But importantly, the crisis will undoubtedly weaken those, inside and outside the country, who want China to adopt the Western economic model wholesale. Those expecting China to leave its reform program on autopilot until it finally arrives at American or European style capitalism are likely to be disappointed, and not just in the short term. It is going to be much more difficult to argue for the adoption of a system that has suffered such a catastrophic, global and supremely public failure.

Pundits who praise China as a shining example of market forces in action are right only up to a point. The commanding heights of the Chinese economy including banks, telecoms, transport and energy remain firmly in government hands. State owned enterprises account for a third of industrial output, and overwhelmingly dominate among large scale enterprises. Nor is the state sector all about ailing rust-belt industries. This year the Industrial and Commercial Bank of China became the world's most profitable bank. Even well-known private companies such as high tech Lenovo have substantial government stakes.

There are tight controls on foreign exchange and capital markets that allowed China to emerge from the Asian crisis of 1997-98 relatively unscathed, and will undoubtedly mitigate the effects of the current crisis.

China's 4 trillion yuan stimulus package – 14 percent of GDP – (the largest peacetime stimulus by any government in history according to the Economist), is another indication of the huge role the state plays in the economy. By comparison, the head of the IMF Dominique Strauss-Kahn is asking Western governments to commit to spending 2 percent of GDP.

In his speech to the Communist Party to mark the thirtieth anniversary of reform and opening up, while stressing the need to continue with reform, Chinese President Hu Jintao pointedly called attention to the shortcomings of the market and the need for state intervention.

Interestingly, a recent United States National Security Agency report noted that while in the 1990s state owned enterprises were becoming an endangered species, a decade later, privatization is being rolled back as novel phenomena such as state owned multinationals and sovereign wealth funds take the stage.

And with the Washington Consensus tarnished, there may well be renewed interest in studying the most successful economy of the past thirty years in its own terms rather than as a deviant approximation of Western capitalism. The idea of an alternative "Beijing Consensus" suggested in 2004 by American economist Joshua Cooper Ramo could be due for a revival - the more so if China meets its 2009 growth target. We will watch this space.

(China.org.cn December 22, 2008)