Is China Inc. one Big Fannie Mae?

Jonah Goldberg seems to think so (National Review). While I'd be hesitant to predict that China's GDP will never become larger than the US, it doesn't take much to recognize that China has significant challenges ahead - some of which I don't know have adequately anticipated. As one example, valuations in China may still be suspect despite rapidly falling p/e ratios - after all, what if the "e's" never existed to begin with?

That being said, if China's economy grows to be larger than the US, it will be a return to a historical norm rather than something particularly remarkable. But it comes back to economic first principles, GDP is an indicator in the incremental wealth created by a country. Wealth in the long run is the direct result of innovation. The US remains, despite this bailout free for all, the most innovative place in the world though regulatory and fiscal policies could change that.