This is a book that is bullish on China; it does not visit any of the arguments of the bears.

That said, there are many reasons to commend the book:

• It accurately describes China’s foreign policy including its interactions with the developing world, which are often far more logical and consistent than US policy.
• It is fair in its rendering that China may have been a factor in the credit bubble, but was not the primary instigator.
• It describes how China has grown to interact with global organization on its own terms.
• It describes the history China/US relations fairly, including the rough spots where China and the US don’t see eye-to-eye, and sometimes play dirty.

Places where I think the book misses

It will be difficult to displace the US Dollar as the global reserve currency.? So long as export-driven nations sell goods on net to the US, and want to keep their currencies artificially cheap, they will have to buy US dollar-denominated assets in order to make that happen.

Pretend currencies like Strategic Drawing Rights are a nonsolution.? It has no active market, and reflects a view that one can have a single monetary policy for the world.? If a single monetary policy for the Eurozone does not work, how much less the world as a whole?

Beyond that, though China is a leading nation economically in Asia, Asian nations are more diffident to follow China’s lead politically.? Outside of Asia, China’s diplomatic moves have been received more favorably, say, in Latin America and Africa.? Asian nations have a long history with China, and realize that its size and power needs a counterweight like the US.? I agree with the author that the US lost a lot of credibility diplomatically after 9/11, given the way that we responded, but the US still has a lot of favor among Asian nations in a way that China can’t replace.

Finally the book fails to develop the details of China’s economic/financial system, and as such, falls into the hole that China bulls often do, neglecting the huge buildup of bad debt inside the major Chinese banks.

Yes, China has set up asset management companies to relieve the banks of bad debts, and transfer the losses to the MOF.? The question remains how long can this go on?? Probably a long time, because China discriminates against average consumers for the good of the Party, and the banks that aid the Party’s efforts.

Though on net I recommend this book, you would also benefit from Red Capitalism, and Uprising: Will Emerging Markets Shape or Shake the World Economy.

Quibbles

Date error on P. 38 should have been 1999, not 1990.

Who would benefit from this book: If you want to understand the Chinese economy, you will like this book.? If you want to, you can buy it here: China and the Credit Crisis: The Emergence of a New World Order.

Full disclosure: The publisher asked if I wanted the book.? I said “yes” and he sent it to me.

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