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Superfusion: How China and America Became One Economy and Why the World's Prosperity Depends on It
Now in paperback, Zachary Karabell argues that the intertwined economic relationship between China and the U.S. will affect our long-term prosperity more than any other contemporary issue. As the world continues the slow work of repairing the damage of the financial crisis, it is crucial that the U.S. understands that it cannot go it alone. Its mutuality with China is permanent, essential, and defining. Zachary Karabell’s brilliant book lays out this complex and important economic story.
“Karabell excels at weaving in glitzy tales of the brave new China against the larger backdrop of the Middle Kingdom’s forceful but cautious economic liberalization and the often tortuous, frequently saber-rattling politics of U.S.-China relations….A provocative argument.”
—Los Angeles Times
“The question at the heart of Superfusion is a pressing What will happen next? Mr. Karabell says that the U.S. must turn its thinking away from the military and security challenges of the twentieth century and focus more on the economic challenges of the twenty-first.”
—The Wall Street Journal
“A compelling brief on the unlikely convergence of the U.S. and Chinese economies….Essential reading for anyone curious about the increasing economic integration and interdependence between China and America, the public opposition in both nations, and the implication for the U.S. as it faces competition from a nation it cannot coerce.”
—Publishers Weekly (starred review)
“Karabell excels at weaving in glitzy tales of the brave new China against the larger backdrop of the Middle Kingdom’s forceful but cautious economic liberalization and the often tortuous, frequently saber-rattling politics of U.S.-China relations….A provocative argument.”
—Los Angeles Times
“The question at the heart of Superfusion is a pressing What will happen next? Mr. Karabell says that the U.S. must turn its thinking away from the military and security challenges of the twentieth century and focus more on the economic challenges of the twenty-first.”
—The Wall Street Journal
“A compelling brief on the unlikely convergence of the U.S. and Chinese economies….Essential reading for anyone curious about the increasing economic integration and interdependence between China and America, the public opposition in both nations, and the implication for the U.S. as it faces competition from a nation it cannot coerce.”
—Publishers Weekly (starred review)
352 pages, Hardcover
First published January 1, 2009
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112 people want to read
About the author
Zachary Karabell
25 books38 followersZachary Karabell is a New York-born author, columnist and investor who previously served as Head of Global Strategies at Envestnet, a publicly traded financial services firm. He currently hosts the podcast “What Could Go Right?” and analyzes economic and political trends as president of River Twice Research.
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Displaying 1 - 12 of 12 reviews
November 14, 2011
A fascinating read on how globalization and consequence of intertwining economies affects the world's economies with specific insights on how American and Chinese economies intertwined.
My conclusions after reading the book:
1) Government cannot influence a market economy directly. It can only make worse or better a recession/depression or increase productivity or get in the way in a bull market. For all his personal deficiencies, Clinton was really a good steward of the American economy during his presidency by favoring decreasing the deficit over tax cuts; thereby shifting investments from public sector to the private sector and championing free trade via the World Trade Organization.
2)Domestic Policy-wise Long-term competitive advantage for the US lies in deficit reduction not tax cuts and increasing R&D dollars for basic science research that new industries can be built upon a la the internet. Also, I think friendlier immigration policies toward highly-skilled immigrants and immigrant students who are skilled should be allowed to stay. I also think we should make America the friendliest place to do entrepreneurial business and make up the tax cuts for entrepreneurs by taxing multinational companies more. But in reality this is harder and harder to do because the company supply chain is global meaning hitting a foreign company might inadvertently hit the US global supply chain. It is news to me that China actually has a trade deficit with Japan and South Korea because they produce high-end manufacturing that China wants. Why can't America do this?
3)Foreign policy - Both American and Chinese nationalist tendencies will be checked by our fused economies which means that only an egregious military mistake will ever lead our two civilizations into direct conflict. This means in terms of defense spending is that we can momentarily keep the status quo in favor of deficit reduction and retooling our economy for the future. I think the market should be allowed to go unimpeded except if it has national security implications.
The National Intelligence Committee states that China will be the dominant world wide economy in 2030. This means we can no longer dictate foreign policy initiatives but rather we have to form alliances with other like minded countries. Militarily this means a decrease in spending in order to focus on our # 1 foreign policy objective: the resurgence of American economy.
4) For American workers, it is clear that the future is either to be a highly-skilled professional that cannot be outsourced or off-shored or to be an innovative entrepreneur in creating industries or companies before the competition abroad. In this environment, to be an employee of a multinational firm is just asking to be laid off.
