My reading over summer has included two excellent books that both put China into a very real and current global perspective. While covering similar ground they are complementary rather than overlapping. Both contain a lot of information and analytical thinking that should be standard for Australian governments but is not even on the radar. Here are brief reviews for those who may be interested.
Is China Buying the World? Peter Nolan (Polity Press 2012)
This book of 143 pages is full of great numbers about the state of global capitalism as well as China. I actually skimmed quite a lot of the case studies, though they would be very interesting to people in those industries. The cover has a quote from the Financial Times describing Nolan as the person who knows more about Chinese companies and their international competition than anyone else on earth. I can believe it.
The first substantial section analyses the revolution in capitalism since 1970. The key point is the dramatic consolidation and globalisation that has resulted from privatisations, liberalisation and general opening up of national economies, plus the huge transfer of nearly two billion people from communist or closed nationalist nations into the global economy.
He argues in detail that we now buy most of our goods and services from oligopolistic marketplaces. The firms that dominate so comprehensively are reinforcing their position by spending billions of dollars every year on research and development. Toyota leads the way, spending nearly $US10 billion per year on R&D.
Part two looks at China. Nolan analyses not just the amazing rise of Chinese industry, but how they did it, step by step. He also shows how far China has to go. Its exports are worth 13% of those from the group of rich nations. It has only nine firms in the top 1 400 globally and none in the top 100. China is a huge market for most big rich-nation firms but very few Chinese firms have a foothold in rich countries as anything but wholesalers.
Nolan concludes that China is not buying the world and has no prospect of doing so. It is the dominant firms in all product and service markets that are buying the world, and almost all of them are based in rich nations. It is extremely difficult for China to join this club. Being a base for other people's manufacturing is not the same as designing and marketing the products and setting the prices. China is trying to buy the right to develop resources but again it has to struggle in most markets because it is a late-arrival in a field dominated by rich-nation firms. It ends up dealing with countries the established firms like to avoid.
This is a very valuable book for global realists. It gets to the realities of capitalism right now and the trends into the future. It does not seek to portray them as good or bad. They are just realities to which all of us must adapt, be we a Chinese farmer, a European car designer or an Australian banker.
Winner Tale All, Dambis Moyo (Penguin 2012)
Moyo is a star of the finance world. She was born and raised in Zambia, has an economics doctorate from Oxford, a masters form Harvard and has worked for the World Bank and Goldman Sachs. She does not know it yet but she is also a global realist.
The first part of the book spells out China's huge demands on global commodity markets and some of the immediate impacts. India and other emerging nations are brought into the picture to explain the current situation, with many useful numbers along the way.
Part 2 explores the global impact of China's need for resources in terms of prices, markets more broadly, and politics. Though nominally about China this is really a look at the state of the planet and what we can expect over the next few decades based on a logical analysis of available data and realistically projecting forward. China is a good focus as it is the key driver of change now and for some time to come.
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