Loretta Napoleoni is the author of 'Maonomics: Chinese Communists Make Better Capitalists than We Do'.
In Sydney for the Writers' Festival, she spoke to SBS about the reasons behind her theory.
"The West is afraid of China. The West does not want to understand China because we are afraid of it," she said.
"Their model fits the world economy much better than our model because it's more flexible and what we need in a globalised market is flexibility".
She says even the workers' exploitation known to take place in China is a worthy price to pay for a country smart in finance.
"The capitalist economy is all based on exploitation. This is the principle of capitalism. Looking at China I think it's worth it. One generation gets exploited and the others can enjoy growth and prosperity. And they are less exploited today than they were 20 years ago".
Loretta Napoleoni believes with time, workers' rights will improve in China.
"In the long run we will see Chinese workers achieving the same kind of treatment that are seeing workers in the west. Flexibility is the key. In the West we are too ideological, too inflexible" Ms Napoleoni said.
"We took the neo-liberal model without thinking we could adapt to the needs of the different countries," she said.
China has introduced a new model for development: state-capitalism, a model that many developing countries are considering to embrace.
"I don't think China is interested in being a world superpower like the US or the UK have been in the past. It is again creating a new model for other countries to follow."
She said Australia is lucky to have China as a main business partner.
"Surviving the economic crisis for Australia was good management but also good fortune. If China was not there buying your resources, your economy would have gone into recession in the same way the US and Europe would have gone into recession".
She said lack of flexibility is what is killing the EU economy.
"In Europe they don't have a plan for growth. The change that we need is to reinvent the EU, and that is not going to happen in the Europe we know today".
