China Versus the WestThe Global Power Shift of the 21st Century
China Versus the West is an innovative book. The author, a leading specialist on the international and Asian economy and business, presents the most comprehensive picture of the changing power balance between the emerging superpower China and the "old" developed economies of the West: mainly the US, Europe and Japan. The reader can clearly see in what areas and to what extent China has become the world leader, in what areas it is catching up and in what areas the West retains its superiority and has a chance to strengthen it further. At the same time, I. Tselichtchev unveils a breath-taking story of the global economy and business in the brave new world which is non-"West-led" and where major growth dynamics are coming from large emerging economies. A radically changing economic environment requires new government policies and business strategies. The book contains many valuable suggestions and ideas. Using his own analytical framework, the author presents a set of options and alternatives for Western businesses in the wake of China's production and export offensive. The book provides a uniquely sharp and thought-provoking analysis of the factors behind the global crisis of 2008-2009, largely different from what we see in other publications, and examines its implications for the global power balance. I. Tselichtchev vividly shows that it was not global, but Western crisis of a structural character which drastically changed the China-West power balance in the former's favor. He provides strong arguments showing that today's China is structurally and macro-economically stronger than most countries of the West. This leads him to rethinking the very essence of the Chinese model of capitalism and to its new definition. He expresses unconventional, sometimes controversial, but well-founded views about China's problems and weaknesses and the prospects for its political evolution. The book ends with invaluable insights into China's unique role in the world economic history, the essence of the non-"West-led" multipolar world and the positions of its major players. Arguing that from now on no single country will be ever able to "rule the world", it shows new opportunities dynamic China is opening for the West. Thoroughly analyzing and discussing a wide range of the key, often complicated issues which are now in the focus of the world's attention, the book remains very reader-friendly. It is written in the form of an unconstrained dialogue with the reader, containing a lot of the author's on-the-spot impressions, interesting facts, remarks and quotations. China Versus the West is a must reading for everyone who wants to know more about the global developments, China and the West, and also, perhaps, to get valuable inputs and hints to find his or her own place in today's new world. It is highly recommended for policy-makers, business people, academics, analysts and journalists. It is a valuable source for professors and students of the universities and business schools.
Foreword by Yang Yongxin xiii Preface xvii Acknowledgments xxi Introduction by Frank-Jürgen Richter xxv Part One China as the World's Leading Producing, Exporting, and Financial Power: To What Extent, Where, and Why? 1 Chapter 1 GDP: Toward the U.S.-China Duopoly 3 Notes 6 Chapter 2 Manufacturing Output: China Is Already the Number One 7 Note 8 Chapter 3 Merchandise Exports: From China's Lead to China's Dominance? 9 Chapter 4 Where China Is Leading and Where It Is Not 13 Group One Industries: China Is the Top Producer and the Top Exporter 13 Group Two Industries: China Is the Top Producer, but Not the Top Exporter 22 Group Three Industries: China Is Neither the Top Producer Nor a Major Exporter 25 Key Features of China's Manufacturing Lead 25 Anatomy of China's Merchandise Trade Surplus 26 Net Exporter and Net Importer Sectors 27 Domestic Private Companies Have Become the Major Surplus Creators 27 Note 28 Chapter 5 Chinese Domestic Manufacturers versus Western Manufacturers 29 The Four Segments Analytical Framework 29 Chinese Manufacturers' Global Offensive: Four Stages 31 Western Manufacturers: A New Way of Thinking Is Required 41 Option One: Stay at Home and Differentiate the Product 43 Option Two: Move to China 45 Western Governments Have to Initiate an Export Counteroffensive 46 Chapter 6 A Big Battle for the Chinese Market 49 China-Bound Exports of Capital Goods: East Asia Is Leading 50 China-Bound Exports of Consumer Goods: Opportunities Are There, but You Have to Work Hard Not to Miss Them 50 China Trap 51 At-Home Chinese Companies Are Active in the High-End Niche 52 Competition with Domestic Capital Goods Makers Is Getting Really Tough 54 Chapter 7 Global Services Market: The West's Edge and China as Number Five 57 China Joins the Ranks of Leading Services Exporters, but the United States Is Far Ahead 57 China's Trade Defi cit 59 China Has a Structural Weakness in Services That Is Diffi cult to Overcome 61 The U.S. and EU Surpluses in the Services Trade with China Are Meager 61 The Right Time to Capture the Chinese Market 62 Note 64 Chapter 8 Is China a New Financial Superpower? 