Page 1 of
2 BOOK
REVIEW The challenge of China's
rise In China's Shadow
by Reed Hundt
Reviewed by Benjamin A
Shobert
In all likelihood, the recent
transition of power in the US Congress from the
Republican to the Democratic Party will be
uneventful where a dose of instability and change
might be appropriate, and eventful precisely
within those issues that beg be allowed to rest.
Among the expected changes in direction is
a moderately more confrontational tone with China
due in large part to the Democratic
majority's political
interests as represented by the trade unions - to
name only one of the many identifiable populist
constituencies they represent.
Reed Hundt,
one of Intel's board of directors and former
chairman of the Federal Communications Commission
under the administration of US president Bill
Clinton, has written a new book titled In
China's Shadow: The Crisis of American
Entrepreneurship that manages to avoid the
pitfalls of much contemporary analysis on China,
and consequently has something helpful and
insightful to say about US-China relations.
That Hundt played an
important role within the most recent Democratic
US presidential administration and now has
something original to say concerning China should
serve to calm the waters and give us all hope that
today's
Democrat,
now in a position of leadership, can find a
temperate and possibly even helpful tone on policy
questions involving China.
Hundt's
analysis is unique in that he chooses to see China
as a test of the United States' resolve to renew
itself instead of the tired and overwrought
discussion that revolves around the idea that
China must become a challenge to US economic,
geopolitical and military hegemony. Refreshingly,
Hundt's political loyalties are less important to
him than recognizing that while China may be a
threat to US prosperity, it is only such if
Americans and their leaders - regardless of
political affiliation - refuse to adapt, change,
and develop new sectors to their economy.
Hundt states: "The [George W] Bush
administration bears no responsibility for making
Chinese entrepreneurs a threat to American
businesses. The trends behind this phenomenon
developed in the Clinton administration or
earlier. But in this matter, as in almost every
aspect of life, the response is more important
than the opening. The Bush administration showed
little sign of delegating people or time to
crafting an answer to the new China question.
Meanwhile, the Democrats treated being out of
power as an excuse for being out of ideas" (p 81).
Rather than dwell on how China is
impacting the US economy, or the challenges China
must deal with to modernize, topics that other
authors have already dissected but which seem to
make for assured sales and consequently be a
regularly rehashed topic for publishing houses,
Hundt focuses on how China has the potential to be
a necessary constructive object lesson that US
policymakers must use to shape changes to
America's systems and policies.
Hundt's
belief is that the best way for the US to protect
what it currently has - its standard of living,
educational systems, world-class companies - is to
encourage its citizens to take risks and innovate.
Similarly, Hundt makes it clear that the highest
stake is not losing America's economic resilience,
but if the noble intangibles of the US experience
- freedom, personal liberty, an elevated notion of
individual rights and social responsibilities -
ultimately are lost because of an inability to
adapt to a changing world where China takes over
the role as the world's factory.
Reading
Hundt's work, one has the sense that he believes
it is likely US politicians will use China as a
scapegoat for internal problems rather than as
motivation to change the way the US must in the
21st century. Hundt's work provides one of the
clearest and, unfortunately, rarest perspectives
on the choice between how the US should respond to
China: an internal status quo and protectionism,
or adaptation and evolution. Hundt is aware that
the inevitability of change makes protectionism
ill-fated and ultimately cancerous to those very
industries and workers it seeks to protect.
Hundt's book is not intended to be a
polemic against protectionism; rather, his hope is
that the challenge China represents to America's
economic interests will be met by reinventing the
United States, challenging its citizens to find
new avenues to grow, and new venues for
prosperity. To his credit, Hundt wishes the reader
to move quickly from understanding the challenge
China poses to framing this challenge within the
context of a US need to reinvent industry, develop
new technologies, and foster the next generation
of entrepreneurs who will innovate their way to
global success.
Hundt manages to take both
the private and public sectors to task for the
somewhat inconsistent and quasi-catatonic response
to China that has thus far characterized the US.
Among the more interesting points Hundt makes is
his argument that US business needs to coalesce
clearly around an identifiable set of reforms that
will seek to further the country's internal
economic growth.
While to some the
uniformity of opinion from such an ambiguously
defined group as "US business" may seem naive,
Hundt deftly points out that such coalescence is
not without recent precedent: "When a large number
of American business leaders can agree on what to
ask for, they usually can persuade any government,
regardless of the party that is in power, to give
it to them. For example, firms that had amassed
profits overseas asked for a tax break on
repatriating the money. They got it.
"In
2004 the president signed a law reducing taxes on
foreign profits to a tiny 5.25% (an 85% discount
off the normal level) as long as firms brought the
cash home by the end of 2005. Firms repatriated
almost a trillion dollars" (p 86).
Given
Hundt's experience with the technology-savvy
Silicon Valley, it comes as no surprise that he
would emphasize the role of entrepreneurship to US
change. Facilitating this requires emphasizing
change in "the architectures of law, technology,
and leadership" (p 89).
The central point
of Hundt's book, that a reinvigorated
entrepreneurial culture is critically important to
US economic success, may seem overly obvious in
the ethereal world of ideology. Yet Hundt's
analysis reminds us that just as the best design
is elegant in its simplicity, so is the best
policy. In managing to advocate such a
straightforward idea with what are always
pragmatic suggestions on how to achieve his ends,
Hundt provides just such an elegantly simple
argument.
Government involvement through
industry regulation is not the answer for Hundt;
neither is anything with vestiges of
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Democrat,
now in a position of leadership, can find a
temperate and possibly even helpful tone on policy
questions involving China. 
