Europeans visiting the Philadelphia Centennial Exposition in 1876 were astonished by American industrial prowess. In two generations, the United States had progressed from a simple agrarian society to challenge the most advanced European economies. Now, China confronts America in an historic test transcending commerce. Americans believe individuals, each defining their own lives, best chart the progress of the nation. Governments draw legitimacy from collective approval; citizens are the sovereign. Markets and democracy define America. Our institutions cultivate competition among individuals and ideas that shape our common material and civic lives. Democrats and moderate Republicans recently lost sight of those fundamentals and imposed health care reforms, bailouts and huge deficits voters simply don't want. They were soundly defeated in midterm elections. Markets and democracy are mutually reinforcing. Markets work best when personal freedoms are protected, and democracy best safeguards those liberties. Free markets give individuals a strong interest in securing democracy. Since World War II, the United States has worked with allies in Europe and elsewhere to build international institutions that promote open markets, human rights and democracy. China is no champion of those values. The Communist Party imposes an authoritarian regime and assumes parental authority over its citizens. It prefers state capitalism to private enterprise, and embraces market reforms only as needed to participate in global commerce on terms unfairly tilted to China's advantage. Unless compelled by necessity, it will not adopt market reforms that could instigate popular sentiment for democracy. China is no 19th century America. Nineteenth-century America made pioneering contributions to steam, railroad, telegraph, and electrical technologies. Wages were higher than in Europe and attracted skilled immigrants. Considerable resource wealth powered development. China accomplishes growth with appropriated technology and cheap labor, and is desperately dependent on imported oil and resources. It compensates for shortcomings by compelling Western companies to transfer know-how and with an undervalued currency that subsidizes exports and suppresses the real wages of industrial workers. Its middle-class prosperity is built on exploited factory labor.