65 China's Overseas Assets 65 $3 Trillion-Plus Foreign Reserves: Implications for China and for the West 66 China Has Become the Largest International Lender for Developing Countries 69 China's Outbound Foreign Investment: Accelerating, but the Lag Remains 70 Chinese Households' Financial Assets: Still Tiny 72 Is China a New Financial Superpower? Yes and No 73 Conclusions 75 Part Two The Global Downturn and Beyond: Western Capitalism and Chinese Capitalism 79 Chapter 9 The Global Crisis Was Not Really Global 81 Chapter 10 Western Crisis: Three Major Factors 85 Unaffordable Consumption and Households Deeper in Debt 85 Gambling Capitalism 89 The Failure of State Regulation, Corporate Governance, and Business Morality 91 Chapter 11 Still, Western Capitalism Is Alive, But. . . . 95 Calm Down: No End of Capitalism 95 Soaring Public Debts as the Biggest Crocodile 103 The Welfare State Has to Be Trimmed More and Faster 108 Chapter 12 Is China Structurally Stronger Than the West? 113 Improvement of Lending Practices and Persistent Fight with Overheating 114 Enhancing Regulatory Standards for Banks 116 Healthy Public Finance 118 Chapter 13 The Chinese Model of Capitalism 121 The Need for a New Conceptual Framework 121 The Chinese System Is Not State Capitalism: A Great Shift to Private Property 122 Creating Market-Style State-Owned Companies 124 Fierce Competition and the Culture of Self-Responsibility 128 Chinese Capitalism: Definition 129 A Digression about China's Structural Weaknesses and Political Evolution 130 Chapter 14 Global Rebalancing Will Not Be Easy 137 Can the Idea Work? 138 Private Consumption in China Is Already Growing Fast 138 Yet Expansion of China's Domestic Demand Is One Thing, and Rebalancing Is Another 140 Too Rapid Increase of China's Consumption May Have Dire Side Effects 142 Present Position: Imbalance or Equilibrium? 143 Conclusions 146 Part Three The China-West Economic Wars: And the Winner Is. . . . 151 Chapter 15 China's Choice Is to Further Expand Trade Surpluses and Keep the Yuan Weak 153 The Rationale for Not Appreciating the Yuan Faster 153 The Rationale for Increasing Savings and Exports Rather than Consumption 155 Chapter 16 Environment: China Going Its Own Way 157 Global Climate Talks: Doubts Remain If Not Increase 158 Concern about the Impact on Growth 160 A Wider Angle Is Needed 161 China's Pro-Environmental Drive 162 China-West Environmental Cooperation 163 China As a New World Leader in Green Business? 166 Chapter 17 A Fight for Natural Resources: China Sets New Rules of the Game 169 Changes in the Global Markets 169 Chinese Model of Tapping Resources 170 African Saga 172 He Acts While Other Men Just Talk 173 China Has Become a Major Source of Development Aid 174 Chapter 18 Indigenous Innovation: Seeking to Command Advanced Technologies by All Means 177 The West is Creating China as a New Technological Superpower 178 Soaring Foreign Investment in R&D Centers and Production Upgrading 179 China's Technological Strategy 181 Technology Transfer Enforcement 182 Chapter 19 Company Acquisitions: Chinese Are More Active than Westerners 185 Acquisitions Asymmetry 186 The Chinese Government Is Tightening Regulations 187 Western Governments Are Blocking Chinese Acquisitions of Technology and Resource Firms 188 Chinese Acquirers Are Backed by the State 189 Conclusion: The West Needs a Cohesive China Policy and Unconventional Responses to China-Posed Challenges 191 Epilogue: China, the West, and the World 199 References 211 About the Author 221 Index 223
Ivan Tselichtchev, PhD, is currently a professor at the Niigata University of Management, Japan. He is an internationally renowned expert and writer on the Asian and global economy and business, actively writing in English, Japanese, and Russian. He is the author of four books, coauthor of Asia's Turning Point (Wiley), contributor to many other academic publications, and the author of nearly two hundred articles. Teaching in Niigata since 1994, he has also worked as a part-time faculty member in a number of leading universities in Japan and lectured in different countries around the world. He is a commentator for the CNBC international TV network. In Gorbachev's perestroika years, he was awarded the Labor Valor Medal and in 2004, the Cabinet Office of the Government of Japan named I. Tselichtchev Seikatsu Tatsujin (A Master of Life), signifying a person with outstanding achievements and lifestyle.