Karabell states the reason that real wage is stagnant and unemployment has increased in the seemingly paradoxical milieu of increased productivity is due to technology and global free trade in which old manufacturing jobs get shipped globally especially to China. Chinese development and their increasing middle class drives oil and commodities upwards thus dampening American consumer spending (increase oil and raw commodities demand and thus price acts as a de facto tax on people)and subsequently our quality of life.
This brings in an interesting quandary does innovation create job loss should we still innovate. I think the answer is yes because developing nations will produce cheaper manufacturing goods the key to our survival economically is to innovate ourselves out of the current paradigm.
Synopsis of what I read:
American effects -
Chimerica occurred despite Chinese and American governments lukewarm reception to it; thus proving the maxim that the markets are blind toward individual government wants. The New Economy via the internet created the possibility of the global supply chain. In the relentless drive to provide stockholders value in the face of the "new economy" and decreasing American profitablity, the old retail economy looked to new markets such as China and Southeast Asia for new profits via a virgin consumer base. The two main examples of this phenomenon is KFC and Avon which remade themselves in China as a status product from their more humble US roots. These two companies re-branded themselves to the Chinese consumer wanting to become more modern and thus cooler. Branding and intended effect of seeming to have a superior product is the only hope that the US companies have against intellectual property theft. Since Karabell states that the Chinese have a consumer culture, it means they can possibly pick up the slack on consumption demand this coupled with the fact that the Chinese manufacturing base now has created a growing middle class.
Government help accelerate this inevitable trend by decoupling human rights from trade status in the Clinton Administration and working to get China into the WTO. Globalization as a reality only started in earnest during W. administration although Clinton laid the foundation for its realization.
The reason why I think we should tax multinational firms for profits they make globally is due to Chinese growing middle class which is taking our old manufacturing jobs will buy American brands. If all the US government does is tax American-based companies for their revenues in the US then the multinational companies will just be nominally American because in a current recession such as ours they can just shift their manufacturing abroad and sell to consumers abroad.
Obama's focus on green technology new economy is pragmatic convergence of a stagnant economy, decrease manufacturing jobs, a ready demand in China due to increase pollution due rapid pace of modernization, and increase in raw commodity prices due to a growing global middle class. Thus, solving the worlds problems is now good for business.
In terms of raw materials, we can either dig for oil that is expensive to dig to or invest our resources into the new green technology economy thereby saving our selves from increase oil prices as well as a having a ready market in China.
Chinese effects -
Deng in wanting to preserve stability of the Communist Party in power in China decided to open China up to the market slowly creating Special Economic Zones and try to bring state enterprises for their performance. Further economic progress occurred in Jiang's administration in his entering WTO to increase free trade. Join the WTO forced China to adhere more to the rule of law, private property, and increase financial transparency in order to compete with foreign companies. Since Chinese institution are currently corrupt, entrants of foreign companies specifically banking institutions forces Chinese banking to clean house or forced to die a painful death due to their economic inefficiencies.
Because of the relentless pursuit of China's stability of the Communist Party, traditionally it is not viable for countries to want to invest in China because they do not follow the rule of law. But the promise for future large consumer base made companies invest in China anyway despite being a corrupt 3rd world country, with little intellectual property protection and not very stable rule of law.
The government mandated economy also means that initially only multinational had the capability of investing in China and risk losing money due to changing whims of the government in exchange for the possibility of a virgin consumer base.
Because multinational companies such as FEDEX, UPS, and DHL were funneling investments in China, they were able to set the terms to how fast they modernize The carriers Chinese partners saw the efficiency of these multinational firms and emulated them at a certain point saw the need for infrastructure upgrade and influenced the Chinese Communist government who wanted to modernize to do it. The low cost manufacturing in China is driven by low wages and combined with world class infrastructure.
The enormous growth of via increase middle class due to manufacturing jobs and increase infrastructure spending made them hunger for commodities of metals and oil. When the state-run oil company wanted to buy an oil company with ties to the US military was denied, China went into a charm offensive with resource-rich poor nations that the use considered rogue. In contrast to the Bush doctrine of bringing democracy by force, China promised to be the perfect business partners of these countries not interfering with their internal politico-social area in exchange for access to their commodities.
My conclusions after reading the book:
1) Government cannot influence a market economy directly. It can only make worse or better a recession/depression or increase productivity or get in the way in a bull market. For all his personal deficiencies, Clinton was really a good steward of the American economy during his presidency by favoring decreasing the deficit over tax cuts; thereby shifting investments from public sector to the private sector and championing free trade via the World Trade Organization.
