Thursday, 12 November 2009

“Superfusion”, by Zachary Karabell (Simon & Schuster US)

Karabell-Superfusion

How China & the US became one economy, & why the World’s prosperity depends on it

China’s emergence as an economic superpower is widely recognized. In Superfusion, Zachary Karabell (a long-time China-watcher) argues that this is only one aspect of the China story. Over the past decade, the Chinese and American economies have fused to become one integrated system – for this, he borrows the term coined by Niall Fergusson in The Ascent of Money: “Chimerica”.

How China and the United States manage their intertwined relationship will determine whether the coming decades witness increased global prosperity or instability. Before we look to the future, however, we must understand how Chimerica came to be. Karabell traces the 20-year history that began with the Tiananmen Square Incident in 1989. Adopting an aggressive economic reform policy, the CCP courted U.S. companies and expertise in the hope of learning from them and evolving their economy. Karabell spends quite some time detailing China’s economic evolution, particularly Deng Xiaoping’s reforms and the slow merging of capitalism and authoritarian communism into the amalgam it is today. While a well written section, there was nothing particularly new, which was a disappointment for me (as someone who reads a lot about US-China relations), but for someone either new to the subject or not as well informed this opening will certainly do a perfect job of setting the scene.

“Tentatively in the late 1980s and more boldly and aggressively in the 1990s, Western companies started to probe the China market. With stops, starts, and considerable growing pains, they established a foothold and began to see results from their efforts and their investments.”

After this contextual part of the book, Karabell then moves on to show how the American and Chinese economies have moved ever-closer together. The author charts how important some of these American companies were to China’s development, which turned their attention to China before others, frequently investing millions (if not billions) without seeing profits. These include Kentucky Fried Chicken, Avon, Federal Express, and Wal-Mart. Their early investments have been to China’s success, as well as their own, with China now an integral part to their growth and continued prosperity (General Motors China, for example, is the most profitable division of the corporation, keeping GM in moderately good health). This is also where Karabell’s work comes into its own and shows signs of breathing originality into a subject that is crying out for something new to be said or written about it. Taking individual companies and their experiences breaking into the Chinese market, Karabell is able to give the reader all the information one might need, with corresponding analytical depth (as well as a broader view).

Given all that was going on in the 1990s – from the growth and emergence of the internet as a powerful social, economic and political tool; the Dot-Com boom; and President Clinton’s various scandals and impeachment - “few people noticed the radical changes taking place in China” and the US-China relationship, taking note only when some major issue would flare in the media (such as the accident bombing of the Chinese embassy in Belgrade).

Though the (super)fusion accelerated with China’s admission into the World Trade Organization in 2001, it was still met with little (if any) attention or notice from the US population at large. Preoccupied with the Global War on Terrorism and the wars in Iraq and Afghanistan, the United States soon found itself in the difficult position of being deeply in debt to China, but at the same time “there can be no argument that U.S. companies reaped extraordinary profits from the growth of China.”

After pushing for greater opening of Chinese markets, and closer relations as a whole, the two countries find themselves in further difficulty. China, for one, has begun to question the wisdom of the close embrace with America. On the other side of the Pacific, buoyed by China’s loans, the US is experiencing acute anxiety over the high level of dependency it now has with China (indeed, this was a major campaign issue for many of the Democratic presidential candidates in 2008 – particularly Hilly Clinton).

Karabell argues that the fusion has become so great that neither country would be able to extricate itself from the partnership without severe harm (to both countries). The challenge for the United States is to embrace this new world order, even if it means a slight loss of relative power in order to ensure its future prosperity. China’s challenge is to recognize that it is now a major player on the world stage with all the risks and responsibilities that entails – in other words, it needs to take Robert Zoellick’s advice on becoming a “responsible stakeholder” in the international system (it also needs to accept that it is among the global economic heavyweights and should be treated thus).

The balance of the book is good – Karabell gives equal time and space to the US and Chinese perspectives, with plenty of examples and case studies to help illustrate his points and arguments. The book started off slowly, but after the author turns his attention to the use of case studies the book comes into its own and held my attention well. It’s difficult to come up with anything original to write about China and the US, but Karabell has done a good job of both outlining the general consensus arguments and issues involved, and then approaching them in an interesting and original way.

The author never gives in to abstracts or sweeping generalisations, either, which was of particular interest to me – too often authors and academics will refer to “US business” as a monolithic special interest, when (as Karabell shows us) this is not the case. Perhaps the best use of examples I’ve come across in a book about US and China in quite some time, making it a valuable addition to the existing literature.

The book should appeal to anyone interested or invested in the US-China relationship, and Karabell’s accessible style and excellent writing should make this an enjoyable and informative read.

Highly recommended.

Also try: Susan Shirk, China: Fragile Superpower (2007); Martin Jaques, When China Rules The World (2009); Niall Ferguson, The Ascent of Money (2008); C. Fred Bergsten, China’s Rise (2009); Richard Rosecrance, Power & Restraint (2009)

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