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Contemporary Asia in the World
The China Boom: Why China Will Not Rule the World
Many thought China's rise would fundamentally remake the global order. Yet, much like other developing nations, the Chinese state now finds itself in a status quo characterized by free trade and American domination. Through a cutting-edge historical, sociological, and political analysis, Ho-fung Hung details the competing interests and economic realities that temper the dream of Chinese supremacy—forces that are stymieing growth throughout the global South.Hung focuses on four common that China could undermine orthodoxy by offering an alternative model of growth; that China is radically altering power relations between the East and the West; that China is capable of diminishing the global power of the United States; and that the Chinese economy would restore the world's wealth after the 2008 financial crisis. His work reveals how much China depends on the existing order and how the interests of the Chinese elites maintain these ties. Through its perpetuation of the dollar standard and its addiction to U.S. Treasury bonds, China remains bound to the terms of its own prosperity, and its economic practices of exploiting debt bubbles are destined to fail. Hung ultimately warns of a postmiracle China that will grow increasingly assertive in attitude while remaining constrained in capability.
260 pages, Kindle Edition
First published January 1, 2015
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571 people want to read
About the author
Ho-fung Hung
10 books19 followersHo-fung Hung (Chinese: 孔誥烽) is an American sociologist and political scientist currently serving as the Henry M. and Elizabeth P. Wiesenfeld Professor in Political Economy at Johns Hopkins University.
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Displaying 1 - 16 of 16 reviews
February 23, 2018
Ho-fung Hung, a sociology professor at Johns Hopkins, has written a fascinating critical analysis of the economic boom in China, the origins of capital accumulation "with Chinese characteristics," and the current prevailing idea that China will replace the United States as the global hegemon. Grounded in World Systems Theory, Hung exposes the unique situation of China as an export and investment dominated economy in a world of unlimited free trade and dominating neoliberalism.
While there was sufficient wealth to create the impetus for native capitalism in Qing-era China, merchants never really wanted to be merchants. Rich merchant families created private schools and entered the bureaucratic elite system as soon as possible and dropped their trade interests, precluding the concentration of merchant capital in the hands of a few families, which one could argue is necessary to the formation of an independent capitalism. After the Opium War, the Qing government realized that it had to "modernize" to stave off colonization, but by that point the state was too weak to implement the policies that would have supported capital accumulation within a burgeoning native capital elite.
So China stagnated, but in the Mao era the creation of massive State Owned Enterprises, or SOEs, facilitated a socialist concentration of capital that allowed for the China boom after decollectivization and market reforms began under Deng Xiaoping. SOE ownership was sometimes transferred to local elite, who then destroyed the "Iron Rice Bowl" of full employment and social benefits that had existed in the Mao era. In other cases, the state retained ownership but reoriented SOEs to profit-making while giving them access to cheap loans, encouraging investment and expansion at all costs at the expense of responsible business practices and exploding debt. China's investment in the export-oriented industrial sector took away from funds available for domestic consumption by siphoning off workers' wages. The subsequent rapid economic growth minimized social unrest, appeasing the masses by lifting up millions of Chinese out of poverty, even as the elites gained more at the poor's expense and inter-province inequality rose.
For Hung, China will not supplant the US as the global hegemon because of the US's dominating military prowess and China's dependence on US bonds as a safe space to park its money. China relies on the US dollar for foreign exchange and trade because the yuan/renminbi is not seen as a fully convertible currency (though this could change with the inclusion of the yuan in the IMF's basket of currencies in October 2016), thus creating a mutual dependency that keeps China from collecting US sovereign debt while supporting growth in US spending and finance. China won't destroy the US economy because it'll destroy its own industries in the process.
Hung refuses to accept a future, inevitable Chinese hegemony, and he studies it through a critical, biting lens. He sees a future China that needs to further liberalize its economy and politics (to a certain extent) to compete in an increasingly unstable world economic order. If you're into critical studies that are neither Sinophilic or Sinophobic, this is your kind of book.
While there was sufficient wealth to create the impetus for native capitalism in Qing-era China, merchants never really wanted to be merchants. Rich merchant families created private schools and entered the bureaucratic elite system as soon as possible and dropped their trade interests, precluding the concentration of merchant capital in the hands of a few families, which one could argue is necessary to the formation of an independent capitalism. After the Opium War, the Qing government realized that it had to "modernize" to stave off colonization, but by that point the state was too weak to implement the policies that would have supported capital accumulation within a burgeoning native capital elite.
So China stagnated, but in the Mao era the creation of massive State Owned Enterprises, or SOEs, facilitated a socialist concentration of capital that allowed for the China boom after decollectivization and market reforms began under Deng Xiaoping. SOE ownership was sometimes transferred to local elite, who then destroyed the "Iron Rice Bowl" of full employment and social benefits that had existed in the Mao era. In other cases, the state retained ownership but reoriented SOEs to profit-making while giving them access to cheap loans, encouraging investment and expansion at all costs at the expense of responsible business practices and exploding debt. China's investment in the export-oriented industrial sector took away from funds available for domestic consumption by siphoning off workers' wages. The subsequent rapid economic growth minimized social unrest, appeasing the masses by lifting up millions of Chinese out of poverty, even as the elites gained more at the poor's expense and inter-province inequality rose.
