Book Review:
China INC.
How the rise of the next superpower challenges America and the World.
Ted C. Fishman
Edward Raymond
The author, Ted C. Fishman, describes how China is intertwined with the world and how China is applying economic pressure to countries around the world, especially America. Fishman provides a candid, provocative perspective accounting China’s rise to dominance and how it affects every American at all levels.
In the Introduction: The World Shrinks as China Grows, the author provides extraordinary statistics not readily available in the media in the United States. China’s enormous population is allowing the natives amass an arsenal of high skilled, superior work ethic and low cost labor pool has made China the world’s largest maker of consumer electronics. China is also poised to be leaders of the biotech and computer manufacturing industries.
Fishman describes some interesting facts about China that includes a relative analysis of the shear size of China. The population of China is consolidated in the 100 to 160 cities with more than one million or more people. In a stark contrast, America has nine cites with populations greater than one million, while Eastern Europe combined has 36 such cities.
China’s rapid rate of industrialization can be credited to the leapfrogs in infrastructure development and advances in technology. China is an laying fiber optic a rapid rate. The leaders of China are buying oil fields internationally and negotiating exclusive deals with Saudi and Russian companies.
The author describes several real world stories depicting the direct affects China is having on the average American. One example that was interesting was the expatriate of the US who now teaches English in Shanghai and was able to receive laser eye surgery for $600 US performed at an ultramodern Chinese clinic for a tenth of the price the procedure would cost at home.
China is able to leverage its enormous labor population due to the relative stability of the region. The Chinese workforce is described as a reliable, docile, and capable industrial workforce, groomed by government-enforced discipline. China’s workforce is dubbed the greatest natural resource on the planet by the author. The numbers tell us that China’s population is 1.3 billion people and China’s GDP was $1.4 trillion in 2003. The author describes how these figures could be unduly low, since some provinces in China’s central planning awards funding to provinces designated as poverty zones and this leads to misreporting. Another reason these numbers may be inaccurate is the existence of an underground economy, which is not included in the official numbers. Lastly, the author believes that the China pegs its currency to the US Dollar. A country like China should be able to see its currency value appreciate against the dollar as the dollar moves up and down. Accounting for these disparities, the U.S. Central Intelligence Agency speculates that the size of China’s economy is in fact closer to $1.4 trillion with a GDP more close to $6.6 trillion.
In subsequent chapters, the author describes the history of China to provide insight into how China has attained its ranking and unprecedented economic growth. These timeline of change is most visible in the city of Shanghai, China. In the twentieth century-until China and the world unraveled in the 1930’s-Shanghai was considered one of the world’s most important commercial centers along side with London, New York, Paris and Tokyo. Shanghai has also historically been the world’s second busiest port. The city’s history of foreign domination is one of China’s enduring national wounds. The government uses the darker history of the colonial history and humiliation of Shanghai, once painted “The Whore of Asia,” as the fuel that drives the Chinese people to strive to be the best.
The author accounts the revolution of the farmer Chinese and their migration into more suburban areas to seek a better life for their families. With the government giving land to its people and then immediately turning around and reclaiming these plots for government collective control, this has led to the great rural migration. The author describes the hukou system was described to prevent rural-to-urban migration. Families were required to at request show an internal passport describing the family’s origin, class affiliation, personal identity, birth date and occupation. Those found to be out of their rural areas would be detained and/or returned home. The revolutions and uprising and eventual liberation of China’s farmers set the stage for China’s emerging market economy.
Economic opportunity in China, largely driven by geography, has grown so lopsided that China now ranks among the most unequal of nations. On average, rural incomes are only a third of those seen the sprawling cities. An interesting fact the author offers is that farmers make a fraction of their urban counterparts, but the government requires them to shoulder disproportionately higher taxes than urban dwellers. Also interesting is the fact that those farmers making the most income receive it by family members who have left the home and sends money to support them. The author describes how Zhejiang Province and the Wenzhou district has grown at astonishing rate because those that left to attain educations outside of the rural nations return to make even more money.
The author transitions from stories in China to parallel stories in the US. Merrill Weingrod, the principle of China Strategies in Providence, Rhode Island, closed his leather belt manufacturing plant and partnered with Chinese manufacturer its product to lower their costs. He closed his plants to become an intermediary to American businesses wanting to do business in China. Zhenjiang is an extraordinary example of a phenomenon that is repeated in varying degrees elsewhere in China.
Competition within China is fierce and most closely touted as a blood sport. China’s free market is unique in size and characteristics. For example, the Chinese citizens have the highest rate of savings in the world, saving on average forty percent of their income. This allows the better-off of them to take advantage of the growing housing market, despite the 20% down payment requirement to obtain a government back and issued mortgage. To gain the dollars of Chinese requires understanding the culture of the people. In the red-hot Shanghai housing market of 2004, the most aggressively built properties were high-end high-rise apartment buildings that were sold off as condominiums. Apartments could be $120,000 and in the same year rise to $300,000 for the same space. This growth accounts for the risk of speculators. The author refers to these Shaghainese as the Wenzhou mafia, not because they are criminals, but for the characteristic Zhenjiang bravado and a penchant for touring Shanghai’s construction sites inseparably attached to their mobile phones and roller bags full of cash.
Most of China’s factory jobs are made up of women. They can have pay of 17 Yuan per month and a dormitory that provides room and board. The capitalistic nature of the Chinese people are finding these jobs are not as profitable as other more personal and private ventures. Many young women are leaving the factory for high paying prostitution jobs. Their worksite is the karaoke bars and can have 1,000 women on premises. They can earn up to three times that of a factory worker.
The book goes on to describe the great energy debacle, environmental concerns/pollution, Beijing’s race to out-skyline Shanghai in the near future, Wal-Mart’s success, global consumer market wars, the China Price, the automotive industry, the pirate nation and the interdependency of the economies of China and the US. The author closes with a story of Aaron Shershow, an American living in Shanghai.