BEIJING–Just down the street from a faded Communist billboard declaring “art, harmony, joy, justice, peace,” dissident artist Ai Weiwei is trapped in a state-of-the-art authoritarian labyrinth.

To avoid prison time, the democracy-advocate known for his work on Beijing’s “Bird’s Nest” Olympic stadium can pay $2.4 million in back taxes and fines that he insists he does not owe. Or he can face a repeat of the 81-day secret detention he endured earlier this year. Either way, China’s all-powerful Communist party succeeds at smearing him.

“The police told me yesterday ‘if you pay, that means you admit the crime,” Ai said in an interview in his Beijing home and art studio. “It will justify that they arrest me.”

Ai’s position – and the charges against him – is cutting-edge repression. For Chinese who do not challenge one-party rule, Western-style consumerism beckons. Police do not line Beijing streets. Starbucks cafes, Calvin Klein ads and Porsches do. The internet is freely available, with references to corruption, environmental degradation and protests in China removed. The suppression here is surgical.

Most chillingly, the financial crisis and political sclerosis in Washington may have convinced China’s ruling elite that Western democracy has failed. A fractured west is in disarray and decline. China’s economic growth and three trillion in foreign currency reserves justifies one-party rule.

Gao Anming, deputy editor-in-chief of China Daily, a state run newspaper, was blunt in a meeting this week with me and a group of American journalists visiting China on a trip arranged by the China-United States Exchange Foundation, a group with close ties to the Chinese government. (Reuters is paying the full cost of my trip.) Gao blithely stated that he engages in self-censorship, avoids “sensitive issues” and his newspaper’s view of the Ai case was “roughly the same as that of the government.”

“You might not agree with me, but that’s the way we are,” he said. “And we have been very successful the last thirty years.”

In some ways, it is difficult to blame him. China’s gleaming skyscrapers, staggeringly impressive infrastructure and burgeoning cities are extraordinary. Over the last thirty years, 200 million Chinese have been moved out of poverty. On the day Gao spoke, western leaders were begging Chinese officials to help ease Europe’s debt crisis. China is simultaneously a repressive authoritarian state and, for now, a successful economic system.

From the perspective of the United States’ current malaise, China’s rise is haunting. In America’s Faustian bargain of the 1980s and 1990s, cheap Chinese consumer goods helped convince middle class Americans that their standard of living was increasing. In fact, wages stagnated. Manufacturing jobs, capital and national confidence shifted east.

Yet the system here has its cracks. Last Sunday afternoon, I visited Beijing’s Ikea store in search of China’s growing upper middle class. In China, Ikea is a store and social destination. Well-educated and upwardly-mobile Chinese in their 20s and 30s cruise through the store’s enormous showrooms, having pillow-fights on beds, lounging on couches and devouring meatballs in the dining room. They are the winners of China’s economic boom.

I interviewed a banker, an accountant, an interior designer and other white-collar professionals. Four of the six people I spoke with complained about spiraling housing prices, corruption and inequality. Several griped about the Communist Party’s online blocking of Facebook, Twitter, You Tube and other websites.

A 37-year-old software developer for Ali Baba, a hugely successful company that is China’s equivalent of Amazon, was the most negative of all. Despite being enormously successful in China, he was applying for a Canadian visa and convinced that pollution and poor schools were harming his 18-month-old son.

“They teach children to tell lies,” said the man, who asked to remain anonymous. “They teach bad values.”

Interviews with a half-dozen migrant workers – the 200 million laborers from rural provinces who run China’s urban factories – prompted responses more favorable to the Party. They complained of high housing prices but said government subsidies had lowered food prices.

Dissidents say the Party’s ability to produce jobs and subsidies will determine its fate. Household income represents only 50 percent of China’s GDP, one of the lowest rates ever recorded. China’s staggering profits have been re-invested in massive infrastructure and economic development projects, not the average person. Widespread discontent exists over inequality and corruption, but little chance exists of Arab Spring-like uprisings for now.

“As long as most of the people can find jobs here, I don’t think there is any chance of a national revolution,” said one dissident who spoke on condition of anonymity. “Just like Clinton said, ‘it’s the economy, stupid.’”

China’s leadership, though, does worry about its future. While China seems like an unstoppable economic juggernaut from abroad, there is a clear sense here that its export-driven economic model cannot be sustained. With demand in the United States and Europe declining, government officials are trying to increase Chinese consumption of homemade goods. As wages in China’s coastal factories have risen, some manufacturing is shifting to Vietnam, Indonesia and Bangladesh. And government officials are trying to slow growth, deflate the country’s housing bubble, and curb inflation.

As he should, Ai criticized the West for its role in empowering and enriching the Chinese Communist party. Eager for quick profits, Western governments and companies embraced China’s cheap labor and turned a blind eye to its repression.

“Every penny, every deal made, everyone should understand the condition you’re dealing with,” Ai said. “A nation where the people do not have the right to vote after 60 years.

The burly 54-year-old faces a bleak choice. He could join Liu Xiaobo, the Nobel peace prize-winning dissident and writer sentenced to eleven years in prison in 2009 for championing the “Charter 08” manifesto calling for democracy in China. Liu’s exact offense under Chinese law? The crime of “inciting subversion of state power.”

Dressed in blue sweatpants, a blue cotton shirt and grey Nike sneakers, Ai calmly discussed his fate and insisted his case was energizing government opponents. In a four day period, over 20,000 people donated roughly $945,000 this week to help Ai pay his tax fine. Most of the donations, made online and through the postal system, can be traced yet they continue to arrive.

For now, China’s model is outperforming Western democracy in economic terms. Over the long term, I believe China’s stilted system is unlikely to produce the innovation it needs to continue its astonishing economic growth.

Emerging market nations, though, could choose to adopt the Chinese model, legitimately seeing China’s stability and growth as preferable to the West’s stagnation and dysfunction. China today is both light and dark. It is succeeding economically but failing politically.

I acknowledge western democracy’s current paralysis, indulgence and failure to reform. But I hope the Chinese Communist party fails first.

PHOTO: Dissident Chinese artist Ai Weiwei waves from the doorway of his studio after he was released on bail in Beijing June 23, 2011. REUTERS/David Gray