Review: The Chinese Century–The Rising Chinese Economy and Its Impact on the Global Economy, the Balance of Power, and Your Job (Hardcover)

5 Star, Economics, Future

Amazon Page
Amazon Page

5.0 out of 5 stars Balanced, Helpful, Historical, Covers Values, Piracy, & Commoditization,

December 18, 2005
Oded Shenkar
This is a very fine book that is narrowly focused on the topic of Chinese economic competition over the course of the next 100 years. In his effort to simplify the book, which is helpful from a straight trade/economic competitiveness point of view, the author has been forced to lose context, not the least of which are the impact on China of the end of cheap oil, the end of free water (they have 300 water-stressed cities see De Villier “WATER”), and the rise of pandemic disease.

What most impressed me about the book, something other reviewers have not noted, is the author’s emphasis on values. He clearly understands the historical context for China’s evolution, and he clearly understands that China wants to adopt Western technologies without being obliged to adopt Western values. I could not help but realize that the USA–a 200+ year upstart–is now challenged by multiple major powers each thousands of years old, whose common view is that they do not like US values in the negative sense (see Jimmy Carter’s new book).

In the flyleaf, inspired by the author but drawing on the many other books I have reviewed here, I drew the USA and then the following surrounding it in clockwise direction, all with arrows pointed at the heart of the USA: India (9), China (10), Earth (11), God (12), Russia (1), Islam (2), Cuba (3), Venezuela (4), and Brazil (5).

Reflecting on the following pages from the author, I found it quite interesting (the dramatic corruption in China not-with-standing) that the Chinese were intent on achieving some form of “communal capitalism” (my new term) that spawned innovation and created the needed 15 million new jobs each year, while avoiding what happened to Russia, where Harvard helped a few oligarchs loot the Russian people, and took its endowment from $3B to $19B as a reward.

The author takes pains to discuss China’s shortcomings from an economic and political point of view, but completely avoids any discussion of the severe ethnic and environmental (energy, water, disease) challenges facing the Chinese.

Over-all the author succeeds at making the point that China is not analogous to Japan or Korea or the European Union because it is vastly larger in terms of achieving scale quickly, with a growing reputation for low-cost reliability that is burying brands and substituting Chinese generic offerings using Wal-Mart among others for global placement. The book also makes the point that the Chinese will not give up their low-cost labor advantage (30 to 1 advantage in hourly cost, displacing USA’s 5 to 1 productivity advantage) as they move up the value chain to high technology production.

I was very pleased to see an earnest and complete discussion of Chinese piracy (unauthorized sales) and counterfeiting (passing off a false replica). Together with his discussion of Chinese corruption, the near fatal state of Chinese banking and the near comatose nature of Chinese law, he provides a very troubling account that suggests that the Chinese will be able to flagrantly violate intellectual property laws as part of their growth. However, the author is equally balanced in noting that most nations of the world will have little sympathy for the USA and its multinational corporations that have spent 50 years looting the Third World.

One other point the author makes is that it will be the lesser developed countries such as Lesotho and the countries in the Caribbean and Central America that will suffer most from being displaced by the Chinese.

The author specifically suggests that China is non-expansionist in military and political terms, while likely to have enormous influence, perhaps displacing the USA, through its dispersed economic activities that will explode in the next quarter-century.

I put the book down pensive. In combination with “Future Jihad” and “The Fortune at the Bottom of the Pyramid” and “The Soul of Capitalism” and “Unconquerable World” and “Confessions of an Economic Hit Man,”, what I see in China is hope. Despite its corruption, it is just barely possible that the Chinese government might realize there is a meld of communism and capitalism that is not socialism, not communism, certainly not fascism or immoral capitalism. I coined the term “communal capitalism.” I envision communal capitalism as a system that is transparent, limiting interest rates to 10%, limiting executive compensation to 1000 times that of the lowest paid worker, but allowing for any one individual to accumulate up to $1B. Such a society would have extremely severe penalties for corruption, crime, drug trafficking, tax avoidance, and usury. It is a system that could focus on “The Fortune at the Bottom of the Pyramid.” I am influenced in my view by the author of “Crossing the Rubicon” who has pointed out that with the end of cheap oil, the Amish and the Cubans are the model for the future in the sense of pioneering sustainable agriculture and full employment without the reliance on pesticides and other energy/oil intensive interventions.

Most interestingly, and the author is to be thanked for pointing this out, such as society would reserve the traditional Mandate of Heaven: if the regime in charge fails to achieve prosperity for the majority of the Chinese, they get booted out. Values and education-whether we face the Chinese, or the Russians or the Islamic fundamentalists or the populists of Latin America, it comes down to values that are supportable, and education that is sensible. America needs to take a close look at its cards-right now they are not a winning hand.

One final note: by coincidence of interest I have read four Wharton School Publishing (WPS) books, and I have a note to myself that the four books are characterized by exceptionally detailed tables of contents, and that there is a clearly a publisher’s hand visible hear (unlike some books I have reviewed, where great substance is trashed by poor presentation). I will more attentive to WSP offerings in the future.

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