BOOK REVIEW
Look who's come to dinner Superfusion by Zachary Karabell
Reviewed by Benjamin A Shobert
One could be forgiven for thinking that books about China tend to come and go
in phases. The prevailing theme of the mid-1990s about China as a cheap
production base was followed by hushed awe at the potential size of the
country's market. Inevitably, a group of authors then made the obvious link:
because China was cheap for industry and such a vast country, it was going to
be a growth dynamo for the next several decades.
And, as we might expect given a vacuum of conventional threats and a wee bit of
insecurity on our own part, the next round of authors seemed enamored with the
idea that the growth dynamo was likely to become - eventually - some sort of
"near-peer" economic and military threat to the United States. This is the
point at which current popular writing on China seems stuck. It is with this in
mind that we may welcome Zachary Karabell's new book, Superfusion: How China and
America Became One Economy and Why the World's Prosperity Depends On It.
Karabell represents a group of thinkers who refuse to reduce US-China relations
to simple echoes of the Cold War which reverberate through the popular
consciousness, providing easily understood, but woefully inadequate, boundaries
within which to place today's China.
As reputable voices within government and media begin to challenge the
legitimacy of China's economic ascent, Karabell is among those who quietly but
firmly point towards the profound intertwining of China into the global
economy, asking two basic questions: if this was not how China was supposed to
evolve, the means by which it was to re-enter the global order, then what was
the other option? Perhaps more importantly comes the second: what alternatives
are there to a hostile reaction to China's growth upsetting the global economic
order built over the past two decades?
This point comes early and forcefully in Superfusion, when Karabell
writes:
The fundamental question for the United States is whether to
accept or resist the fusion with China and all that it entails ... many
Americans remain locked in a mentality that sees the United States as a nation
that can remain powerful only by being more powerful than everyone else ...
Rather than hobbling China, the United States may end up hobbling itself ... In
trying to prevent China from assuming its place at the table, we instead evict
ourselves.
Among the best of Karabell's insights is the idea
that the US - once the primary advocate and beneficiary of free trade - might
react so negatively to China's rise and the current recession as to make its
own economic future questionable.
The balance of Superfusion is first an attempt to recreate the history
from which China emerged in the late 1970s to its current embrace of
quasi-capitalism and, secondly, to show how this still nascent relationship
benefits American consumers and companies. Where it is in some ways frustrating
is in rehashing some of the experiences of business - Avon, Huawei and KFC are
a couple of examples - that have been used time and again by other
commentators.
But throughout Superfusion Karabell is able to weave together at least
three threads which leave the reader engaged: how the US-Sino fusion impacts
business, its political implications and brief glimpses on how these stand to
influence us as individuals.
This fusion is apparent when Karabell writes about the context within which
China became America's factory:
The trends began in the 1990s - with US
companies investing heavily in China in order to access the new market and gain
advantages from low-cost manufacturing - unfolded in the context of heady
economic times in America. Even though some sounded the alarm about China as a
competitor for US jobs and as a potential rival of the United States on the
global economic stage, China was still too small an economy and US confidence
was still so strong that these concerns paled in comparison with the sense of
opportunity.
Karabell's unspoken question seems to be whether
America should be blaming China for its malaise, or if perhaps thinking about
how best to restore self-confidence. After all, as he suggests, at one point
the US believed we could afford - and in many cases affirmatively hoped - to
move certain types of industry offshore.
To now want those jobs back, to believe that lost industries are now key to
future success, seems to indicate a country which has lost a vision of a
tomorrow worth working toward. What Karabell equally recognizes is that, unless
the US is able to rediscover confidence in itself, it stands not only to lose
even more jobs but, as he provocatively suggests, the allegiance of US
companies that begin to divorce themselves more and more from their American
heritage and take on a more detached global role.
The crisis of the past two years provides ample opportunity for Karabell to
argue that the US-Sino relationship insulated both countries from what could
have been an even more serious situation. But more importantly, the analysis
throughout his book supports the idea that, while low-cost, high-labor
manufacturing has certainly moved from the US to China, too few Americans
appreciate the role Chinese domestic economic growth has played in China's
broadening wealth.
Karabell goes further, writing that "Chinese consumption has been a more
important factor than most acknowledge ... Contrary to claims that a third or
even more of China's growth was due to exports, the actual figure was closer to
15% and perhaps much lower." It is likely Karabell makes this point to dislodge
the singular fixation many American policymakers hold that China should only be
understood as a predatory exporter. It also reinforces the importance of
viewing access to the Chinese domestic market as an important political goal as
well as a business strategy that forward-thinking corporations need to put in
place.
Towards the end of his book, Karabell writes with the candor that makes Superfusion
worth reading:
As for those who believe that China's growth has been
built on a flimsy foundation, with too much state intervention, too much
spending on big projects, too little entrepreneurial activity, insufficient
innovation, and inadequate individual consumption, the fact is that no one
knows the secret formula for economic success. The Washington mantra of open
markets and less state activity was the orthodoxy until it proved to have some
critical flaws, but no other system has proven better. If there were a clear
road map to prosperity, everyone would use it. [Emphasis not in the
original].
American thinkers such as Karabell are particularly
important at this moment, when US confidence has been rocked and its beliefs
about what the future holds appear hollow and shallow. Karabell notes, as have
many before him, that China's rise is no more certain than America's demise. Superfusion
leaves the reader with a sense that the challenge in the next decade is not to
stifle China's rise, but rather to restore America as the beacon of
entrepreneurship and innovation it once was, to view China as an opportunity
for growing the US economy and not a threat to its people's standard of living.
Superfusion: How China and America Became One Economy and Why the World's
Prosperity Depends on It by Zachary Karabell. Simon & Schuster
(October 13, 2009). ISBN-10: 141658370X. Price US$26, 352 pages.
Benjamin A Shobert is the managing director of Teleos Inc
(www.teleos-inc.com), a consulting firm dedicated to helping Asian businesses
bring innovative technologies into the North American market.
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As reputable voices within government and media begin to challenge the
legitimacy of China's economic ascent, Karabell is among those who quietly but
firmly point towards the profound intertwining of China into the global
economy, asking two basic questions: if this was not how China was supposed to
evolve, the means by which it was to re-enter the global order, then what was
the other option? Perhaps more importantly comes the second: what alternatives
are there to a hostile reaction to China's growth upsetting the global economic
order built over the past two decades?
