When Tom Friedman is urging the Americans to follow China’s economic example, and the US mainstream media is all about how powerful China’s economy is, you know that it’s a good idea to take a closer look. Bill Dodson does just that with his latest book China Fast Forward.
China’s current model of economic development is largely based on transplanting the industries which made the US great in the 1950s, 60s and 70s, and then adding a very generous splash of top-down central government planning, all managed under the hawklike gaze of the Chinese Communist Party, which controls finance, land, key resources and personnel. The result: a huge and so far, flourishing, 20th century economy in the 21st century.
Since the author is a consultant, he has had the opportunity to look at several industries up close, including auto manufacturing, mining, solar energy manufacturing, wind energy, and railways, just to name a few. This exposure to a wide variety of industries gives him the opportunity to identify industry quirks, and then extrapolate social commonalities.
The problem of course, is that while this economy can deliver very impressive early results (as it is doing now), it is not equipped to deliver sustained growth over time. Here are just some of the problems pointed out in the book:
- Huge waste of resources, especially water (the author argues that water will eventually need to be rationed);
- Environmental damage on an epic scale, with very high cleanup costs
- Short-term thinking, which encourages corrupt officials to make as much as possible as soon as possible, and then leave China with their families;
- The complete domination of society by the party, with little tolerance shown for civic institutions;
- The widespread belief among many Chinese that they still are not masters of their own destiny;
- A society and education system which continues to value rote learning over creativity;
- A society and culture which while old, has not yet developed civic values.
These are views which only someone who has spent considerable time in China could make, not someone who makes a few passing visits to China, gazing in awe at the Shanghai skyline, or the immensity of Tiananmen. After all, those are exactly the reactions a Chinese official would want a visitor to have.
This book makes it very clear that the easy stage of China’s growth has come and gone, and the next stage requires some thoughtful and balanced thinking. With the new Chinese leadership coming into power in March 2013, it gives a good idea of the challenges they will face as they deal with a China which, while continuing to grow faster than the other major economies, will grow at a slower rate than the official 8% of the past decade. Moreover, China no longer has a cost advantage compared to many other developing economies. At the same time, the party has to deal with a growing rich/poor gap, and the growing aspirations of many Chinese. Not an easy challenge, any way you look at it.
Most importantly, China Fast Forward makes it clear that all these issues cannot only be dismissed as China’s problems. Since China has one-fifth of the world’s population, and since we are interconnected in a globalized world, China’s problems are the world’s problems.
One way or another, we will have to deal with these challenges together.
The book is available from Amazon in Kindle and print formats; you can order it by clicking on the image above.