For Hung, China will not supplant the US as the global hegemon because of the US's dominating military prowess and China's dependence on US bonds as a safe space to park its money. China relies on the US dollar for foreign exchange and trade because the yuan/renminbi is not seen as a fully convertible currency (though this could change with the inclusion of the yuan in the IMF's basket of currencies in October 2016), thus creating a mutual dependency that keeps China from collecting US sovereign debt while supporting growth in US spending and finance. China won't destroy the US economy because it'll destroy its own industries in the process.
Hung refuses to accept a future, inevitable Chinese hegemony, and he studies it through a critical, biting lens. He sees a future China that needs to further liberalize its economy and politics (to a certain extent) to compete in an increasingly unstable world economic order. If you're into critical studies that are neither Sinophilic or Sinophobic, this is your kind of book.
June 23, 2023
The first chapter goes into reasons as to why capitalism developed in England and not in China, who was not only wealthier than England, but also fostered thriving markets that rivaled any on the planet at the time. The author, Ho-fung Hung, believes that capitalism is a natural development of man’s predilection for trade and improving efficiency in production, and that its development was more or less the natural course of history that simply had to overcome whatever was impeding it. The author writes: “The difference between the market and capitalism is tantamount to the difference between a local farmers’ market and transnational grocery chains. Though there were always urges in a market economy for some to pursue endless accumulation of monetary wealth, these urges had been repressed by political and cultural forces before modern times.” (p. 35). This has been dubbed the ‘commercialization model’ of capitalism, which authors such as Ellen Meiksins Wood are highly critical of. Nevertheless, assuming this model is true and that capitalism is simply a higher stage of development that man’s natural tendencies would eventually bring us to, the author must explain why Britain (and not China) evolved from a society with markets into a market society where all interactions, including receiving access to the means of subsistence, are mediated by the market. He disagrees with the most popular theory as to why England became capitalist while China did not: Kenneth Pomeranz’s theory of a ‘Great Divergence’. This theory boils down to claiming that China’s development was trapped by ecological factors, much like the rest of the world, which only England was capable of overcoming thanks to the industrial revolution (which their coal deposits played a huge role in) and the subsequent rise of capitalism. It’s debatable whether capitalism came before the industrial revolution, but Hung himself has 3 other arguments against the Great Divergence theory. They boil down to this:
1. It does not explain why England didn’t use its access to American resources earlier to build industrial-capitalism
2. It does not explain how American goods, which were sold at high prices in England, helped England develop. It also fails to explain why American cotton and sugar were not purchased by China, who was much richer
3. It does not explain how Japan was able to industrialize in the 1800s without access to colonies
I’m not sure what to think about point 1, but point 2 seems silly. It ignores England’s most important colony, India, entirely while also ignoring the benefits colonies had as forced markets for England’s own manufactured goods (raw cotton goes to England -> gets sold back to the Americas as more expensive clothing). To argue that Caribbean plantations were not beneficial for everyone involved (excluding the indigenous peoples and African slaves being genocided of course) is completely ahistorical. To quote The Agrarian Question in The Neoliberal Era:”It was only after the (global) North colonially subjugated today’s third world regions, located in sub-tropical and tropical climes, and started slave-labour-based plantation systems, that the consumption basket of northern populations started to diversify and improve dramatically. Increasing imports made by the monopoly trading companies such as the East India Company, The Africa Company and the South Sea Company included cotton cloth, sugar, tea, coffee, tobacco, raw cotton, raw silk, vegetable dyestuffs, tropical cereals, natural fertiliser, tropical hardwoods and a host of other goods, none of which could be produced at all in northern Europe or, later, in North America.“ (Patnaik, p.15). Point 3 is also a head scratcher, because Japan really had capitalism thrust upon them at the barrel of a gun well after the world-capitalist-system had begun developing and spreading; Japan did not “develop” capitalism in isolation. He even admits in chapter 2 that Japan’s Meiji restoration was helped by the fact that Japan was an island, and therefore it could defend itself much more easily from imperialist encroachment while China could not. It seems more likely that Japan industrialized not because of an entrepreneurial elite, but because it had to in the face of an imminent imperial invasion like the ones that forced opium addiction upon the Chinese populace.
Hung’s own theory argues that England had a class of urban entrepreneurs willing to take risks and innovate for profit that China did not. This class was more willing than any in China to go through costly experimentations to improve production, and for generations they siphoned off agricultural surplus, accumulated it into a mass of wealth, and used that wealth to find ways to develop production technology further. In China the urban elite were more likely to use their wealth to gain state power/offices rather than spend it on risky technological experimentation. This is because, while England's state fully backed the urban elite against the masses whenever it needed to, the Chinese state was more ambivalent and often sided against the urban elite to try and diffuse tensions.
