China, Inc. : How the Rise of the Next Superpower Challenges America and the World

Rating:
Summary: Interesting, but hyperbolic
Review: Fishman engages in more of the same in much this book: the glowing and optimistic statistics and assessments about China, the most grim and dismal for the United States. (And everyone else.) Forecasting China as the world's largest economy in "just a few decades" is an act of either extreme ignorance - calling the entire book into question - or extreme hyperbole - which raises its own questions about the book.

China - even as estimated by the Chinese - will see growth fall to the 6-7% range within the 2010 to 2020 time period, and into the steady 5% range thereafter as it slowly sinks to a developed-economy-like rate of 3-4% by 2040 to 2050. On the flip side, it would need to grow at around 4% more than the United States each and every year for over 60 years in order to match our GDP. (And the project long-term rate for the U.S. is over 3%, and likely higher as China and India develop their own domestic markets.) China will outstrip all others, but the U.S. will not be one of them. The difference in size between the two in the long run even should China manage to just coast ahead as its hyper growth phase ends in the middle of the century would be like a 50 pound difference between two 12,000 pound bull elephants.

Fishman does make many salient arguments with regard to America's need to re-invest itself in the foundations of its economic vitality, it's a shame he's couching them in language almost tailor-made to get him featured on Lou Dobbs' nightly sky-is-falling segment on CNN.

Market forces are already shifting slowly against China, the first pebbles of balance: everything from the burgeoning return of some factories to Mexico and hollowed-out Asian economies, to China's absolutely brushing demographic time bomb which will begin to hit in less than two decades - a time bomb that will look like a tsunami compared to even the extreme greying of Europe or the impact of the retiring Boomers in America.



Rating:
Summary: The Chinese Economic Juggernaut
Review: This is an outstanding book on modern China and I am sure it will be a best seller. I bought the book a few days ago at a book store that had an early copy and quickly breezed through the 303 pages. It is a quick and easy read. It is overflowing with information such as population statistics, economics, impact of China on domestic finances, industry, prices, job losses, trade policy, and much, much, more. The author presents many stories, based on interviews both in China and elsewhere, including some about Illinois farmers and business people who have been touched by the China boom. This is really quite a good book being both entertaining and very informative.

I had just finished reading Mitter's book A Bitter Revolution which describes the evolution of China albeit briefly from 1919 to 2000 so I was primed to read this present book by the Ted Fishman. Fishman is a writer and former trader on the Chicago Mercantile Exchange. This is a wonderfully prepared, researched and well written book that covers modern economic developments in China - especially the last ten years.

As most people know, China went through a very difficult period that spanned most of the 20th century from the early revolution, colonialism at its major seaports, the Nationalists period, the invasion by Japan, the rise of communism, famine from the great leap forward, the cultural revolution, etc. This resulted in deaths by some estimates as high as 60 million people. But simultaneously a political and economic transformation of China took place over a period of about 60 to 70 years starting in 1911. This agrarian economy of 500 million people barely survived - but it did survive, recovered, people even saved some money, and the population is now expected to reach close to 1.7 billion in the current century even with birth control. During this period, and more so since about 1980 there has been a massive country to urban migration involving hundreds of millions of people leaving the poor rural areas attracted to jobs in the cities such as Shanghai - the world's largest ever movement of people from farm to city. There are now almost 150 cities with a population of a million or more in China as opposed to just 50 to 60 or so in Europe and North America combined. Some cities have increased 10 to 100 fold in population in 10 years. It is a modern economic boom similar to a gold rush that is all quite amazing.

Although the majority of the people remain poor, there are enough savings and foreign investment to fuel a dramatic if not breath taking growth spurt in the Chinese economy that could well propel it to become the largest and most powerful economy passing the US within decades - or less. This is coupled with impressive numbers of scientists and engineers being churned out at modern Chinese universities with massive foreign investments and technology transfers into China. The government is providing an orderly and business friendly environment plus is building vast amounts of modern roads and infra-structure.

The author explains in detail seemingly without any axe to grind and seemingly with a neutral political bias the sources of the investments, how the factories are structured, where they get the workers, how much they are paid, working conditions, how technology is transferred to China, intellectual property, aerospace businesses, the auto business, electronics, food, machine tools, exports to the US and Walmart, job losses in the US, structural changes in economies including other poor countries, a hollowing of the Taiwan economy, and on and on. It is all very fascinating stuff and does not bode well for our future.

In recent years we witnessed the overnight development of the inexpensive DVD player - as an example from China - along with massive job losses in the US manufacturing sector. Factories are moving from Mexico to China for further cost savings. As another example, the famed Japanese camera maker Nikon has moved camera prodcution to low cost China. The trends all indicate fewer manufacturing jobs here in the "west", a breakdown in vertically integrated US manufacturers, soaring prices for oil and natural resources, and cost deflation on everything from autos to electronics and eventually perhaps even jet planes. With labor rates of just dollars per day in China and with the huge market potential, companies cannot resist the temptations and market forces to move at least some manufacturing and marketing to China. In many cases that has become a technology trap since the price of admission into the Chinese market is often to share technolgy with Chinese companies. The Chinese have a habit of quickly copying the best new products with scant attention to intellectual property rights.

Will the Chinese bubble burst? Who can predict - but at the moment it is an impossible balance of payments situation for the US and with many more job losses going forward - perhaps in computer software next, or entertainment and media, or biomedical and genetics or even cheap drugs. They are producing more scientists and engineers (many more not just a few more) and they now have the savings and investments and with hundreds of millions of people looking for work - more mobile workers that the entire US or EU population - so the long term trend does not look good. As the author says, many worry about Islamic radicals, but perhaps more serious is that much of our economy is being moved to China or is already gone.

Great book, good read, and great value - 5 stars.