China Reality: Boom, but Also Some Gloom

Editor's Note: Jon D. Markman writes a weekly column for CNBC on MSN Money that is republished here on TheStreet.com.

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A flight into Beijing these days begins the descent into a kind of hell.

It's not just the smog, which is pervasive, gray and suffocating on an epic scale. It's not just the weather, which is unseasonably cold and windy. It's not just the sand, which is blowing in from inner Mongolia in thick, yellow sheets. It's not just the traffic, which is inert because of the stunning lack of major crosstown freeways. And it's not just the vibe of the city's residents and laborers, which is often foul and hostile amid the pollution and crowding.

It's the sense of alienation and hopelessness that you get from so many of the kind and brilliant people who have grown up there and who should have the greatest stake in its success.

It's one thing, after all, to live and work in a city that is suffering short-term growing pains toward a sunny future. It's quite another to work in a town that's in the perverse process of being dragged backward into an industrial revolution that the West experienced a century ago, when expectations for living standards were so much lower.

I visited Beijing last week in advance of Chinese President Hu Jintao's arrival to my hometown of Seattle, and I discovered that, for investors, the situation is paradoxically both grave and ripe with opportunity.

There's little doubt that China's capital city is at the spearhead of the sort of double-digit, multiyear economic growth that you have read so much about; construction cranes disappear high into the gray haze virtually everywhere you turn. Yet the pace of super-development seems almost too great, and it may ultimately prove to be the country's undoing, as it is losing many of the smart, ambitious people who have fueled its dystopian miracle.

A Disjointed Middle Kingdom

Dan Zhou is a Shanghai-born, MIT-educated economist who is one of the leading analysts of the growing crisis in Beijing -- and he is not terribly optimistic.