Defeats to western imperialists and constant internal rebellions (White Lotus Rebellion, Taiping Rebellion, etc) turned the Qing dynasty into a failed state (it is here, Hung argues, that China began its centuries long quest to develop its productive forces and industrialize). Eventually, local warlords took over every corner of China and financed themselves through levying heavy taxes, especially on rich urbanites, further constraining China’s ability to build industrial capitalism. By consuming most of the economic surplus, these rich warlords prevented the Qing state from constructing a state-led industrialization effort. The Qing dynasty collapsed in 1911, and from this period until 1949 China was in a constant state of war, mainly between local warlords and the rival modernizing powers of the nationalist liberals (KMT) and communists (CCP). With support from the USSR and the peasantry, the CCP was able to defeat all opponents and take control of the country and soon began on a plan to develop heavy industry (inspired by the USSR).
At first the CCP paid back the peasants for their support through land reforms (redistributing large peasant holdings to more people), developing infrastructure, and promoting peasant cooperatives. However this did not lead to industrialization; schemes to promote urban industries by selling iron farm tools to peasants failed because the peasants clung to traditional means of farming. Peasants also kept most of the products they made for household consumption or local markets rather than selling them elsewhere, constraining urban– rural exchanges. With a heavy hand, the Communist government made all peasants surrender their plows and other means of production and pushed them into peasant communes. Their production was then sent to urban centers, and the peasants then bought back products like fertilizers and machines at elevated prices. This coercive process (which helped exacerbate large famines) worked, and the industrial share of China’s GDP rose from 20.9 percent in 1952 to 47.9 percent in 1978, while Industrial labor productivity grew by 236.7 percent. To compensate the peasants, the CCP invested in agricultural infrastructure, basic education, and healthcare in the Communes. Life expectancy at birth in China rose dramatically from 43.5 years in 1960 to 66.5 years in 1978, mainly thanks to improvements in the rural areas.
This policy of rural improvement had long term structural effects. It left China with a large reserve of rural laborers who had high literacy rates and good life expectancies. This mass of laborers would prove to be very attractive to foreign investors, especially in the 1980s and 1990s. On top of this, because the Maoist state relied almost solely on surplus extracted from the countryside for the primitive accumulation process and refused to rely on external borrowing, as many other socialist and developing countries did in the 1970s.Therefore, the Chinese state did not fall prey to external creditors when the international debt crisis hit in the 1980s, unlike most of the Global South and Soviet Bloc. “The Chinese state, therefore, did not have to rely on emergency credit from the World Bank and the IMF for rescue, which meant it could maintain its autonomy vis-à-vis the United States and experiment with market reform gradually rather than undergo the shock therapy that the World Bank and IMF applied to most of their debtors amid the debt crisis…By the late 1970s …China was already endowed with a network of state industries and infrastructure; a large, educated, and healthy rural labor force; and a state autonomous from foreign governments and international financial institutions. These legacies of the Mao period, regardless of the high cost that the Chinese people had paid for them, laid the foundation for the success of the subsequent market reform” (p. 76-77)
By the 1970s China’s growth had begun to slow, and by the 1980s it was on a path to market reformation. This reform destroyed the Mao era promises of lifelong employment, healthcare, and basic social services provided by the State Owned Enterprises (SOEs) and communes. According to the author the unrest this caused led to the Tiannamen protests and subsequent crackdowns in 1989, and in the 1990s the Chinese government underwent neoliberalization at the behest of the advice of U.S. financial capital. However, in the 1990s the state also began taking control of the vast private sector, with SOEs beginning to dominate most major areas of the Chinese economy; by 2011, the SOEs’ total assets were 2.2 times larger than all private enterprises’ total assets. As the SOEs began behaving more and more like private enterprises as they were subjected to market forces (although much less productive than private enterprises) they began exploiting their workers harder and harder. This exploitation resulted in more unrest, which in turn resulted in the Chinese state making commitments to introduce social security and a medical insurance system to try and offset the loss of the old welfare benefits.
Since then, from around 1990 to today, China has been the leader in global poverty reduction. According to the U.N.: “(from 1990-2005) the decrease of poor population achieved in China accounted for 76.09 percent of the world’s total”. However, internally China has become increasingly unequal, especially between urban-rural areas and between richer and poorer provinces, leading to China being one of the most unequal societies on the planet. Even still, “although the incomes of rich and poor have been polarizing within China in the post- Mao era, even the poorest segment of the Chinese population has been experiencing real-income growth faster than the average-income growth in the world, enabling China to reduce global inequality regardless of the spectacular growth in inequality within its own huge population.” (p. 129).
On the global sphere, nations in South America and Africa have both benefitted and been harmed by China’s rise. China gives these global south countries much more favorable loans than the United States while simultaneously stifling their attempts to reduce their reliance on natural resource exports due to China’s growing markets for oil, agricultural produce, raw materials such as base metal, and energy/food. Due to these Chinese markets, a growth of mining and agribusiness industries across the third world has hindered development. At the same time, China’s efficient low-cost manufacturing also competes with many of these nations’ manufacturing sectors. For example, “more than 80 percent of major Latin American countries’ manufactured exports are under direct or partial threat from Chinese manufacturers” (p. 136). In Asia, China has become the center of an intra-Asian division of labor; Asian neighbors export goods/components to China, who then assemble and ship the goods worldwide. On top of this China has also actively provided its poorer neighbors, such as Cambodia, with investments, loans, and other economic/infrastructural assistance. This all gives China leverage over their governments, and the threat of economic sanctions is a bludgeon with which China can impose its will on its neighbors.
