By Henrique Schneider

China has been hailed as the new motor for worldwide economic recovery. There's good news on China's economic performance. Its GDP is bound to grow by 8 percent this year.

Together with the good news coming from other countries in East Asia, especially Korea, Taiwan and Singapore, Asia seems to be one of the main drivers of global recovery. This seems to be great news ― and it is!

If the aforementioned seems good, think of a different, unrelated, annotation: The Shanghai Market Index has some 1,800 listed stocks. Of those companies, only around 50 are private ― that is an absolute number, not a percentage. In Korea, of the listed companies, some 80 percent are private.

What is the point of comparing this data on China's growth and the completely privately-owned listed companies? As East Asia leads the world economy, many analysts proclaim the superiority of the allegedly ``Asian'' version of capitalism, state capitalism and a managed economy.

By doing so, many commentators seem to believe that all economies in Asia work alike; Taiwan and Korea and Japan and Singapore and China. Can this be so?

The comparisons made before point to Chinese state capitalism at work. See this in its historical context. In 2008, state-financed investment still contributed to around 50 percent of the Chinese GDP growth; in 2009, it is supposed to climb to almost 55 percent.

Taiwan, at the height of its state capitalism, didn't have more than 30 percent GDP growth which was dependent on state intervention. Korea began with 50 percent but reduced the rates steadily and quickly to some 15-20 percent.

Kenneth Arrow, the Nobel Prize laureate, recently tried to rank the world's best state-managed economies and came up with three: China, Taiwan and South Korea. And there you have two mistakes ― one concerns the quality of growth while the other deals with grouping those countries together.

Let's put them in order by asking a few questions.

First, is China growing in the middle of the crisis? Yes, but it is still state-induced growth -- which tends to be focused on construction, not on technology. Therefore, it isn't fond of modernization.

Second, is China a managed economy? Yes, but it is not comparable to what Taiwan or South Korea was. Both countries began their rapid ascension with state-capitalistic ventures, but as soon as the private sector began catching up, these states diminished their intervention and ― most important ― deregulated technology bound sectors and let them go.

The results are clear. Private business is the most important motor of the economy in Taiwan and South Korea. In both countries, more than two-thirds of the listed companies are held privately and both countries experienced a business turnaround with moderate state management in the 1997 crisis.

Even more, both are trying to position themselves under the theory that technology drives innovators in a completely free market. Both countries are championing the information-oriented industry, high-level and high-end agriculture, and research in societal models with more elderly people.

All these incentives are arising from the market, often only with government watching from the sidelines.

The People's Republic of China lacks these fundamental moves. It has been growing and doing this for 20 years. How come there is almost no technology development by now? Because state capitalism is profoundly in love with infrastructure and suspicious of all other sectors. Infrastructure can be projected, seen and publicly inaugurated; computer chips cannot. Indeed, if China is trying to boost its inner demand as a response to the crisis (and it should do so), it is not doing enough to boost its supply of upgradeable goods.

It reaches such extremes as the four most heavily regulated areas are the ones which could champion further development of the economy: computer applications, pharmaceutical, chemistry and telecommunications.

Without innovation and technology can China enjoy the fruits of modernization? This is difficult to assess. In recent history, no state-managed economy has succeeded in developing and modernizing itself without leaving room for more forward-looking branches and techniques.

In the past, many primarily state-managed economies entered a longer period of reflexive interaction by cutting back state intervention and freeing market forces.

This recipe led many East Asian countries to their wealth and human security. The comparison between China and Korea can only be validly made if China dwells on the same path. As it currently does not, they cannot be put together.

As everyone was and is affected positively by Korean growth and modernization, it can only be hoped that Chinese planners can pick up the inspiration. Until then, let the good news be good but do not overestimate the differences.

Henrique Schneider is a traveller in Asia as well as a political analyst. He works as a consultant and analyst in Vienna, Austria, and publishes regularly in German and English on economic and security issues related to China and other Asian countries. He can be reached at hschneider@gmx.ch.