|NY Times, February 15, 2005
Car Clones and Other Tales of the Mighty Economic Engine Known as China
By WILLIAM GRIMES
How the Rise of the Next Superpower Challenges America and the World
By Ted C. Fishman
342 pages. Scribner. $26.
If the 20th was the American century, then the 21st belongs to China. It's
that simple, Ted C. Fishman says, and anyone who doubts it should take his
whirlwind tour of the world's fastest-developing economy.
The numbers are staggering. From 1982 through 2002, the United States
economy grew at an annual rate of 3.3 percent, he writes, well above
average for the world's most prosperous nations. China's economy grew at an
annual rate of 9.5 percent, meaning it "doubled nearly three times over,"
in the generation since market reforms were introduced. In 2003 it bought 7
percent of the world's oil, a quarter of its aluminum and steel, almost a
third of its iron ore and coal, and 40 percent of its cement. It makes 40
percent of all furniture sold in the United States. Its 3,000
Christmas-decoration factories exported more than $900 million tree
trimmings and plastic Santas in the first 10 months of 2003.
"China still only makes one-twentieth of everything produced in the world,
but on the world stage it plays the role of a new factory in an old
industrial town," Mr. Fishman says. "It can spend, it can bully, it can
hire and dictate wages, it can throw old-line competitors out of work. It
changes the way everyone does business."
One of the most powerful weapons in China's economic arsenal is what
businesses have come to know as "the China price." A stampede from the
countryside to China's new industrial boomtowns has created a vast low-wage
army, working for an average of 40 cents an hour, that can turn out
consumer goods of every description even cheaper than Mexican or Malaysian
factories can. American factories that cannot deliver to Wal-Mart or
General Motors at the China price often face two stark choices: they can go
under or set up shop in China.
Many choose option No. 2. But danger lies in that direction too. The
Chinese are adept at copying and quite loose in their interpretation of
intellectual property rights. One of Mr. Fishman's more striking examples
is the auto industry, which looms large in China's economic plans. American
and Japanese companies spend $1 billion to $2 billion to develop a new car.
The Chinese, by forcing foreign car companies to form joint ventures with
their companies and to share their technology in order to enter China, hope
to leapfrog over those kinds of development costs.
Foreign companies, salivating at the thought of 100 million Chinese
customers, cannot stop themselves from signing on the dotted line.
Sometimes, rude surprises await. At the 2003 Shanghai auto show, G.M.
executives unveiled a new $9,000 small family van, only to discover an
identical vehicle, priced at $6,000, at a Chinese booth in the same row.
The clone was made by Chery, a Chinese company owned in part by Shanghai
Auto, G.M.'s joint-venture partner.
Americans who fret over Japanese-style assaults on major industries miss
the point, Mr. Fishman maintains. The real competition, he argues, and the
real source of China's strength, lie in local enterprises "that spring on
the scene lean and mean, planned and financed by investors who want to make
money quickly." No one in Beijing analyzed the German toy industry and
decided that China needed to move in.
Mr. Fishman describes China's miracle economy with a mixture of fear and
admiration. He is a lively writer, and some of his most vivid pages are
devoted to the wrenching transformations brought about by the government's
controlled experiment in free enterprise. He paints a neon-lit portrait of
Shanghai, the showcase city of the new China. He also walks through the
market stalls and factory floors of new super-cities like Shenzhen, a
fishing town of 70,000 20 years ago that now has 7 million people, making
it larger than Los Angeles or Paris, swelled by migrants from the
countryside looking for a better life in the city. They are part of the
largest human migration in history, a tide estimated to be as high as 300
million Chinese who account for the dynamism of the Chinese economy.
Their wishes, increasingly, will be our commands, Mr. Fishman says. Their
production and consumption patterns are already changing the way Americans
shop, the kinds of jobs, wages and pensions they can expect and even the
air they breathe. The Asian Brown Cloud, a wind-borne industrial smog that
originates on China's east coast, can be seen in California as it rides the
jet stream. (China has 7 of the world's 10 most polluted cities.)
Mr. Fishman does not really have any convincing ideas on how to meet the
Chinese challenge. The book goes a bit soft at the end, as he recommends
better education to deal with the narrowing research and development gap
between China and the United States. He would like to see Washington pay as
much attention to China as to the Middle East. But he's a much better
worrier than he is a problem solver. If it's any consolation, China is
beating just about everybody in the world right now. How can you stop a
nation where peasants figure out a way to sell on eBay? It's simple, Mr.
Fishman seems to be saying. You can't.