This centuries-long Chinese project of development appears to be coming to fruition before our very eyes, yet Hung argues it will not displace the United States’ hegemonic dominance over the world (nor does China really want to). He concedes that the U.S. percentage of global GDP has dropped from 39% in 1960 to around 20% today, but he counters by saying that the U.S. dollar will always give it a position of power on the world stage. The dollar has been the global exchange reserve currency since the implementation of the Bretton Woods system/Marshall Plan, with around 70-80% of all exchange reserves in the world being U.S. dollars. This means that most global trade, like the purchase of oil, is done in dollars. China’s own currency, the RMB, is pegged to the dollar, and to keep the RMB from appreciating against the dollar China has purchased U.S. treasury bonds at an exorbitant rate. By 2008 China had become the biggest foreign holder of U.S. treasury bonds. These purchases have helped the United States fund its massive budget deficit (due to the Iraq and Afghanistan wars) and have secured consistent United States demand for Chinese goods by preventing the freefall of the dollar. In the end, more than 80 percent of Chinese exports are paid for in dollars (Reuters 2010). As long as China’s rising trade surplus comes mostly in dollars, the Chinese central bank has few choices than to invest these dollars in the most liquid and relatively safe dollar-denominated asset—U.S. Treasury bonds. (p. 157). This has only strengthened after the 2008 financial collapse, exemplified by the fact that China doubled its holdings in U.S. Treasury bonds between 2008-2013. China needs the United States as a market just as badly as the United States needs Chinese goods; this impells China to help perpetuate the dollar-standard, the foundation of U.S. dominance. Altogether, it is not an exaggeration to say that China and the U.S. have become an integrated economic system.
Hung concludes with an apt summary of China’s role in the capitalist system today: ”relatively slow growth in domestic consumption led to China’s increasing reliance on foreign markets, a ballooning trade surplus, and the increasing purchase of U.S. Treasury bonds, which in turn contributed to the expansion of the U.S. debt bubble accountable for the Great Crash of 2008. The expansion of debt-financed overinvestment in China after the 1990s has also created financial and real-estate bubbles within China that are themselves destined to deflate. The rapid rebound of the Chinese economy in 2009–2010 after the initial shock of the Great Crash of 2008 was driven solely by a redoubling of debt-driven overinvestment, which aggravated the economy’s structural imbalance. The imminent and inevitable readjustment of the Chinese economy is poised to create significant repercussions throughout the world.” (p. 203)
1. It does not explain why England didn’t use its access to American resources earlier to build industrial-capitalism
2. It does not explain how American goods, which were sold at high prices in England, helped England develop. It also fails to explain why American cotton and sugar were not purchased by China, who was much richer
3. It does not explain how Japan was able to industrialize in the 1800s without access to colonies
I’m not sure what to think about point 1, but point 2 seems silly. It ignores England’s most important colony, India, entirely while also ignoring the benefits colonies had as forced markets for England’s own manufactured goods (raw cotton goes to England -> gets sold back to the Americas as more expensive clothing). To argue that Caribbean plantations were not beneficial for everyone involved (excluding the indigenous peoples and African slaves being genocided of course) is completely ahistorical. To quote The Agrarian Question in The Neoliberal Era:”It was only after the (global) North colonially subjugated today’s third world regions, located in sub-tropical and tropical climes, and started slave-labour-based plantation systems, that the consumption basket of northern populations started to diversify and improve dramatically. Increasing imports made by the monopoly trading companies such as the East India Company, The Africa Company and the South Sea Company included cotton cloth, sugar, tea, coffee, tobacco, raw cotton, raw silk, vegetable dyestuffs, tropical cereals, natural fertiliser, tropical hardwoods and a host of other goods, none of which could be produced at all in northern Europe or, later, in North America.“ (Patnaik, p.15). Point 3 is also a head scratcher, because Japan really had capitalism thrust upon them at the barrel of a gun well after the world-capitalist-system had begun developing and spreading; Japan did not “develop” capitalism in isolation. He even admits in chapter 2 that Japan’s Meiji restoration was helped by the fact that Japan was an island, and therefore it could defend itself much more easily from imperialist encroachment while China could not. It seems more likely that Japan industrialized not because of an entrepreneurial elite, but because it had to in the face of an imminent imperial invasion like the ones that forced opium addiction upon the Chinese populace.
Hung’s own theory argues that England had a class of urban entrepreneurs willing to take risks and innovate for profit that China did not. This class was more willing than any in China to go through costly experimentations to improve production, and for generations they siphoned off agricultural surplus, accumulated it into a mass of wealth, and used that wealth to find ways to develop production technology further. In China the urban elite were more likely to use their wealth to gain state power/offices rather than spend it on risky technological experimentation. This is because, while England's state fully backed the urban elite against the masses whenever it needed to, the Chinese state was more ambivalent and often sided against the urban elite to try and diffuse tensions.
