- Lord Copper
Stalling Sun, Rising Dragon?
I’ve just been reading a book called ‘Rising Sun’, by Michael Crichton (he of Andromeda Strain, Jurassic Park and ER fame). It was published originally in 1992 and is a story about a murder that happened during a reception at the new Los Angeles offices of a major Japanese corporation. As a cross between a detective novel and a thriller, it’s pretty good; if you haven’t read it, get hold of it – it’s worth a read.
But this isn’t a book review, and it wasn’t so much the story I wanted to focus on as the way that a book written only twenty-odd years ago seems already to be so dated. You see, a large part of the story revolves around the way that the big bogeyman for US industry – particularly the high-tech end of it – is Japan, Inc. It’s the Japanese who are blocking patent applications while calmly copying the technology, it’s the Japanese who are buying up US companies, financing US university research for their own ends, inflating the cost of Californian golf-club memberships, and so on.
For those old enough to remember, this was all of a piece; every time you went to Australia, they told you how much more of Queensland the Japanese had bought; every economist who spoke in public assured us that Japan was on course to become the world’s biggest economy in two, or five, or ten years; Sumitomo and their allies dominated the LME copper market.
A Damp Squib
And then what happened? Well, a few acres of central Tokyo apparently became as valuable as the whole of the state of California, and then it all kind of fizzled out as the bubble burst and the Japanese economy entered a long period in the doldrums. The Rising Sun approached its apogee in our skies, and then stalled (apologies to astronomers for that one). Japan is one of the world’s major economies; but it is not anybody’s bogeyman, threatening hegemony over the rest of us.
The Rise of China
As with Japan, so with China? Are we perhaps guilty of over-hype – or indeed, over-expectation? There are some intriguing parallels. Chinese interests are not buying Australia, but they are buying up large swathes of its mineral products. In Africa, they are most definitely buying assets, indeed some make the claim that they are actually buying countries. In the auto industry, Volvo, for example, and the rump of the old state-owned British motor industry in the shape of the MG name, have both been snapped up by Chinese companies. ‘Made in China’ has become almost the default expectation to find stamped on a raft of products across a huge range of industries. For sure, China is the most populous country on earth, although not the biggest in size, and there is no question that its economy will continue to drive forward as it is modernised and that population becomes increasingly consumer-oriented.
One thing that history teaches us, though, is that expectations are very often significantly different from reality. In the nineteenth century, Karl Marx, writing from his comfortable base in London, was totally convinced that his new doctrine of revolutionary socialism would rise to power first in the developed industrial societies of Western Europe (basically Britain or Germany); Russia was way down his list of candidates. Neither was it by any means clear in the eighteenth century that the small island off the north-west coast of Europe would become the first mercantile and industrial super-power.
So things don’t always develop as mass expectation intends. China is on a massive upward growth path. But it is also being loaded with the weight of expectation. There are signs that it is not all a one-way ride. Shale gas exploitation in the United States is changing the structure of manufacturing costs there; there is plenty of anecdotal evidence that ‘Made in the USA’ is not a phrase of the past, but one which will continue for far longer than had been predicted only a few years ago. US and German, for example, technological skill and innovation is not going to disappear; neither for that matter is Japanese.
This is not intended as a piece negative towards China’s development; it will happen, and the country will rightly occupy a place at the top table. What I suggest is that, rather than the whole weight of the world being shifted simply eastwards, it will become more balanced between east and west. It’s too simplistic just to expect ‘Asia’s century’ to leave the west gasping hopelessly in its wake. The reality is more nuanced as knowledge and information are more and more widely shared.