Fingleton - In The Jaws Of The Dragon (2008) - Synopsis

UFPPC (www.ufppc.org) — Digging Deeper LXXXV: June 22, 2009, 7:00 p.m. Eamonn Fingleton, In the Jaws of the Dragon: America’s Fate in the Coming Era of Chinese Hegemony (NY: Thomas Dunne Books/St, Martin’s Press, March 2008. Paperback slated for July 2009). [Thesis: This book, completed in 2007, is a contrarian, monitory argument about U.S.-China relations. Fingleton proposes to alert Americans to “the Confucian challenge” (276, 291), i.e. what he calls “the East Asian economic system” (89), to which American leaders and pundits have been blinded by self-interest or ideological blinkers. China is not “really capitalist” (151) and is pursuing a strategy to achieve hegemony without using military conflict (30-31). “The key to the entire Confucian economic phenomenon is a revolutionary savings regimen in which consumption is systematically suppressed” (289).] Ch. 1: A Dragon on Steroids. The “Washington establishment” is betting on, and the Chinese Communist Party leadership is betting against, the idea that a rich China must become democratic (1-3). Washington’s bet is grounded in ideology and by ignorance of China (3-5). This ignorance is based on a naïve faith in the universality of Western values, ignorance of East Asian economics, and Chinese obfuscation (57). Like Japan, China obstructs free trade and technology transfer (7-9). Japan and South Korea have been very successful with similar policies (9-10). The high Chinese savings rate, “one of the most geopolitically significant phenomena of our time,” is an example of a general East Asian “policy of forced saving” [ch. 4] effected through barriers to consumption (10-14). Authoritarian measures, grounded in “quasi-fascist” Confucian culture that practices group punishment [ch. 6 & 8], maintain these policies (14-19). Another tool: blackmail through selective enforcement of laws (19-22). Meanwhile, the U.S. is in economic and geopolitical decline (22-

28). Western businesspeople going to China are like “chocolate soldiers marching into a blowtorch”; they either convert to Confucian values or they fail (28-30). Chinese foreign policy is following the subtle precepts of Sun Tzu (“To subdue the enemy without fighting is the acme of skill”) (30-31). China is not becoming more like us, we are becoming more like China (“reverse convergence”) (32-33). Ch. 2: “Don’t Worry, Be Happy.” Many American policymakers are in denial about the nature of East Asian economics (34-36). The “Confucian truth ethic,” unlike the “Western truth ethic,” is context-dependent; loyalty trumps truth; “blanket secrecy is the norm” and “institutional mendacity” the rule (3642). China monitors observers of China and rewards “friends of China” (cf. Steven Mosher’s China Misperceived (1990) (42-47). Western journalism about China is particularly inadequate and the Chinese press is “entirely government-owned and comprehensively censored” (47-53). Thomas Friedman is a “fanatical” supporter of the proglobalist convergence theory of U.S.China relations (53-57). Guilt has led to extreme political correctness vis-à-vis China (57-58). Chinese policies have been more, not less, mercantilist than Japan’s (58-62). The Smith-Ricardo laissez-faire theory on which many Western policymakers rely is fundamentally flawed, as many economists are belatedly acknowledging (63-67). China understands, as Fingleton argued in In Praise of Hard Industries (1999), that manufacturing matters (6770). Some argue—falsely—that because fears regarding Japan failed to be realized in the 1990s, fears of China can

be ignored (there was no ‘lost decade’) (70-78). Ch. 3: Genesis of a New System. The conventional account of a successful U.S. occupation of Japan is wrong; in fact Japan deliberately set up a one-party state bent on obtaining markets for Japanese products while pretending to embrace democracy and free trade (8089; few references). Japan’s development of Manchuria’s economy in the 1930s has been the basic model for the East Asian economic system, which was then applied to the Japanese homeland after the war, when the zaibatsu (‘industrial group’) families were expropriated in a way that undermined genuine capitalism through preferential trading and control of banking via the Ministry of Finance (89-97). The statist economic success of pseudo-democratic Taiwan, “run by a nearly omnipotent elite bureaucracy dominated by members of the mainland ethnic minority [Han—more than 90% of mainland Chinese are Han (142), the ethnicity of leaders in Beijing] that seized power in the late 1940s,” was the most important factor in inducing China to adopt the East Asian economic system (97-104). Chaebol (Hyundai, Daewoo, etc.)-dominated South Korea, facilitated by Japanese technology transfers, best shows the system’s “true potential” (104-11). In China, Deng Xiaoping’s 1978 victory meant a decision to “abandon Maoist economics and develop instead their own version of the East Asian economic system” (including cartels), starting with “free economic zones” and going on to create the “New China” (111-15). Ch. 4: Let There Be Savings! The régime of forced saving (capital accumulation) through restricted consumption is accompanied by promulgation of false explanations, since it is “a blatant breach of the rules of world trade” (117; 116-18). Edwin Reischauer was the first to identify the