Defeats to western imperialists and constant internal rebellions (White Lotus Rebellion, Taiping Rebellion, etc) turned the Qing dynasty into a failed state (it is here, Hung argues, that China began its centuries long quest to develop its productive forces and industrialize). Eventually, local warlords took over every corner of China and financed themselves through levying heavy taxes, especially on rich urbanites, further constraining China’s ability to build industrial capitalism. By consuming most of the economic surplus, these rich warlords prevented the Qing state from constructing a state-led industrialization effort. The Qing dynasty collapsed in 1911, and from this period until 1949 China was in a constant state of war, mainly between local warlords and the rival modernizing powers of the nationalist liberals (KMT) and communists (CCP). With support from the USSR and the peasantry, the CCP was able to defeat all opponents and take control of the country and soon began on a plan to develop heavy industry (inspired by the USSR).
At first the CCP paid back the peasants for their support through land reforms (redistributing large peasant holdings to more people), developing infrastructure, and promoting peasant cooperatives. However this did not lead to industrialization; schemes to promote urban industries by selling iron farm tools to peasants failed because the peasants clung to traditional means of farming. Peasants also kept most of the products they made for household consumption or local markets rather than selling them elsewhere, constraining urban– rural exchanges. With a heavy hand, the Communist government made all peasants surrender their plows and other means of production and pushed them into peasant communes. Their production was then sent to urban centers, and the peasants then bought back products like fertilizers and machines at elevated prices. This coercive process (which helped exacerbate large famines) worked, and the industrial share of China’s GDP rose from 20.9 percent in 1952 to 47.9 percent in 1978, while Industrial labor productivity grew by 236.7 percent. To compensate the peasants, the CCP invested in agricultural infrastructure, basic education, and healthcare in the Communes. Life expectancy at birth in China rose dramatically from 43.5 years in 1960 to 66.5 years in 1978, mainly thanks to improvements in the rural areas.
This policy of rural improvement had long term structural effects. It left China with a large reserve of rural laborers who had high literacy rates and good life expectancies. This mass of laborers would prove to be very attractive to foreign investors, especially in the 1980s and 1990s. On top of this, because the Maoist state relied almost solely on surplus extracted from the countryside for the primitive accumulation process and refused to rely on external borrowing, as many other socialist and developing countries did in the 1970s.Therefore, the Chinese state did not fall prey to external creditors when the international debt crisis hit in the 1980s, unlike most of the Global South and Soviet Bloc. “The Chinese state, therefore, did not have to rely on emergency credit from the World Bank and the IMF for rescue, which meant it could maintain its autonomy vis-à-vis the United States and experiment with market reform gradually rather than undergo the shock therapy that the World Bank and IMF applied to most of their debtors amid the debt crisis…By the late 1970s …China was already endowed with a network of state industries and infrastructure; a large, educated, and healthy rural labor force; and a state autonomous from foreign governments and international financial institutions. These legacies of the Mao period, regardless of the high cost that the Chinese people had paid for them, laid the foundation for the success of the subsequent market reform” (p. 76-77)
By the 1970s China’s growth had begun to slow, and by the 1980s it was on a path to market reformation. This reform destroyed the Mao era promises of lifelong employment, healthcare, and basic social services provided by the State Owned Enterprises (SOEs) and communes. According to the author the unrest this caused led to the Tiannamen protests and subsequent crackdowns in 1989, and in the 1990s the Chinese government underwent neoliberalization at the behest of the advice of U.S. financial capital. However, in the 1990s the state also began taking control of the vast private sector, with SOEs beginning to dominate most major areas of the Chinese economy; by 2011, the SOEs’ total assets were 2.2 times larger than all private enterprises’ total assets. As the SOEs began behaving more and more like private enterprises as they were subjected to market forces (although much less productive than private enterprises) they began exploiting their workers harder and harder. This exploitation resulted in more unrest, which in turn resulted in the Chinese state making commitments to introduce social security and a medical insurance system to try and offset the loss of the old welfare benefits.
Since then, from around 1990 to today, China has been the leader in global poverty reduction. According to the U.N.: “(from 1990-2005) the decrease of poor population achieved in China accounted for 76.09 percent of the world’s total”. However, internally China has become increasingly unequal, especially between urban-rural areas and between richer and poorer provinces, leading to China being one of the most unequal societies on the planet. Even still, “although the incomes of rich and poor have been polarizing within China in the post- Mao era, even the poorest segment of the Chinese population has been experiencing real-income growth faster than the average-income growth in the world, enabling China to reduce global inequality regardless of the spectacular growth in inequality within its own huge population.” (p. 129).
