In the first part of the book, Hung takes the reader back to the two centuries (1650-1850) in which China had a market without capitalism, where capitalism is understood to be the use of money to pursue a larger sum of money. He outlines China’s phase of primitive accumulation (1850-1980), followed by the capitalist boom (1980-2008). The flowering of Chinese capitalism, he argues, was not a radical break with the past. Rather, it was “built on the foundation laid in the Mao period, including a large, healthy, and educated rural surplus labor force and an extensive network of state-owned capital.” (p. 10)
The second part of the book looks at the present and paints possible future scenarios.
With its rise as a global economic powerhouse China took a “great leap backward to inequality.” In the Mao era, inequality was expressed not in income but in power. But after the 1980s income inequality became “the increasingly prevalent form of inequality through which other inequalities are expressed.” (p. 91) Inequality is now manifested in class inequality, the growing rural-urban inequality, and inequality among provinces.
China’s development model led to an imbalance in the Chinese economy, “characterized by tepid household consumption, excessive investment by the state sector, and reliance on the export sector” (p. 151), complaints we have heard frequently. Wage growth is lagging far behind the growth of the economy as a whole. Corporate profits are turned into corporate and government savings, which in turn fuel a credit boom that aggravates overinvestment. “The problem of overinvestment that accompanies worsening underconsumption in China is more severe than it was earlier for the Asian Tigers owing to the decentralized nature of the Chinese developmental stage.” That is, local states in China can act independently, creating “anarchic competition among localities, resulting in uncoordinated construction of redundant production capacity and infrastructure.” (p. 155)
So far China has been able to export its excess capacity. But how long can this last? Hung believes that “the imminent and inevitable readjustment of the Chinese economy is poised to create significant repercussions throughout the world.” (p. 176) Just what these repercussions might be Hung leaves largely to the reader’s imagination. He certainly doesn’t want to be a fear monger. In fact, he concludes:
In the end, China is far from becoming a subversive power that will transform the existing global neoliberal order because China itself is one of the biggest beneficiaries of this order. It will not be exonerated any time soon for its role in facilitating continued dominance by the United States in the world through its supply of low-cost export and credit to the United States. If U.S. global dominance is going to end, it will not likely be fostered by China but by some other forces. To be sure, China has been reshaping and will continue to reshape the context of development in the developing world…. Whether China’s net impact will be beneficial or detrimental to development will vary from country to country and will change from time to time. In the short run and from the perspective of specific individual countries, China’s capitalist boom might seem like a game changer that will bring new prosperity, empowerment, subordination, or crisis. At the global level and in the long run, nevertheless, China is set to disappoint many who hail or fear the prospect of its challenging the existing global order in any fundamental way.” (pp. 180-81)