Book of the Month: China, Inc.

Tomorrow night's discussion will presumably center around China, Inc. : How the Rise of the Next Superpower Challenges America by Ted C. Fishman. We all know that we'll go off topic at some point but that is what makes our discussions so much fun. I scoured the net for reviews and found some stuff.

The much maligned TNR site has one the better (and shortest) reviews. Noting the massive volume of facts and interviews used by the author but also the paucity of political analysis and discussion of controversial topics:

Fishman has compiled an impressive array of facts, figures, and anecdotes about China's business boom. And to his credit, he includes worthwhile interviews with everyone from shop sellers in a Shanghai knick-knack market to Patrick Lo, chief executive of networking equipment giant Netgear Inc. But while Fishman's range of reporting is impressive, his book could have benefited from an overriding argument--or rather, any strong arguments at all. Occasionally Fishman lets an opinion seep in, but only in the most cursory of terms. For instance, in his discussion of the Three Gorges Dam, the government's massive effort to block off a Lake Superior-sized reservoir along the Yangtze River, he laments briefly that the project will destroy much of the gorges and several cities, while displacing over a million people--quite a point for a mere aside.

By avoiding more controversial waters, Fishman reduces heated political debates to endless on-the-other-hand dialogues that would put Tevye to shame. In his chapter on piracy, Fishman says that China's vast counterfeit market constrains business innovators because they know any good idea will be ripped off. But he stops short of outright condemnation of piracy, explaining that the underground economy also provides an influx of much-needed cash to China. Then, moments later, he concedes that China's piracy robs the world of wealth. In his chapter on the valuation of the yuan, Fishman hedges again, noting both that the yuan's peg to the dollar falsely inflates China's competitive advantage and that if the yuan were unpegged, it would create instability. In other words, there are pros and cons to the current valuation of Chinese currency. You don't say.

The China Economic Review feels that China, Inc. is "written with tabloid principles in mind" but says that's "not a bad thing." CER notes that the message of the book that China is "big and growing fast" is beaten to death and not necessarily news to it's own readers. CER also feels that the analytical side of China, Inc. falls short failing to ask what happens next?

The Press Division of the Taipei Economic and Cultural Office in New York has a surprisingly benign review that does not criticize the Reds. Asia Times also has a perfunctory review that summarizes the book well but offers very little analysis.

Finally the Asian Review of Books has an intriguing review that launches broadsides at Fishman's thesis:

I feel Fishman stops his analysis one step too soon: he argues that China's underlying strength is its almost unlimited workforce, a workforce willing to work for subsistence wages. There are a few problems with this position: first, it may not be true indefinitely. There is already wage pressure and labour shortages in some industries and regions. Just this week, The Economist reports "Can China -- population 1.3 million - really be running out of people? In many of the most important parts of its booming economy, the answer, increasingly, is yes. Though China has a vast pool of unskilled labour, firms in the south now complain that they cannot recruits enough cheap factory and manual workers. The market is even tigher for skilled labour."Fishman also argues that China is competitive because it can swap out "million dollar machines" for low-cost human labour, i.e. turn back the clock on the last 150 years of industrial development. This is surely temporary, and cannot apply to everything: semiconductors cannot be made by hand, regardless of how cheap the labour is. This is not Fishman's only economically curious argument, for he also argues that China is inherently prone to over-investment and over-capacity, which is wants relentless depresses the "China price". However, this is an indication that China allocates its resources inefficiently, and in the long run, inefficient economies are not competitive.