On the global sphere, nations in South America and Africa have both benefitted and been harmed by China’s rise. China gives these global south countries much more favorable loans than the United States while simultaneously stifling their attempts to reduce their reliance on natural resource exports due to China’s growing markets for oil, agricultural produce, raw materials such as base metal, and energy/food. Due to these Chinese markets, a growth of mining and agribusiness industries across the third world has hindered development. At the same time, China’s efficient low-cost manufacturing also competes with many of these nations’ manufacturing sectors. For example, “more than 80 percent of major Latin American countries’ manufactured exports are under direct or partial threat from Chinese manufacturers” (p. 136). In Asia, China has become the center of an intra-Asian division of labor; Asian neighbors export goods/components to China, who then assemble and ship the goods worldwide. On top of this China has also actively provided its poorer neighbors, such as Cambodia, with investments, loans, and other economic/infrastructural assistance. This all gives China leverage over their governments, and the threat of economic sanctions is a bludgeon with which China can impose its will on its neighbors.
This centuries-long Chinese project of development appears to be coming to fruition before our very eyes, yet Hung argues it will not displace the United States’ hegemonic dominance over the world (nor does China really want to). He concedes that the U.S. percentage of global GDP has dropped from 39% in 1960 to around 20% today, but he counters by saying that the U.S. dollar will always give it a position of power on the world stage. The dollar has been the global exchange reserve currency since the implementation of the Bretton Woods system/Marshall Plan, with around 70-80% of all exchange reserves in the world being U.S. dollars. This means that most global trade, like the purchase of oil, is done in dollars. China’s own currency, the RMB, is pegged to the dollar, and to keep the RMB from appreciating against the dollar China has purchased U.S. treasury bonds at an exorbitant rate. By 2008 China had become the biggest foreign holder of U.S. treasury bonds. These purchases have helped the United States fund its massive budget deficit (due to the Iraq and Afghanistan wars) and have secured consistent United States demand for Chinese goods by preventing the freefall of the dollar. In the end, more than 80 percent of Chinese exports are paid for in dollars (Reuters 2010). As long as China’s rising trade surplus comes mostly in dollars, the Chinese central bank has few choices than to invest these dollars in the most liquid and relatively safe dollar-denominated asset—U.S. Treasury bonds. (p. 157). This has only strengthened after the 2008 financial collapse, exemplified by the fact that China doubled its holdings in U.S. Treasury bonds between 2008-2013. China needs the United States as a market just as badly as the United States needs Chinese goods; this impells China to help perpetuate the dollar-standard, the foundation of U.S. dominance. Altogether, it is not an exaggeration to say that China and the U.S. have become an integrated economic system.
Hung concludes with an apt summary of China’s role in the capitalist system today: ”relatively slow growth in domestic consumption led to China’s increasing reliance on foreign markets, a ballooning trade surplus, and the increasing purchase of U.S. Treasury bonds, which in turn contributed to the expansion of the U.S. debt bubble accountable for the Great Crash of 2008. The expansion of debt-financed overinvestment in China after the 1990s has also created financial and real-estate bubbles within China that are themselves destined to deflate. The rapid rebound of the Chinese economy in 2009–2010 after the initial shock of the Great Crash of 2008 was driven solely by a redoubling of debt-driven overinvestment, which aggravated the economy’s structural imbalance. The imminent and inevitable readjustment of the Chinese economy is poised to create significant repercussions throughout the world.” (p. 203)
December 2, 2022
Ho-fung Hung makes a pretty strong case that everyone has the wrong idea about China's relationship to global capitalism. There won't be a shift from American hegemony to Chinese hegemony—the Chinese and American systems are too interconnected for one to overtake the other. They cannot exist without each other, to the point that they're both just two parts of the same system.
They both facilitate the same status quo.
They both facilitate the same status quo.
October 12, 2015
To some, this book may appear to be heresy or denying the inevitable, no matter what they would like to otherwise believe. Yet can this book be incredibly incisive or just stating what might be the obvious fact – China will NOT rule the world.
Is the author criticising the new clothes of the emperor? Maybe China will not become the world-dominating superpower many fear, expect or await. Time will tell, yet nonetheless the author offers up an interesting analysis and forecast through a mix of politics, sociology, business and history. Four key points are taken up that, the author claims, show that China’s current meteoric growth is transient. There are said to be misconceptions about China’s boom, namely that that China could undermine orthodoxy by offering an alternative model of growth; that China is radically altering power relations between the East and the West; that China is capable of diminishing the global power of the United States; and that the Chinese economy would restore the world’s wealth after the 2008 financial crisis.
Many have pointed towards China’s present “financial hold” on the West due to it being the low-cost workshop of the world, sucking in masses of foreign currency; yet many point out that whilst China could dump the Dollar and create a world meltdown in the process, it is in the country’s own interests (and especially its elites’ interest) to maintain the status quo and not do anything rash. In more recent months many cracks have appeared in Chinese financial markets and structures; is the economy over-heating and what may occur if things start to split. China is probably trying to rapidly paddle and maintain the status quo for its own selfish reasons; at the same time the rest of the world can watch on and hope…
The author has put together a gripping read about a fascinating subject within an engaging, credible package. It manages to be accessible to the generalist reader whilst being a nuanced, actionable book for the academic or specialist. It is not screeching hysterics but provides a fairly matter-of-fact assessment with a lot of referenced sources so the sceptical, curious or argumentative reader can dig deeper as required.
