing and owing the books end to end. Today it's standing around 60 trillions dollars. Evergrande is 4% of China's real estate sector. If you round up top 20 guys, you'd get something like a third of the sector. Again China knows and owns the books from end to end, and they knew they had to pop it and glide it down to a safe zone given the true social nature of Evergrande problem, not the financial nature, as it's the Chinese citizens who'd be holding the bag as they wouldn't have the apartments they had mostly paid for. Evergrande missing bond payments is just that, they missed payments, nothing more. No foreigners can come to China and claim any piece of Chinese property and asset, just like Americans would normally do with court orders and police enforcement. That's the beauty of VIE structure, it's an unenforceable contracts with a Chinese holding company, boxed up in some lawyers office in the Caribbean. The same goes for all the Chinese tech stocks listed in US. Nobody can do jackshit about it, thus the reason China don't bother giving them their financials and compliance. Greed is a double edged sword. Again knowing and owing the books yourself from end to end ,ie,Control. Lehman and Evergrande are at opposite end of each other in nature, but then again, China don't sleepwalk into it. Having more control means more resiliency, better overall management, etc.
Just don't buy the veneer of sophistication that American system flashes out at the first glance. It's designed to impress and if you scratch hard enough and long enough, they don't come out the same way they appear.
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