2)Domestic Policy-wise Long-term competitive advantage for the US lies in deficit reduction not tax cuts and increasing R&D dollars for basic science research that new industries can be built upon a la the internet. Also, I think friendlier immigration policies toward highly-skilled immigrants and immigrant students who are skilled should be allowed to stay. I also think we should make America the friendliest place to do entrepreneurial business and make up the tax cuts for entrepreneurs by taxing multinational companies more. But in reality this is harder and harder to do because the company supply chain is global meaning hitting a foreign company might inadvertently hit the US global supply chain. It is news to me that China actually has a trade deficit with Japan and South Korea because they produce high-end manufacturing that China wants. Why can't America do this?
3)Foreign policy - Both American and Chinese nationalist tendencies will be checked by our fused economies which means that only an egregious military mistake will ever lead our two civilizations into direct conflict. This means in terms of defense spending is that we can momentarily keep the status quo in favor of deficit reduction and retooling our economy for the future. I think the market should be allowed to go unimpeded except if it has national security implications.
The National Intelligence Committee states that China will be the dominant world wide economy in 2030. This means we can no longer dictate foreign policy initiatives but rather we have to form alliances with other like minded countries. Militarily this means a decrease in spending in order to focus on our # 1 foreign policy objective: the resurgence of American economy.
4) For American workers, it is clear that the future is either to be a highly-skilled professional that cannot be outsourced or off-shored or to be an innovative entrepreneur in creating industries or companies before the competition abroad. In this environment, to be an employee of a multinational firm is just asking to be laid off.
Karabell states the reason that real wage is stagnant and unemployment has increased in the seemingly paradoxical milieu of increased productivity is due to technology and global free trade in which old manufacturing jobs get shipped globally especially to China. Chinese development and their increasing middle class drives oil and commodities upwards thus dampening American consumer spending (increase oil and raw commodities demand and thus price acts as a de facto tax on people)and subsequently our quality of life.
This brings in an interesting quandary does innovation create job loss should we still innovate. I think the answer is yes because developing nations will produce cheaper manufacturing goods the key to our survival economically is to innovate ourselves out of the current paradigm.
Synopsis of what I read:
American effects -
Chimerica occurred despite Chinese and American governments lukewarm reception to it; thus proving the maxim that the markets are blind toward individual government wants. The New Economy via the internet created the possibility of the global supply chain. In the relentless drive to provide stockholders value in the face of the "new economy" and decreasing American profitablity, the old retail economy looked to new markets such as China and Southeast Asia for new profits via a virgin consumer base. The two main examples of this phenomenon is KFC and Avon which remade themselves in China as a status product from their more humble US roots. These two companies re-branded themselves to the Chinese consumer wanting to become more modern and thus cooler. Branding and intended effect of seeming to have a superior product is the only hope that the US companies have against intellectual property theft. Since Karabell states that the Chinese have a consumer culture, it means they can possibly pick up the slack on consumption demand this coupled with the fact that the Chinese manufacturing base now has created a growing middle class.
Government help accelerate this inevitable trend by decoupling human rights from trade status in the Clinton Administration and working to get China into the WTO. Globalization as a reality only started in earnest during W. administration although Clinton laid the foundation for its realization.
The reason why I think we should tax multinational firms for profits they make globally is due to Chinese growing middle class which is taking our old manufacturing jobs will buy American brands. If all the US government does is tax American-based companies for their revenues in the US then the multinational companies will just be nominally American because in a current recession such as ours they can just shift their manufacturing abroad and sell to consumers abroad.
Obama's focus on green technology new economy is pragmatic convergence of a stagnant economy, decrease manufacturing jobs, a ready demand in China due to increase pollution due rapid pace of modernization, and increase in raw commodity prices due to a growing global middle class. Thus, solving the worlds problems is now good for business.
In terms of raw materials, we can either dig for oil that is expensive to dig to or invest our resources into the new green technology economy thereby saving our selves from increase oil prices as well as a having a ready market in China.
Chinese effects -
Deng in wanting to preserve stability of the Communist Party in power in China decided to open China up to the market slowly creating Special Economic Zones and try to bring state enterprises for their performance. Further economic progress occurred in Jiang's administration in his entering WTO to increase free trade. Join the WTO forced China to adhere more to the rule of law, private property, and increase financial transparency in order to compete with foreign companies. Since Chinese institution are currently corrupt, entrants of foreign companies specifically banking institutions forces Chinese banking to clean house or forced to die a painful death due to their economic inefficiencies.