There is a lot to this book; at times it felt overwhelming, but maybe it is the equivalent of a good Chinese buffet dinner; a lot of things for everyone and it is good to offer more than most people could consume. It was an interesting, pleasurable read and it could be good to put this book into a time capsule and look back in the future to see just how right on the money the author was.
Autamme.com
Is the author criticising the new clothes of the emperor? Maybe China will not become the world-dominating superpower many fear, expect or await. Time will tell, yet nonetheless the author offers up an interesting analysis and forecast through a mix of politics, sociology, business and history. Four key points are taken up that, the author claims, show that China’s current meteoric growth is transient. There are said to be misconceptions about China’s boom, namely that that China could undermine orthodoxy by offering an alternative model of growth; that China is radically altering power relations between the East and the West; that China is capable of diminishing the global power of the United States; and that the Chinese economy would restore the world’s wealth after the 2008 financial crisis.
Many have pointed towards China’s present “financial hold” on the West due to it being the low-cost workshop of the world, sucking in masses of foreign currency; yet many point out that whilst China could dump the Dollar and create a world meltdown in the process, it is in the country’s own interests (and especially its elites’ interest) to maintain the status quo and not do anything rash. In more recent months many cracks have appeared in Chinese financial markets and structures; is the economy over-heating and what may occur if things start to split. China is probably trying to rapidly paddle and maintain the status quo for its own selfish reasons; at the same time the rest of the world can watch on and hope…
The author has put together a gripping read about a fascinating subject within an engaging, credible package. It manages to be accessible to the generalist reader whilst being a nuanced, actionable book for the academic or specialist. It is not screeching hysterics but provides a fairly matter-of-fact assessment with a lot of referenced sources so the sceptical, curious or argumentative reader can dig deeper as required.
There is a lot to this book; at times it felt overwhelming, but maybe it is the equivalent of a good Chinese buffet dinner; a lot of things for everyone and it is good to offer more than most people could consume. It was an interesting, pleasurable read and it could be good to put this book into a time capsule and look back in the future to see just how right on the money the author was.
Autamme.com
October 8, 2020
The China Boom: Why China Will Not Rule the World by Ho-fung Hung is a look at China's history and its likelihood as a world power. Hung is an associate professor of sociology at the Johns Hopkins University and researches the development of capitalism, state formation, and protests in China and the world.
China is the boogie man in American contemporary culture. It has replaced Japan as the killer of the American dream in the 1970s and 1980s and the media feeds this fear. Claims from China developing a massive blue water navy to trying to set claims on the moon are frequent watercooler talk. What we do know is that China is the last country helping to support the North Korean regime. It relies on the US naval presence to keep its sea lanes safe. Talk of China's huge military budget of $129.4 billion is dwarfed by the United States' 571 billion in military spending. China is exercising its regional hegemonic powers where it knows it can make progress -- Spratley Islands vs Tiawan. China is the second largest economy and expected to eclipse the US by mid century.
Hung spends a great deal of time explaining China's history to explain the culture and its motives. His primary thesis is that China will not rule the world and the argument is convincing. Much of the argument centers on growth and economics. For those hoping for a more political and or power related explanation, there will be some disappointment. On the international development, China does not want to change the world order. It benefits greatly from the current setup. It’s military does not need to worry about power projection on the world stage. It is an export nation and it benefits from the current consumption based economies. Its development in Africa contributes to its access to resources and markets, and goodwill. It succeeds where India is failing -- developed infrastructure, low consumption, and a large trade surplus.
Hung goes a long way at dispelling the rumors and myths of a China-centric future world. China will play a role in the world and a fairly large role. Its dependency on export markets and the US dollar will hold it in check and to a great extend keep the world order in place. One annoyance I found with the book was the use of in line parenthetical referencing citations. Most historical and political books use endnotes or footnotes. This book on the whole contains useful and well documented information and goes a long way in setting straight the role of China in today’s world and the limits of its future role.
China is the boogie man in American contemporary culture. It has replaced Japan as the killer of the American dream in the 1970s and 1980s and the media feeds this fear. Claims from China developing a massive blue water navy to trying to set claims on the moon are frequent watercooler talk. What we do know is that China is the last country helping to support the North Korean regime. It relies on the US naval presence to keep its sea lanes safe. Talk of China's huge military budget of $129.4 billion is dwarfed by the United States' 571 billion in military spending. China is exercising its regional hegemonic powers where it knows it can make progress -- Spratley Islands vs Tiawan. China is the second largest economy and expected to eclipse the US by mid century.
Hung spends a great deal of time explaining China's history to explain the culture and its motives. His primary thesis is that China will not rule the world and the argument is convincing. Much of the argument centers on growth and economics. For those hoping for a more political and or power related explanation, there will be some disappointment. On the international development, China does not want to change the world order. It benefits greatly from the current setup. It’s military does not need to worry about power projection on the world stage. It is an export nation and it benefits from the current consumption based economies. Its development in Africa contributes to its access to resources and markets, and goodwill. It succeeds where India is failing -- developed infrastructure, low consumption, and a large trade surplus.
