BOOK
REVIEW Global tango tilts toward
China Reviewed by Muhammad
Cohen
Evidence continues to mount that
Western economies are on a collision course with
China. Calling his new book China Versus the
West, economics professor Ivan Tselichtchev
seems to be cheerleading for the inevitable crash.
But Tselichtchev has a far more nuanced message
that revolves around cooperation and mutual
understanding that could, to some extent, address
the West's complaints about China's unfair
economic behavior.
No matter what the West
does, at this stage of history, the world is
tilting toward China, according to Tselichtchev.
In the book he provides a valuable service by
dispassionately analyzing how China uses its
national laws and international opportunities to
its advantage. The key for the West is to accept
the situation and work with it as skillfully as
China and its companies do. If the
West wants things to be
fair, it should stick to the San Diego weather
report.
The book analyzes the two
contending sides, starting with the challenger
from the east. Tselichtchev demonstrates
convincingly that China's position as the world's
leading manufacturer will remain unassailable for
decades. China's combination of human resources,
infrastructure and domestic demand enable it to
move up the value chain while continuing to
dominate the lower end. Moreover, China is using
that dominance to expand into related fields, such
as buying and building its own global consumer
brands. Even though he's often wielding statistics
from more than five years ago, Tselichtchev offers
his most compelling and original analysis here in
the first third of the book.
Yuan is
not the answer Some countries can compete
with China's manufacturers on price, but not
Western ones. Tselichtchev argues convincingly
that the much-lamented valuation of China's
currency, the yuan, is a factor but hardly a
decisive one in the Middle Kingdom's cost
advantage. The only hope for Western manufacturers
lies in filling boutique or specialty niches, as
manufacturers have done in Japan, Tselichtchev's
home for decades, or simply moving to China and
producing there.
There is room for US
services exporters, according to Tselichtchev, if
they're ready to accept the space China offers and
the restrictions China demands. It's refreshing to
have these trade issues analyzed for a Western
audience without the filter of domestic politics
that turns the discussion into a treatise on good
versus evil. However, Tselichtchev's analysis
sometimes seems overly hostile to the West and
strays toward naive sympathy toward China.
Beyond manufacturing, Tselichtchev
examines China as a major global financial power.
That new role is leading to conflicts as China
tries to flex its financial muscle, whether
through buying Western companies or presenting
impoverished, resource rich countries
comprehensive with development packages that
seamlessly mix aid and commerce. Tselichtchev
notes that the private sector now plays a leading
role in China, but state-owned companies remain
the major overseas actors, heightening Western
consternation over China's foreign acquisitions
Rebalancing flops China's
unique model has created a rich state with a vast
majority of poor people. For Tselichtchev, that
renders the popular notion of rebalancing - Asian
consumers' spending approaching Western levels - a
fantasy. He's right on that score, and he
acknowledges the potential explosiveness of a rich
state-poor people configuration.
But
Tselichtchev fails to address the emergence of
extraordinarily wealthy Chinese individuals (and
companies) either for the potential impact on
social stability domestically, or for their very
clear and present impact on asset prices,
beginning with property, in Asia and beyond.
China's wealth has also caused a seismic shift in
the global casino industry, making Macau's
gambling revenue more than five times bigger than
Las Vegas, and promises to similarly reshape the
global travel industry and the luxury brand
landscape, to offer just two examples.
While understanding and often admiring
China, Tselichtchev mainly expresses disdain for
the West, considering it morally and, lately,
financially bankrupt. His litany of US debt woes
and need for austerity would make Tselichtchev a
credible Republican presidential contender. While
parroting right wing lies about the danger of US
budget deficits and the growth of America's
welfare state, he prescribes a full range of
corporate welfare measures. Many of these
proposals appear drawn from Japan's industrial
policy playbook, strategies that haven't helped
Japan much over the past two decades.
Play by their rules Above all
the West needs to see China for what it is: a
capitalist state that uses national and
international rules to its benefit. Tselichtchev
urges the West to take a similar approach if it
wants to compete with China. He suggests, for
example, that the West keep pushing China on
currency valuation, even though it won't revive
Western manufacturing, and fight discriminatory
Chinese practices in areas such as government
procurement.
But the main thrust of the
book, contrary to its title, focuses on the
benefits of cooperation between China and the
West. Like it or not, the two sides need each
other and the two sides have to accept that.
The West has to accept that its days of
unfettered global leadership are over. Through its
own policies combined with good fortune, China
finds itself in the kind of economic sweet spot
the US enjoyed in the period following World War
II. Neither China nor the West can succeed without
the other, but now China has the upper hand.
Tselichtchev's reminder of those realities is
useful, particularly for the West, though not very
original.
China Versus the West: The
Global Power Shift of the 21st Century by Ivan
Tselichtchev. Singapore, John Wiley & Sons
(Asia), 2012. ISBN: 978-0-470-82972-1. US$29.95;
221 pages.
Former broadcast news
producer Muhammad Cohen told America's
story to the world as a US diplomat and is author
of Hong
Kong On Air, a novel set during the 1997
handover about television news, love, betrayal,
financial crisis, and cheap lingerie. Follow www.MuhammadCohen.com
for his blog, online archive and more.
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There is room for US
services exporters, according to Tselichtchev, if
they're ready to accept the space China offers and
the restrictions China demands. It's refreshing to
have these trade issues analyzed for a Western
audience without the filter of domestic politics
that turns the discussion into a treatise on good
versus evil. However, Tselichtchev's analysis
sometimes seems overly hostile to the West and
strays toward naive sympathy toward China.
, a novel set during the 1997
handover about television news, love, betrayal,
financial crisis, and cheap lingerie. Follow 
