China book reviews

From The NY Review of Books. I briefly mentioned both of these books in earlier posts here and here.

Three Billion New Capitalists: The Great Shift of Wealth and Power to the East
by Clyde Prestowitz
Basic Books, 321 pp., $26.95

China, Inc.: How the Rise of the Next Superpower Challenges America and the World
by Ted C. Fishman
Scribner, 342 pp., $26.00

The "rise" of China has suddenly become the all-absorbing topic for those professionally concerned with the future of the planet. Will the twenty-first century be the Chinese century, and, if so, in what sense? Will China's rise be peaceful or violent? And how will this affect the United States, the current "hyperpower"? In fact, China has been "rising" for some time (after several hundred years of "fall"), but for many years its claim to notice was obscured by more exciting events. Attention in the 1990s concentrated on the fall of Soviet communism, "globalization," the spread of democracy, and the high-tech revolution. These developments, which left America as the world's sole economic and political superpower, seemed to belie Paul Kennedy's prediction in 1987 of relative US decline and "more of a multipolar system."[1]

The attack on the World Trade Center in 2001, together with the concurrent collapse of the high-tech bubble, exposed America's fragility, but this was masked by the hyperactivity of the Bush administration. The "war on terror" planted American armies in Afghanistan and Iraq; the Clinton surpluses were succeeded by the Bush deficits to shore up the economy and finance the military operations. However, as the Iraq escapade foundered and the deficits ballooned, the sense of relative decline reasserted itself. Unlike in 1987, there was now a clear candidate for the succession: China. This was especially so as the US economy became dependent on China's bankrolling its huge trade deficit. The dream of an "American century" receded, to be replaced by the nightmare of a "Chinese century."

Focus on China is overdue. For the last quarter of a century its economy has been growing by over 9 percent a year, increasing eightfold. However, it is not just this long-sustained hyper-growth rate that amazes and alarms the observer. It is the size of the economy which is growing. China's population is officially estimated at 1.3 billion, but is probably larger—one fifth of all the people in the world. This makes its rise much more important than that, say, of Japan in the 1960s. From the economic point of view its cheap labor is much more abundant, so its cost advantage will not quickly be eliminated. The size of an economy obviously matters, too, in measuring power. The Chinese economy, in terms of the purchasing power of the Chinese people, is about two thirds the size of the US economy.[2] If it continues to grow at 9 percent a year, it will overtake the US by 2014. Lee Kwan Yu of Singapore believes that the rise of China will shift the balance of power back to the East for the first time since Portuguese caravels arrived there in the sixteenth century.

China's growth, simply because of its size, is bound to create problems both for itself and others. From the Chinese leadership's point of view, the main problem is how to maintain social cohesion amid the vast socio-economic upheavals going on. Apart from the environmental degradation and rampant corruption, China's pell-mell, and largely uncontrolled, economic growth is disturbing its domestic stability in a profound way: there is a huge floating population without settled jobs or abodes, and a development and income gap between the coastal and inland areas which is as big as between the United States and North Africa. According to one estimate, 30 percent of China's urban workforce, or 200 million people, is currently unemployed or underemployed. The livelihood of another 100 million agricultural workers is threatened as World Trade Organization rules increase China's dependence on foreign food supplies. The specter of chaos frightens the rulers in Beijing.

In international relations, the issue is whether China' impact on the world will be peaceful or violent. Th debate here follows disciplinary lines. "Those who focus on economics tend to see partnership, cooperation and reasons for optimism despite tensions, while security experts are more pessimistic and anticipate strategic conflict as the likely future for two political systems that are so different," writes one commentator [3]. Both views can claim some evidence in their favor...