Hung goes a long way at dispelling the rumors and myths of a China-centric future world. China will play a role in the world and a fairly large role. Its dependency on export markets and the US dollar will hold it in check and to a great extend keep the world order in place. One annoyance I found with the book was the use of in line parenthetical referencing citations. Most historical and political books use endnotes or footnotes. This book on the whole contains useful and well documented information and goes a long way in setting straight the role of China in today’s world and the limits of its future role.
February 10, 2019
Outstanding analysis of China's economic history since the Qing dynasty and how it has become the main benefactor of the current neoliberal world order, which means the popular debate of whether China will take over as the new superpower is a false proposition. China is addicted to the export-oriented model and has not been successful in finding another growth engine to replace it.
In a time where China is glorified or demonized in almost every single book/article, I am delighted to see a professor from Hong Kong who is known for supporting Hong Kong localism to be able to produce a book that is based on cold hard facts instead of what people want to hear.
In a time where China is glorified or demonized in almost every single book/article, I am delighted to see a professor from Hong Kong who is known for supporting Hong Kong localism to be able to produce a book that is based on cold hard facts instead of what people want to hear.
May 5, 2016
Some solid arguments, well made, but if you're familiar with his work in other fora or Michael Pettis' work on The Great Rebalancing then there's little new here to justify the cover price.
June 22, 2021
This is a great book to counteract the relentless US propaganda about China. (Though I'm sure my knowledge is limited enough to miss the times its premises fall in line with western propaganda more subtly.) I particularly enjoyed the first 3 chapters of the book that covered the modern history of China and its steady push toward capital accumulation and industrialization. I learned a lot about the enormous achievements of revolutionary China under Mao. Ho-fung rightfully praises the achievements of Mao's economic revolution while giving some mention to the social and cultural damage that resulted from the massive economic upheavals (limiting of some civil rights in exchange for major educational, economic and medical gains across the country).
The second half of the book focuses on debunking the claims that China will majorly disrupt the neoliberal Western order. It makes a convincing case that China's export-driven development has bolstered this order and they are trapped by this dynamic (as is the US and Europe). I was left wondering about what rebalancing of their economy should/might look like and its effects throughout the world. The book also talks about how China has provided more bargaining power for other developing nations in the face of IMF/World Bank hegemony, but that China is also reinforcing colonial-style natural resource dependence for many developing countries; whether China is a net positive of net negative for other developing countries remains to be seen.
The book primarily stays in the realm of economics, which is all it claims to do. I would have appreciated a bit more political analysis of the power of coastal elites within China and its political economy. It whet my appetite for further reading on modern China, and would recommend it to anyone looking to learn more about China and its place in the world (it seems introductory but thorough).
The second half of the book focuses on debunking the claims that China will majorly disrupt the neoliberal Western order. It makes a convincing case that China's export-driven development has bolstered this order and they are trapped by this dynamic (as is the US and Europe). I was left wondering about what rebalancing of their economy should/might look like and its effects throughout the world. The book also talks about how China has provided more bargaining power for other developing nations in the face of IMF/World Bank hegemony, but that China is also reinforcing colonial-style natural resource dependence for many developing countries; whether China is a net positive of net negative for other developing countries remains to be seen.
The book primarily stays in the realm of economics, which is all it claims to do. I would have appreciated a bit more political analysis of the power of coastal elites within China and its political economy. It whet my appetite for further reading on modern China, and would recommend it to anyone looking to learn more about China and its place in the world (it seems introductory but thorough).
July 5, 2022
What a fascinating book, it's well written thought a bit technical but still accessible. This need to be read by more people.
China is part of the global neoliberal order, a reality check for both conservatives seeing China as a threat and people who believe that China is still a revolutionary forces.
China is part of the global neoliberal order, a reality check for both conservatives seeing China as a threat and people who believe that China is still a revolutionary forces.
March 12, 2023
Interesting analysis of the economic development of China in the world. Worth a read if you want that exactly, But a lot of the conclusions feel prescribed by orthodoxy.
To get the five stars it would have to say something new and interesting. Instead, all it does is go against propaganda and irrational fears.
A solid read for someone in the area but not recommended otherwise.
To get the five stars it would have to say something new and interesting. Instead, all it does is go against propaganda and irrational fears.
A solid read for someone in the area but not recommended otherwise.
May 24, 2023
Quite technical at times but a fascinating read. Painted a far more complex, nuanced and interesting (and well-sourced) picture than most texts I've found. In no position to judge the soundness of the economic arguments, but the reasoning is well-structured and convincing.
September 28, 2024
Vaguely leftist recapitulation of Pettis' arguments, with the first half being instead focused on why capitalism did not emerge in China until the 20th century. While some consequences to today emerge, it is disconnected still. Just read Pettis instead
December 11, 2019
A good objective look at China without conventional hysteria. China is not what it seems to be to many and Ho does a great job in showing what it truly is.
April 16, 2023
Very interesting study from a world systems perspective. A bit dated
July 2, 2023
Extraordinarily helpful succinct history of China’s political economy and its full integration into the neoliberal capitalist order since 1980.
Want to read
January 25, 2016Reviewed by Asian Review of Books
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