China Shakes the World

"If the Chinese were ever to consume at the American levels of 2001, they would need to guzzle three times the world's total consumption." This is a quote from China Shakes the World by James Kynge; I recently finished reading this. The book has been around for 5 years or so, and I thought I'd share a some of the things that I found particularly interesting and revealing. 

• "Each year since 2004, China has installed the equivalent of all the generating capacity of a country such as Spain"

• Kynge argues that due to the patriarchal system and lack of status, "Some 56 percent of the world's female suicides occur in China" 
• Summarizing the population density: "The weight of their presence is everywhere." and "Numbers posses a power that transcends the mechanics of mathematics."
• Throughout the book Kynge explains the fallacy of the billion + person market. Western multinationals believe that by opening up in China they will have access to this market. However, Kynge explains that the corporations forget...there are over a billion people in that nation trying to gain access to the exact same market, and guess what? They already live there and know the culture. Quoting Kynge, "When a market is finally found, aggressive domestic competitors have usually got there first." This market fallacy can be summarized, "it is the prospect of a large market, rather than its actual existence, that is the key to luring foreign investors." 
• But all this growth must mean profits and profits, banks would never lend if there are no profits...or would they? 2 points in China Shakes the World stand out: 1) "China is not a normal market economy. It does not have a well-functioning bankruptcy law, so the liquidation of insolvent companies is difficult. In addition, banks are awash with liquidity," might I add, that they must put to use, they are still banks. And 2) Yu Yaochang explained, "The banks only care if your company is getting bigger and stronger. If you expand production, you are increasing scale and reducing unit cost. That is bigger and stronger. And anyway, we are the biggest local company. If they don't lend to us, who are they going to lend to? [Emphasis mine]"

These bits and pieces from Kynge's book are important, as they, and Kynge's book, reveal much more about China than just the rapid economic growth and outsourcing stories that have become mainstream. They demonstrated the difficult cultural, political and economic hurdles that must be overcome. Rapid expansion is wonderful in many ways, but it also creates more room for error, as speed and excess often do. 

I would certainly recommend Kynge's China Shakes the World, it will give you a better insight into the things that the Chinese people and Nation are facing as they move forward with their growth. Below are links to the book at Amazon, if you would like to read it yourself. 

China Shakes the World: A Titan's Rise and Troubled Future -- and the Challenge for America