One can argue that it works that way, not because Americans are more vigilant, but there isn't any real threat against the regime.
And yet, less "criminals" suffer under the fist of the government in both those countries (in peace time). You think more "good people" suffer under China's regime, and that's why you perceive a contrast. That's an ad hoc judgement and results from how you are raised in the first place. How do you know (or how does the State know) those kinds of offenders should not be killed? What if everyone was okay with it, out of fear or out of being brainwashed by a dream?
I'm not saying the USA is worse or anything like that, but it seems to me that your claim requires you to be neutral in these cases.
You still live in a community that thinks it right to stop people smoking dope. The ex-cops, army, FBI and so on are still there but now they no longer need warrants to come after you. They can come to your house when they like and do as they please. And if they decide that you deserve punishment, there won't be a court. It will be done then and there and your punishment will be whatever they think right. If one of them is really against drugs, you may be killed.
This is what I was talking about. The picture you present is also a dream. Seriously, why do you omit a possible transitional period? Why don't you question what could be done to prevent those problems from happening in the first place?
With this attitude, how on Earth can you think Bitcoin could succeed? Look at history. There hasn't been a single currency who survived State monopoly, even gold. Besides, the history of Bitcoin is nothing but a series of thefts and scams.
I do a lot of business in China and I have a friend who was arrested last week. Life for Chinese people who are not Party members is very arbitrary and they don't like it. The ideal of buying your own house and having freedom to do business is not some cultural artefact. People everywhere hate when an official comes along, arrests them and they have to pay to retain their own property.
I accept that I don't see how a transitional period to anarchy would work. Americans seem obsessed with locking up criminals. Take away your legal system and they will be obsessed with lynching criminals. I know you think the system is what makes Americans brutal. I think that its Americans make their own system brutal. You only have to look at Mick Huckabee and Michael Dukakis. 2 decent men whose political careers were terminated because they showed mercy to criminals.
Bitcoin is actually very useful for moving money without needing banks to help you. I don't think it will ever be used to buy drinks in a bar but it will be used to buy yachts and jets and the like.