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Book Review: Look who's come to dinner

February 8, 2010

Superfusion by Zachary Karabell
Reviewed by Benjamin A Shobert
Asia Times
February 6, 2010

One could be forgiven for thinking that books
about China tend to come and go in phases. The
prevailing theme of the mid-1990s about China as
a cheap production base was followed by hushed
awe at the potential size of the country's
market. Inevitably, a group of authors then made
the obvious link: because China was cheap for
industry and such a vast country, it was going to
be a growth dynamo for the next several decades.

And, as we might expect given a vacuum of
conventional threats and a wee bit of insecurity
on our own part, the next round of authors seemed
enamored with the idea that the growth dynamo was
likely to become - eventually - some sort of
"near-peer" economic and military threat to the
United States. This is the point at which current
popular writing on China seems stuck. It is with
this in mind that we may welcome Zachary
Karabell's new book, Superfusion: How China and
America Became One Economy and Why the World's Prosperity Depends On It.

Karabell represents a group of thinkers who
refuse to reduce US-China relations to simple
echoes of the Cold War which reverberate through
the popular consciousness, providing easily
understood, but woefully inadequate, boundaries
within which to place today's China.

As reputable voices within government and media
begin to challenge the legitimacy of China's
economic ascent, Karabell is among those who
quietly but firmly point towards the profound
intertwining of China into the global economy,
asking two basic questions: if this was not how
China was supposed to evolve, the means by which
it was to re-enter the global order, then what
was the other option? Perhaps more importantly
comes the second: what alternatives are there to
a hostile reaction to China's growth upsetting
the global economic order built over the past two decades?

This point comes early and forcefully in Superfusion, when Karabell writes:

The fundamental question for the United States is
whether to accept or resist the fusion with China
and all that it entails ... many Americans remain
locked in a mentality that sees the United States
as a nation that can remain powerful only by
being more powerful than everyone else ... Rather
than hobbling China, the United States may end up
hobbling itself ... In trying to prevent China
from assuming its place at the table, we instead evict ourselves.

Among the best of Karabell's insights is the idea
that the US - once the primary advocate and
beneficiary of free trade - might react so
negatively to China's rise and the current
recession as to make its own economic future questionable.

The balance of Superfusion is first an attempt to
recreate the history from which China emerged in
the late 1970s to its current embrace of
quasi-capitalism and, secondly, to show how this
still nascent relationship benefits American
consumers and companies. Where it is in some ways
frustrating is in rehashing some of the
experiences of business - Avon, Huawei and KFC
are a couple of examples - that have been used
time and again by other commentators.

But throughout Superfusion Karabell is able to
weave together at least three threads which leave
the reader engaged: how the US-Sino fusion
impacts business, its political implications and
brief glimpses on how these stand to influence us as individuals.

This fusion is apparent when Karabell writes
about the context within which China became America's factory:

The trends began in the 1990s - with US companies
investing heavily in China in order to access the
new market and gain advantages from low-cost
manufacturing - unfolded in the context of heady
economic times in America. Even though some
sounded the alarm about China as a competitor for
US jobs and as a potential rival of the United
States on the global economic stage, China was
still too small an economy and US confidence was
still so strong that these concerns paled in
comparison with the sense of opportunity.

Karabell's unspoken question seems to be whether
America should be blaming China for its malaise,
or if perhaps thinking about how best to restore
self-confidence. After all, as he suggests, at
one point the US believed we could afford - and
in many cases affirmatively hoped - to move certain types of industry offshore.

To now want those jobs back, to believe that lost
industries are now key to future success, seems
to indicate a country which has lost a vision of
a tomorrow worth working toward. What Karabell
equally recognizes is that, unless the US is able
to rediscover confidence in itself, it stands not
only to lose even more jobs but, as he
provocatively suggests, the allegiance of US
companies that begin to divorce themselves more
and more from their American heritage and take on a more detached global role.

The crisis of the past two years provides ample
opportunity for Karabell to argue that the
US-Sino relationship insulated both countries
from what could have been an even more serious
situation. But more importantly, the analysis
throughout his book supports the idea that, while
low-cost, high-labor manufacturing has certainly
moved from the US to China, too few Americans
appreciate the role Chinese domestic economic
growth has played in China's broadening wealth.

Karabell goes further, writing that "Chinese
consumption has been a more important factor than
most acknowledge ... Contrary to claims that a
third or even more of China's growth was due to
exports, the actual figure was closer to 15% and
perhaps much lower." It is likely Karabell makes
this point to dislodge the singular fixation many
American policymakers hold that China should only
be understood as a predatory exporter. It also
reinforces the importance of viewing access to
the Chinese domestic market as an important
political goal as well as a business strategy
that forward-thinking corporations need to put in place.

Towards the end of his book, Karabell writes with
the candor that makes Superfusion worth reading:

As for those who believe that China's growth has
been built on a flimsy foundation, with too much
state intervention, too much spending on big
projects, too little entrepreneurial activity,
insufficient innovation, and inadequate
individual consumption, the fact is that no one
knows the secret formula for economic success.
The Washington mantra of open markets and less
state activity was the orthodoxy until it proved
to have some critical flaws, but no other system
has proven better. If there were a clear road map
to prosperity, everyone would use it. [Emphasis not in the original].

American thinkers such as Karabell are
particularly important at this moment, when US
confidence has been rocked and its beliefs about
what the future holds appear hollow and shallow.
Karabell notes, as have many before him, that
China's rise is no more certain than America's
demise. Superfusion leaves the reader with a
sense that the challenge in the next decade is
not to stifle China's rise, but rather to restore
America as the beacon of entrepreneurship and
innovation it once was, to view China as an
opportunity for growing the US economy and not a
threat to its people's standard of living.

Superfusion: How China and America Became One
Economy and Why the World's Prosperity Depends on
It by Zachary Karabell. Simon & Schuster (October
13, 2009). ISBN-10: 141658370X. Price US$26, 352 pages.

Benjamin A Shobert is the managing director of
Teleos Inc (www.teleos-inc.com), a consulting
firm dedicated to helping Asian businesses bring
innovative technologies into the North American market.
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