Because of the relentless pursuit of China's stability of the Communist Party, traditionally it is not viable for countries to want to invest in China because they do not follow the rule of law. But the promise for future large consumer base made companies invest in China anyway despite being a corrupt 3rd world country, with little intellectual property protection and not very stable rule of law.
The government mandated economy also means that initially only multinational had the capability of investing in China and risk losing money due to changing whims of the government in exchange for the possibility of a virgin consumer base.
Because multinational companies such as FEDEX, UPS, and DHL were funneling investments in China, they were able to set the terms to how fast they modernize The carriers Chinese partners saw the efficiency of these multinational firms and emulated them at a certain point saw the need for infrastructure upgrade and influenced the Chinese Communist government who wanted to modernize to do it. The low cost manufacturing in China is driven by low wages and combined with world class infrastructure.
The enormous growth of via increase middle class due to manufacturing jobs and increase infrastructure spending made them hunger for commodities of metals and oil. When the state-run oil company wanted to buy an oil company with ties to the US military was denied, China went into a charm offensive with resource-rich poor nations that the use considered rogue. In contrast to the Bush doctrine of bringing democracy by force, China promised to be the perfect business partners of these countries not interfering with their internal politico-social area in exchange for access to their commodities.
This entire review has been hidden because of spoilers.
dnf
April 12, 2020Skimmed it for a class.
February 8, 2010
I mostly enjoyed this book, which takes a fresh and interesting look at the growing interdependence between the Chinese and American economies. Karabell is undoubtedly correct when he says almost no one has been paying enough attention to this issue, and that a lot of our previous paradigms and models are really bumping up against this "elephant in the room". I enjoyed the approach taken of taking a "tour" through Chinese-American interactions based on case studies by various companies who have gone to do business in China. However, Karabell tends a bit towards hyperbole (I'm unsure that great interdependence means we are now "Chimerica"--ask the Europeans how easy it is to make one economy out of many nations) and tends also to be pretty statist in philosophy, with many questionable comments about how China is more stable than we are because of its government control, and how the current housing and financial mess was created by "unbridled capitalism" and we'd be better off with MORE government control. (Just WHERE did he pick up the notion that the US financial and housing markets were "unbridled capitalism"? Oh, yeah, the press, who seem able to believe nearly anything) Still, a very worthwhile book, and anyone concerned with the future of the economy should definitely study more seriously the conjunction of the Chinese and American markets.
January 22, 2012
The book argues that the common economic indicators are flawed and inadequate to measure the complex interdependencies of trade between countries today, and goes on to make a case of how the economies of America and China are now deeply intertwined despite both being sovereign nations, and the tensions that arise because of this. The argument is that both countries are at a crossroads and the logical step to maximise rewards is to embrace this relationship, but old fashioned nationalism and perceptions of state will stand in the way. Given that most of the world is dependent on the two countries to varying degrees, what happens in the future bears watching indeed.
March 27, 2011
I related so well to this book, having just returned from a tour of Beijing, Xian, and Shanghai. The author shows how the China and US economies are so tied together. It is not as simple as China buy up all our debt. Its fast growth happened because of the influence of new US capital and invention in China.
You can read excerpts on my blog site: http://bitsfrommyreading.blogspot.com/ There is a link to it on my “goodreads” profile page under “website.”
You can read excerpts on my blog site: http://bitsfrommyreading.blogspot.com/ There is a link to it on my “goodreads” profile page under “website.”
October 11, 2011
Recommended by my step-uncle, Joe Sizer who works in the financial services sector. Premise: it's not as simple as the dominant China-America narrative would have you believe- the dependence runs both ways, and nothing like this has ever existed on earth. Fascinating read, I appreciated Karabell's attempt to sort out the complicated path that got us to today, and his work to add detail to an oft over-simplified situation. Made me want to learn to speak Chinese.
September 30, 2011
Interesting case stories of US business adapting themselves to China as it changed its stance on the market economy. Did not read enough to figure out if he provides a framework to think of the relationship of the economies, but it is a good place to see what is really going under the fearmongers idea of "Chinamerica". (Hint: historians of money can only think of history in terms of money.)
January 4, 2014
Had to read it for a Government class in college. It was well written but very hard to get through and the points are restated over and over. The book could be easily cut in half and the writer would still get all his points across. I would never read this book unless forced to and will hopefully never have to look at it again.
December 8, 2009
hedge fund manager celebrates chance to get rich in China!
August 20, 2015
I learned somethings here. a reasonable book but not a great book.
April 11, 2010
Somewhat interesting account of how American businesses moved into China. Found the book a bit boring.
Displaying 1 - 12 of 12 reviews