Abstract
China’s outstanding economic performance has served as the foundation for its heightened ambitions for global eminence and its emboldened strategic intent. The two books under review represent diametrically divergent perspectives and approaches to the country’s two major economic strands of today, which are its economic and strategic outreach through the Belt and Road Initiative (BRI) and its struggle to sustain a high economic growth rate. Reviewing these two publications together from the unbiased viewpoint of a non-Chinese, non-Western reader, in fact, evokes amusement at the spectrum of narrative positioning that is possible regarding the Chinese economic experience.
While the first book, authored by Dawei Cheng, professor of economics at Renmin University, seeks to present the legitimacy of a Chinese model of globalisation, the second volume (of which the e-book version was reviewed) is by Dinny McMahon, a Wall Street Journal journalist, who spent a decade in China and emphasises the fragile underpinnings of the Chinese economy with lofty predictions about the ‘end of the Chinese miracle’. The former’s argument is couched in an academic framework, complete with research outline and explanation of methodological innovation, in contrast to the latter’s expansive, rambling and anecdotal chapters. Both were perused by this reviewer with a certain degree of scepticism.
Cheng states that global trade governance has been driven into a severe state of crisis through complete disregard of the World Trade Organization (WTO) by the Trump administration. ‘Therefore, understanding how to view anti-globalization campaigns and save global trade governance is imperative. In a time of reverse globalization, superior global governance is needed’ (p. 2). Taking this as its general theme, the book delves into four aspects of the BRI which is postulated as the much-needed alternative form of global governance.
The first is the historical progress of globalisation wherein the professor avers that while economic globalisation as a Western construct is thought to have originated in the United Kingdom, the Silk Road was its first occurrence in human history, as it was the first time that the coexisting empires of the Han, Roman, Parthian and Kushan were connected through trade. Overlooking previous trade flows between ancient civilisations, this statement about a Silk Road, a term that was coined in the late nineteenth century, appears rather fanciful. This chapter goes on to outline ‘globalization during American imperialism’ (p. 17), the ‘recession of Anglo-Saxon globalization’ (p. 21) and the US disrespect of multilateral trade regulations, developments within which the Chinese BRI was proposed.
The second aspect is the economic logic of the BRI. Citing the initiative as ‘bringing the world into a new stage of global governance’ (p. 23), the professor outlines its gains to developing economies which seek to become part of global value chains. Undertaking a detailed analysis of revealed comparative advantage between China and the Eurasian Economic Union, as an example, she states that the BRI ‘should aim to establish regional value chains to promote industrialization in developing countries’ (p. 33), a win-win for both sides.
Coming to the values and goals of the BRI trade governance, Cheng believes that the WTO system ‘lacks spirit and basic value consensus’ (p. 35). Economic theory does not factor ‘values’ within global governance, but a ‘valueless’ governance system cannot exist in the world. ‘Current anti-globalization campaigns have put liberalism on the inspection table. For the first time, people are doubting the viability of freedom as a universal value’, she writes (p. 37). In contrast to the values of ‘zero-sum game’, ‘winner takes all’ and ‘mutual demise’, BRI governance values are based on certain guidelines, the first of which is ‘holism’ or an aggregation of countries and their peoples. China’s philosophies prefer global order rather than global dominance along with symbiosis of human societies. Thus, ‘holism requires the participation, coordination, and cooperation of all entities involved in global trade governance’ (p. 41). The two other tenets of the BRI governance are identified as the ancient Chinese philosophies of ‘harmonious but different’ and ‘win-win’, leading to the ‘community of shared destiny’.
The final pillar of the book is the institutional arrangement for global governance that is professed by the BRI, comprising of rules, systems and processes. Terms which come up under this chapter relate to advocacy for getting countries on board, connectivity and an ‘embedded multilateral structure’ (p. 68). The monograph ends by appreciating the Regional Comprehensive Economic Partnership (RCEP) for being developed by small countries, while noting that the BRI is different from both RCEP and Trans-Pacific Partnership (TPP) as it is based on bilateralism.
The reader of this slim volume is left wondering what Professor Cheng would have thought about the China–US trade war unleashed shortly after its publication in May 2018. In this one-sided view which tries hard to present a BRI that is inclusive and considerate of developing nations, its trade governance arrangement hardly inspires confidence about Chinese ‘win-win’ philosophy, especially given that several countries pulled back from China-funded BRI projects in 2018.
Dinny McMahon’s book is situated at the other end of the governance scale, taking the Western perspective of a Chinese economy liable to collapse at any moment. Much of the book is storytelling of a journalistic nature, narrating experiences of individuals to comment upon entire sectors of the Chinese economy. These range from an interesting tale of how lavender-filled teddy bears produced in Tasmania became a rage for new Chinese consumers to how peer-to-peer (P2P) lending platform Yooli pioneered the P2P concept for the new Chinese retail lender. McMahon reiterates that the speed of China’s debt accumulation, from 160 per cent of GDP in 2008 to 260 per cent in 2016, is a clear sign of a crisis situation. It is true that travels in China show up ‘empty apartment towers’ and ‘extravagant new government buildings’ but to say that the country will face a ‘reckoning’ before gaining global or regional dominance may be an exaggeration. [Note by the reviewer: In the e-book version, page numbers are not mentioned.]
After the stimulus following the global economic crisis,
the need to overhaul the way in which the economy works has only become more acute as debt and waste have grown to epic proportions…. Xi has tried to pare back the excesses of the system in efforts that have met stiff resistance from entrenched bureaucrats… But he seems uninterested in overhauling the mechanisms that continue to drive the unabated accumulation of debt and waste.
The book captures the prominent challenges of the Chinese economy, which, put together, present a dismal picture of the vulnerabilities that lie at its heart. For example, it notes that of the 100 tallest skyscrapers under construction in the world, as many as fifty-five are coming up in China, adding that typically such iconic buildings work as early warning signs for economic ills. Covering well-known themes such as over-capacity, state-owned enterprise profligacy, indebted local governments, shadow banking and so on, an effective case is made for a sharp growth slowdown that would impact the global economy.
The author also implies that economic data in China is unreliable, that the government steps in with ‘thugs’ for favoured private companies, that it manipulates markets and that media is guided daily on what not to cover. With its long stories and conversations, the book appears not to be for the serious reader, but even those reading for entertainment might wish for a more focused approach.
Together, the two books emphasise why it is so difficult to develop a sense of what is happening in the Chinese economy—a strategic and well-managed rebalancing or a series of unbridled bubbles that threaten the world as the next source of crisis.