China does get industrial development, but a lot of it is export-oriented and (at least partly) foreign owned, and not so much of the value remains in China. It is beneficial, but it is artificial growth, and it is not clear if it will be sustainable without US demand.
The US get to live above their means, which is possible thanks to the status of the dollar as reserve currency - the trouble is that they have abused that privilege and are threatening to break the whole system.
As that Economist article we've discussed and which I have promised to review says, China is bringing an oversupply of labor into the world economy, putting downwards pressure on the price of labor, and giving a premium to the relatively rarer capital. But the USA are also flooding the market with money, making capital cheap - thus downwards pressure everywhere on the price of labor, and inflated asset prices.
Deflation form China and inflation from the USA. So long as they more or less balance, we're fine (doing very well if we own assets, not so well if one has a wage-paying job). As soon as the two bubbles diverge, we're all fucked. In the long run, we're all dead. John Maynard Keynes
The multinationals are squeezing the Chinese for labour and the Americans for cash
And I would add - they are mocking the Europeans mercilessly for not giving them any easy fat to burn. In the long run, we're all dead. John Maynard Keynes
