| The Elephant and the Dragon: The Rise of India and China and What It Means For All of Us |
| Robyn Meredith, WW Norton & Co, September 2008, 384 pages, £9.99. |
| There is a popular urban myth that if all 1.2 billion Chinese jumped up and down at the same it would cause a tidal wave that would swamp America. Fortunately this is bad science. Unfortunately there are many similar economic myths surrounding China and its near neighbour India. Gordon Brown spent much of his Chancellorship reminding us how many thousands of science students graduate from the two countries’ universities each year while Lord (Digby) Jones often quipped that the two tigers would eat our breakfast, lunch and dinner if we didn’t watch out. China and India have entered folklore as, respectively, the world’s factory and its back office. On the back of these come the urban myths: their rise is a calculated attack on the West; labour markets in the US and the UK will be hollowed out; all economic activity will be outsourced to Guangdong or Bangalore. |
| Into this arena steps Meredith with her analytical look at the rise of China and India and what that means for the West. Meredith, a foreign correspondent for Forbes magazine based in Hong Kong, quickly banishes any idea one should think of these two countries as one beast – a Chindia so to speak. She highlights the deep differences between the two: China the communist state with a planned economy and a developed infrastructure; India the democracy with antiquated infrastructure and persistent mass poverty. |
| She also shatters some of the myths, pointing out that outsourcing has improved living standards in the West and that employment has gone up and not down over the period of globalisation. |
| Crucially she explains in fascinating detail the sequence of individual decisions by politicians and entrepreneurs in both countries that put them on the path they are now following. In China for instance the book tells of how 18 farmers in Xiaogang risked prison or worse by breaking up their collective and dividing land ownership. Today Xiaogang is celebrated as the birthplace of the transition to the modern economy. Likewise she notes that in pre-reform India Procter and Gamble once worried they were breaking the law by producing too much Vicks VapoRub during a flu epidemic. The book is full of such anecdotes and Meredith brings her journalist’s eye for detail and nose for a good quote that makes the book entertaining as well as informative. |
| The bulk of the book is taken up with analysis of how the two countries entered the economic mainstream, relying both on telling anecdote and a broad understanding of the two countries’ modern history. The final chapters take the book’s sub-title as their theme, asking what the US and by implication other G7 nations such as the UK should do to cope with the economic challenge. To her credit Meredith urges the US not to adopt a protectionist response but instead see the economic challenge as a “catalyst for competitiveness”. The US and the West must invest more, especially in areas such as education, and give a greater focus to the innovative spirit that led to inventions such as the Internet. With the financial crisis in full swing and seemingly destroying one major US institution every week, this is a difficult message to sell. Certainly neither candidate for the US Presidency – and particularly Mr Obama – seems to be heeding the message. |
| But once the dust settles on both the credit crisis and the race for the White House, this book should be seen as a useful primer on the econo-mic challenge posed by India and China and a roadmap for meeting it. |
| Phil Thornton |
| Lead Consultant, Clarity Economics |