Leading economist Ivan Tselichtchev presents a comprehensive picture of the changing balance of power between emerging China and the "old" developed economies of the West. He outlines those areas where China has become the world leader, the areas where it is catching up and those areas where the West retains its superiority and has a chance to strengthen it further Tselichtchev reveals a breathtaking story of the global economy in the brave new world which is non-"West-led" and where major growth dynamics are coming from large emerging economies. A radically changing economic environment requires new government policies and business strategies. The book contains many valuable suggestions and ideas. Using his own analytical framework, the authorpresents a set of options and alternatives for Western businesses in the wake of China's production and export offensive. China Versus the West provides a thought-provoking analysis of the factors behind the global crisis of 2008-2009 and how it changed the China-West power balance in the former's favor. He provides strong arguments showing that today's China is structurally and macro-economically stronger than most countries of the West. This leads him to rethink the very essence of the Chinese model of capitalism. He expresses unconventional, sometimes controversial, but well-founded views about China's problems and the prospects for its political evolution. The book ends with invaluable insights into China's unique role in the world economy. Arguing that from now on no single country will be ever able to "rule the world", it shows opportunities a dynamic new China is opening for the West.
Praise for China Versus the West "There are shelves full of books that will tell you about the rise of Chinaand what it means for the West. The merit of Ivan Tselichtchev's contribution is that it is grounded in a statistical approach that extends to every dimension of China's astonishing economic performance, and comes with advice for policymakers on how to respond to the China challenge. China Versus the West is recommended reading for students and business leaders—and all who must come to terms with the global power shift that is unfolding before our eyes." —Graham Hutchings Director of Analysis, Oxford Analytica "With great diligence and acuity, Ivan Tselichtchev has compiled a thorough and insightful overview of China's position relative to that of major Western economies. The result is an outstanding resource for anyone in academia, business, or politics needing to gain a comprehensive understanding of the status quo and its possible future evolution as well as the attendant issues. Highly recommended." —Michael Witt Professor of Asian Business and Comparative Management, INSEAD "The country of China itself is like the world. To understand China is as challenging as explaining the world. Addressing this challenge is the mission of a China researcher. What is China? What is the direction taken by this giant country? You are unlikely to find any other book that provides as convincing and comprehensive answers as this one." —Toshio Watanabe President, Takushoku University "China Versus the West is a lucid and insightful exposition of China's increasingly influential economic position in the global village. In addition to his impressively sharp quantitative analyses, Professor Tselichtchev draws some admirably blunt normative conclusions concerning China's ascendency, and the West's decline. A must-read for anyone with a vested interest in globalization." —Lou Marinoff Professor and Chair of Philosophy, The City College of New York Foreword by Yang Yongxin Introduction by Frank-Jürgen Richter