Review - The Coming China Wars, by Peter Navarro

It's no myth that China's economy is booming and dwarfing that of all neighbouring economies. Peter Navarro sees several benefits to this - namely their national progress - but can see warnings of a tide of social, economic and political unrest resulting from it. In "The Coming China Wars: Navarro argues that what's driving China's unprecedented economic growth will ultimately lead to global strife and turmoil, partly inside its borders but mostly outside and abroad.

Main Thesis / Main Idea:
Because of its burgeoning economy, China is willingly creating global conflict on social, political and environmental fronts.

Ideas Addressed:
--Will the dramatic increases in China’s economy bear trouble for the rest of the world?
--How can China afford to produce so much for so little expenditure?
--Where’s that smog drifting over the Pacific coming from?
--What is bolstering China’s rapid economic growth?

Figures and statistics are sourced.
Navarro writes succinctly, so it’s easy to follow him from thought-to-thought.
A good primer for anyone concerned about the social, political and environmental impacts of rapid economic growth on an international scale.

The book reads like the loud opinions you might hear from a south-state truckstop that’s somehow been infused with a library.
Glossing over the obviousness of much worse rogue economies makes you wonder if anything else is distorted.

Does Navarro see the irony in being an American citizen and criticizing Chinese economic imperialism?

We clearly have an American patriot here. This is all well and good for him - not so good for his rational credibility in the book's arguments or how they're framed. He first claims that China's economic explosion is due primarily to the "China Price" in which China has systematically begun Wal-Marting the World....ie. driving other companies out of business with a much lower price, due to overall volume of sales and the cheapness of goods in terms of material quality.

"The China Price refers to the fact that Chinese manufacturers can undercut significantly the prices offered by foreign competitors over a mind-bogglingly wide range of products and services.

Today, as a result of the China Price, China produces more than 70% of the world’s DVDs and toys; more than half of its bikes, cameras, shoes, and telephones; and more than a third of its air conditioners, color TVs, computer monitors, luggage, and microwave ovens." (p. 2)

Navarro identifies 9 major constituents of what make the China Price function:

• Low-wage, high-quality work by a highly disciplined, educated, and nonunion work force
• Minimal worker health and safety regulations
• Lax environmental regulations and enforcement
• The supercharging, catalytic role of foreign direct investment (FDI)
• A highly efficient form of industrial organization known as “network clustering”
• An elaborate, government-sanctioned system of counterfeiting and piracy [is this true?]
• A chronically undervalued, “beggar thy neighbor” currency
• Massive government subsidies to numerous targeted industries
• “Great Wall” protectionist trade barriers, particularly for “infant industries”

First is the low-wages that don't cut into profits -- which can then be spent on more investments.

China hasn't considered raising its minimum wage or industry-safety standards, despite years and years of record economic growth. They do this, he claims because of a vast “reserve army” of workers.

The irony is that this aspect was a Marxist critique of capitalist societies. In fact, one of the central tenets of Marxist theory is that the exploitation of workers by capitalists is made possible because capitalism will always generate significant unemployment. The inevitable presence of this “reserve army” of unemployed workers will always depress wages and allow the capitalists to exploit their workers in other ways, too (for example, poor working conditions). Navarro allows that the explosive population of China allows this to happen in a non-capitalist country.

But how can this happen in a country that institutionally controls fertility? Navarro never mentions fertility control, perhaps because it would make his argument much, much more complicated. Privatization, he claims, has more to do with constantly creating more unemployed than does a rising population.

In Mao’s time, they had an economic model called the “iron rice bowl” in which State Owned Enterprises (SOE’s) guaranteed people jobs, houses, pensions, etcetera. But people did little to produce and China’s GDP went down...so they have rapidly started privatizing everything to make their market competitive.

Navarro also argues that factors contributing to economic growth that don't exist in Western countries are China's banning of unions and the lack of environmental, health and safety laws that threaten to reduce production levels.

"Indeed, as China has flapped its laissez faire butterfly wings, foreign capital and foreign companies have flocked to its shores—often bringing their own lobbyists to ensure that the rules do not change. In this way, countries as near as Korea, Japan, and Taiwan and countries as far away as the United States have been able to “export” effectively their pollution and workplace risks to China." (p. 11)

Aside from the low level of monetary kickback for workers, China also produces industrial synergy in terms of proximity.

"For the production of a wide range of China’s export goods, companies located in close physical proximity to one another have formed highly synergistic networks and clusters of activity that yield significant economies of both scale and scope ... In an extreme and extremely efficient modern version of Adam Smith’s specialization of labor, China features entire cities or towns that specialize in particular industries or industry segments." (p. 14-15)