AMERICA remains a colossus in Asia, for now. But between 1999 and 2004
trade among Asian countries jumped more than 80 percent, to $1.2
trillion, according to the World Trade Organization. Trade within Asia has come to exceed trade between Asia and the United States.
China has become the largest trade partner of almost every country in
Asia. Even the exchange between the longtime rivals China and India
ballooned over the last decade from about $1 billion a year to more than
that each month. Of the $600 billion in foreign direct investment into
China since 1978, most has come from within Asia.
Asia is a giant,
competitive, interdependent regional economy that affects the world.
Long-standing cross-cultural ties are strengthening, too, because of
booming intra-Asian tourism and student exchange. “Korean wave” dramas
and pop music can now be found in much of Asia, alongside Japanese and
Hong Kong fare. And it’s now often hard to distinguish national
origins of dubbed television and movies.
China
has become the largest trade partner of almost every country in Asia.
Even the exchange between the longtime rivals China and India ballooned
over the last decade from about $1 billion a year to more than that each
month. Of the $600 billion in foreign direct investment into China
since 1978, most has come from within Asia.
Asia is a giant,
competitive, interdependent regional economy that affects the world.
Long-standing cross-cultural ties are strengthening, too, because of
booming intra-Asian tourism and student exchange. “Korean wave” dramas
and pop music can now be found in much of Asia, alongside Japanese and
Hong Kong fare. And it’s now often hard to distinguish national
origins of dubbed television and movies.
“China Shakes the World”
by James Kynge (Houghton Mifflin, $25) is not about this interconnected
Asia. But Mr. Kynge — who spent more than a decade in China as a
journalist, becoming the Beijing bureau chief of The Financial Times —
offers a nuanced and superbly reported read about China rattling the
West.
How to convey China’s ascent? In a clever gambit, Mr. Kynge
travels to a huge gouge in the earth near Dortmund, Germany. The hole
was made by Shen Wenrong, the founder of Shagang Steel. The company
began in the 1970s as an illegal smelter of iron bars whose unlicensed
production enabled a Chinese textile mill to expand without the approval
of government planners. Transgression, Mr. Kynge rightly argues, is the
secret of China’s takeoff. Over three decades, Mr. Shen took some
colossal risks, and eventually had one of Europe’s huge steel mills
crated and shipped to the Yangtze valley. He paid just $24 million, the
plant’s value in scrap, but it can make high-grade steel for autos, one
of China’s strategic frontiers.
Prato, Italy, is another of Mr.
Kynge’s destinations. There he finds that the Tuscan textile industry
enjoyed a boon from Chinese laborers who paid “snakeheads,” or
smugglers, extortionist fees for perilous passage to Europe. But some of
those laborers used their acquired know-how and connections to
reproduce the garment-making operation in China at a fraction of the
cost, putting their former bosses out of work.
When European
intellectuals rant about “predator neoliberal capitalism,” they are
talking about the United States, but in Rockford, Ill., Mr. Kynge finds
that a Chinese company, the Dalian Machine Tool Group, has devoured
Ingersoll Production Systems, scattering the latter’s skilled American
employees to $7-an-hour jobs at Lowe’s. Then Dalian stalks the big prey,
the Ingersoll Milling Machine Company. It is thwarted only when someone
tips off the Pentagon, which helps to quash the deal.
Skim Mr.
Kynge’s fuzzy forecasting about the coming protectionist tide, but soak
up his telling vignettes. Liu Chuanzhi extracted excrement from public
toilets to make fertilizer as a student, was sent to the rice paddies
during Mao’s Cultural Revolution, survived and founded Lenovo, which within 20 years gobbled up the personal computer division of I.B.M.
Thus
does the author illustrate how China’s rise is not cliché but momentous
— even larger and quicker than that of the United States in the late
19th century.
Mr. Kynge devotes almost half of his book to China’s
vulnerabilities. It has 16 of the world’s 20 most-polluted cities,
while its water resources are not only dwindling but highly
contaminated. China is already an ecological catastrophe. Worse is to
come.
And pollution is not even the foremost problem. Corruption
has murdered social trust. Mr. Kynge describes how officials in Henan
province set up a blood bank that became contaminated with H.I.V. — as
many as a million peasants were infected — but instead of shutting it
down, the officials arrested activists and bullied journalists.
Stolen
exam results, impostor police officers: scam after scam highlight
profound governance problems beyond the lack of freedom. Mr. Kynge hints
that while the Communist Party is still in full control, officials’
transgressions of laws and regulations have devolved into an
institutional crisis for a capitalist economy.
Potent new
consumer tastes are absent from the book, but Mr. Kynge deftly uses the
familiar theme of piracy to illuminate the underappreciated complexities
of China’s economy. He tells the story of Yin Mingshan and his Lifan
Motorcycle, which is made with technology lifted from Honda
— but is itself copied and undercut by other Chinese pirates. By 1998,
more than 1,000 Chinese companies were making 15 million motorcycles, 5
million more than were sold. No wonder it’s hard to make money in China.
Profitless
producers retain access to nearly free capital from what passes for
banks in China and to new technology from foreigners desperate for a
joint-venture that could connect to those elusive 1.3 billion
customers. Mr. Kynge estimates that 90 percent of the manufactured
products in China are in chronic oversupply, because when copycats
squeeze profits in core products, Chinese pirates branch out to other
knockoffs. They read pirated translations of John F. Welch Jr., and go straight for their competitor’s gut.
Then
they go overseas. Lifan went to Vietnam, to undercut Honda there,
starting anew a pirates’ rush to the bottom. But Honda fought back,
setting up a factory on a Chinese island across from Vietnam to secure
Chinese knockoffs of Japanese parts. Here — with Japanese and Chinese
companies slugging it out over Vietnamese market share — we glimpse
Asia’s unparalleled mutual opportunities and strains.
Intensifying
prosperity and integration in Asia represent a return to historic
patterns. But never before have both China and Japan been so strong
simultaneously.
For international studies at American
universities, today’s principal unmet challenge is understanding the
vast global connections not centered on America and how the success of
China or Vietnam may contravene social science models.
For
American-based international businesses, the imperative is to capitalize
not only on growth within individual Asian countries, hard enough for
outsiders, but simultaneously in the countries they do business with,
regionally. China-Japan-Vietnam, Japan-China, Korea-Japan, India-China,
not to mention India-Persian Gulf and China-Africa — that’s
globalization, too.
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