Assuming Psychohistorian's friend was arguing in favor of the efficiency of the Chinese government, I think the argument was really about the relatively collectivist morals of the Chinese people and government compared to the morality of the US people and government.

In the USA, most people probably think that the USA government is more efficient than the Chinese government because the USA is more "good" than the Chinese. Most Chinese people don't think the government has a duty to be "good", but should instead be focused on relentless growth and strong national unity. The USA government is indeed more "good" than the CCP, but the CCP is indeed focusing on relentless growth and national unity which makes it seem very efficient to people with Urban Residency Permits. It probably doesn't seem so efficient to the Chinese people that don't have Urban Residency Permits.

http://en.wikipedia.org/wiki/Hukou_system