June 8, 2005: Reading Room

China’s bubble

Ted C. Fishman ’80 looks at China’s manufacturing might

By Louis Jacobson ’92

In Indonesia, shortly after his graduation from Princeton, Ted C. Fishman ’80 began to grasp the economic potential of China. While teaching English at a university on the island of Java, Fishman noticed an endless supply of low-end consumer goods manufactured in China. Chinese glassware and textiles filled his bamboo house; his Chinese bicycle had cost him the equivalent of $12, a bargain even 25 years ago.

Today, China still produces low-cost goods, but over the past quarter-century, its economy — driven by 1.3 billion people and a torrent of foreign investment — has expanded in unprecedented fashion, writes Fishman. Chinese goods are still inexpensive, but they’re increasingly high quality, ranging from pharmaceuticals to automobiles.

China is growing so fast that Fishman foresees it outstripping the United States as the world’s biggest economy within a generation. And in his book China, Inc.: How the Rise of the Next Industrial Superpower Challenges America and the World, published in February by Scribner, Fishman argues that this development should worry all Americans, because their employers, and their jobs, could disappear at the hands of a vigorous competitor.

One key factor in China’s rise, Fishman says, has been a general willingness by its businesses to use intellectual property developed in America without paying royalties — a practice officially forbidden by Chinese law, but mostly winked at by the authorities. By not paying license fees for software, or by “reverse-engineering” products to divine the secrets of their manufacture, China drastically cuts its costs, already low due to the country’s vast labor pool. This approach starves American innovators and makes Chinese low-cost products attractive to consumers. According to the book, 70 percent of the goods sold in Wal-Mart are made in China.

Fishman says he has no quarrel with the Chinese people. Instead, he says, it is up to Americans to become fiercer competitors by improving their educational system, their investment in science and technology, and their enforcement of intellectual property rights.

“There’s no point in demonizing” China, he says. The Chinese are “living the American dream.” Per capita income, he notes, has increased fourfold in China over the past 20 years, and even though China’s hybrid communist-capitalist system has dismal, Dickensian aspects to it, it is also spawning a vast middle class.

A resident of Chicago, Fishman majored in philosophy at Princeton and, through the Princeton-in-Asia program, worked as a management trainee for a Japanese company before teaching in Indonesia. Back in the United States, Fishman eventually became a floor trader at the Chicago Mercantile Exchange before he moved into freelance writing in the early 1990s.

Asked whether China’s bubble could burst, as Japan’s did in the 1990s, Fishman insists that it is unlikely, given the size of China’s population, its growing number of domestic consumers, and its vibrant spirit of entrepreneurship. Says Fishman, “Long-term growth is almost a certainty.”

Louis Jacobson ’92 is deputy editor of Roll Call, a newspaper covering Congress.

BOOK SHORTS

Borderlines: A Memoir — EDMUND KEELEY ’48 (White Pine Press). Keeley, an American who spent three years in Greece before World War II, became a novelist, translator, and critic who often focused on Greece. In his memoir he writes about his childhood in that country, his years during war-time in Washington, D.C., and his student years at Princeton. He is a professor of English and creative writing, emeritus, at Princeton.

Fourth Planet from the Sun: Tales of Mars from the Magazine of Fantasy & Science Fiction — edited by GORDON VAN GELDER ’88 (Thunder’s Mouth Press). An anthology of science fiction, this collection focuses on short stories about humans traveling to Mars and includes work by Ray Bradbury, John Varley, Roger Zelazny, Leigh Brackett, Alfred Coppel, and Gregory Benford. Van Gelder is the editor of the Magazine of Fantasy & Science Fiction.

Ruby Tuesday — JENNIFER ANNE KOGLER ’03 (HarperCollins). Narrated by 13-year-old Ruby Tuesday, this novel follows Ruby after her father has been suspected of murdering his bookie. Named after a Rolling Stones song, Ruby, her cigar-smoking mother, and card-shark grandmother dodge mobsters in Las Vegas as they try to get to the bottom of the murder. Kogler’s novel about a dysfunctional family began as her senior thesis.

By K.F.G.

For a complete list of books received, click here.