China Shakes the World – The Rise of a Hungry Nation
By James Kynge
Published by Weidenfeld & Nicolson, 2006

Fat kid at the fridge

First it took the West’s jobs, then the skills, not to mention the trees – will China never be satisfied? It’s a good thing Beijing is footing America’s bill in Iraq. My review for The Nation, published in May 2006.

The country that controls magnetism controls the universe, the old Dick Tracy comics used to insist, and in 2003, when manhole covers started disappearing from city streets all over the world, the magnetic force yanking them from the ground was China. It needed the metal to build stuff for the rest of the planet.
The world can find some way of replacing its manhole covers (or do without them altogether in Bangkok’s case), but feeding China’s sudden growth spurt – historically unprecedented in scale – is going to require a globe-spanning supermarket, and most of us will be waiting a long time in the check-out queue while Beijing fills its order.
Why should the rest of the world be China’s caterer? The question is soon likely to become a much broader election issue in the US than it already is as the Chinese swallow American companies whole, and the more opportunistically supple Europeans are starting to scratch their heads as well.
James Kynge, former Beijing correspondent for the Financial Times, provides a persuasive answer in this book, though hopefully it’s not the definitive one. It’s understood that allowing China to fail in its dramatic first flight will have dire consequences for the global economy, but it will take some fiercer convincing to prove that getting the juggernaut aloft in the first place is worth the risk.
It’s one thing to calculate, for alarm-bell effect, that the Chinese peasants flooding into new factories are pleased to be earning half what a Chicago labourer was paid in 1850 (after adjustments). It’s quite another to calculate the consequences, and here Kynge equivocates.

He’s certainly an engaging enough writer for a business reporter, encapsulating the great sweeps of economics in gritty tales from the front, like that of the vast German steel mill bought by a Chinese company, dismantled with astonishing speed and rebuilt just as fast at the mouth of the Yangtze, where it now churns out auto parts for the original customer, Volkswagen, and many others besides.
Rockford, Illinois – almost completely dependent on machine tooling after a century – frets as the Chinese take over its companies one by one. Yet it chooses to ignore the fact that it’s the US multinationals who are selling those firms out (for short-term gain, but, hey, that’s business). The Chinese alone are blamed in the Yankee heartland, and pity the congressman who doesn’t heed the whining.
The next big worry for Westerners, having been divested of their factories, is that Chinese skills are improving – it’s no longer just cheaper stuff; it’s better quality too.

And then after that, after the jobs and the expertise are gone, perhaps the rest of the world will have time to consider the environment.
Kynge reports that, its appetite for manhole covers sated, China is unable to grow enough soybeans for itself, so the Brazilians are happily cutting down six football fields’ worth of rainforest every minute to make room for soybean cultivation.
Brazil must have thought it better jump at the chance because it missed the boat on feeding China’s hunger for hardwood: In 2002 China officially imported 2.6 million more cubic metres of Indonesian timber than Indonesia approved for export. That’s in addition to all the Siberian, Burmese and African trees being cut down for its papermaking plants and its luxury-housing boom.

So this is one starving kid standing at the world’s refrigerator with the door open and the light dimming. Is a diet possible, a little tough love to make sure there’s enough left in the larder for the rest of us?
Kynge points out that there are benefits to supplementing China’s weight gain. Its cheaper and better products make life easier around the world, Chinese students overseas are a solid investment, and speaking of investments, the Chinese are deluging foreign companies with fiscal largesse.
What the author calls “one of the greatest ever surges in general prosperity” has placed US$700 billion in Chinese reserves behind America’s federal housing loans and its war in Iraq.
Then there’s tourism. Mainland Chinese have exhausted Hong Kong’s possibilities and now coat the beaches of Thailand and want to see the White House too.
Bottom line: the fat kid at the fridge is only one of billions, and as long as they’re buying, the rest of the globe is guaranteed a market of such stupendous proportions that it would be foolish to prod them toward consumer restraint.
This, of course, is why Western democracies view China’s wonky politics with a grimace on the homeward side of their faces but a smile to Beijing. There’s simply too much money to be made to risk bringing up Tiananmen (an event, by the way, which Kynge covered for the Financial Times).

So you have to do business with the Chinese, and as such, this book is a sensible guide for the beginner. Kynge explores the process of “creative disobedience” by which local officials deliberately misinterpreted the reformist commands of Beijing. “People began to form companies that were socialist and state-owned on paper but capitalist and privately owned in reality.”
“The legitimacy of the Communist Party sprang from both growth and control, yet in order to get more of one, it had to sacrifice part of the other.” It artificially depressed the cost of power and water for industry” and looked the other way as the banks fuddle lending records. A lot of this is still going on, naturally.
It’s a delicate balancing act for China and for the world watching with bated breath. China, Kynge writes, “is like an elephant riding a bicycle. If it slows down, it could fall off and the earth might quake.”
I would only quibble with the necessity of the word “might”.