Professor
Michael Pettis's (China expert) response, and my counter-points:
Michael, thank you for sharing your thoughts. I admire so much your willingness to discuss openly in your blog. Two counter points without claiming you are "wrong", because I am not sure any of us have all the requisite data.
1. The article claimed or implied that SOEs were claiming higher net profits (at least after taxation).
2. Until we factor in the reversal in the "wealth effect" (Δmarket cap ≠ Δmonetary capital invested) due to bursting of debt and speculative bubbles, we can't account for what portion of the GDP is not real. The large capitalists can position their power and monetary wealth (two different forms of wealth) such that it sustains across such corrections. In other words, the masses can be running around like hamsters on a wheel, going effectively no where while the large capitalists siphon off all the power.