importance of the policy, in 1955, followed by Fingleton, Lester Thurow, Daniel Lien, etc. (118-21). China restricts retail space and raises rents (121-24). Foreign travel is discouraged (124-27). Consumer finance and credit is limited (127-32). Imports are restricted and advertising is overpriced (132-36). Some imports that constitute a form of investment (diamonds, art objects) are encouraged (136-38). Ch. 5: Power Begets Power. China has had genuine problems with political stability (139-40). But the situation in China now “tilts toward unity” (140-42). An ersatz modernized Confucian tradition, revalorized beginning in 1994, helps Chinese leaders (142-46). The Chinese government maintains pervasive control, facilitated by censorship and illdefined property rights; “[i]n a word, the Chinese Communist Party is above the law,” as is shown by its behavior toward the Falun Gong movement, whose chief offense is to be “not controlled by the Communist Party” (147, 148 ; 146-49). China’s system of taxation (149-51), statist, cartelized bank lending (151-56), selective enforcement (156-63) including capital punishment (163-64). Corruption plays a systemic role (164-67). Ch. 6: In a Confucian America. In practical terms, America regularly yields to China (168-69). China is engaged in the “project” of “the Confucianization of American society” (169). Cf. James Mann’s account of AMC’s Jeep factory in China in Beijing Jeep (1989) (170-72). Corporations pursuing their own interests have often taken China’s side in Washington (172-77). Comparison with Russia demonstrates that corporate leaders have not merely been promoting “free trade” (177-80). Corporations are systematically intimidated by China (18082). Companies that fail to cooperate face bureaucratic delays, legal harassment, even sexual blackmail, with little support from the U.S. government

(182-86). Software and Internet companies (Yahoo!, AOL, Google, Skype) also “kowtow to Beijing” (186-91). By making the Rolling Stones accept restrictions on their concert, Chinese authorities showed that all Westerners have a price and established “who was boss” (192; 191-93). The Chinese have funded U.S. think tanks and East Asia programs to promote their agenda (19398). Chinese students flood prestigious American graduate programs, and are often recruited by Chinese intelligence (198-200). Chinese agents and the China lobby are increasingly intimidating those outside China (200-13). Ch. 7: The Dragon’s Fey Friend. Despite the conventional notion that China and Japan are at odds (much of which is “political pantomime”), there is a “special Sino-Japanese understanding” underlaid by Japan’s expectation that American hegemony will not be longlasting (214-30). Trade relations between Japan and China are balanced and equitable, though not always harmonious (230-32). Japan has consistently helped China “in almost every area of policy” (232-37). China’s failure to complain about Japan’s noncompensation of war victims and Japan’s silence about various crises are profoundly significant, as is Japan’s assistance to China’s nuclear program (237-43). The debate over the Senkaku Islands is contrived for a Western public (243-46). “[A]fter more than two decades in Tokyo I have yet to meet a single Japanese citizen who conforms to the China-baiting profile of the Western press’s imagination” (245). The Yasukuni shrine amounts to “an exercise in careful Japanese-style contingency planning” to divert American opinion from strengthening Sino-Japanese relations (250; 245-53). China blocked Japan’s entry to the U.N. Security Council in 2004, but Japan didn’t really want membership (253-56). Japan’s constructive trade policy toward China is

the most reliable indicator of its true policy (256-60). Ch. 8: A Few Good Confucians. There are “good Confucians” at “every level in the American intellectual establishment” (280); most pursue their own interests, a few are idealists (262-64). Rupert Murdoch (264-67). Maurice “Hank” Greenberg, CEO of AIG from 1968 to 2005 (267-72). Economist Nicholas Lardy, formerly of the UW Seattle, then with the Brookings Institution, then China advisor to Bill Clinton (272-76). AngloDutch journalist Ian Buruma, “the Confucian studies field’s literary gatekeeper” (276-80). Ch. 9: Globalism or Democracy? Like George Bush, Americans are too guided by their “instincts” (281-82). China’s rise is only one factor in a conjuncture of “epochal forces” (282-84). China’s export growth if the fastest in history (284-85). American power is imploding fast, with output inflated by an overvalued dollar, imports two times exports, collapsing manufacturing industries (285-89). U.S. policymakers “assume away” the “Confucian” suppression of consumption (289-91). American policymakers deny reality and prefer faith in the theories of David Ricardo, while business leaders pursue shortsighted corporate goals and ignore national interests (291-95). Westerners in East Asia face character assassination and coercion if they hew to “the Western truth ethic,” and they are sometimes entrapped with sex or money (295-99). “At least where sensitive geopolitical issues are concerned, little truthful information ever emerges from the East Asian region” (299). Many are lulled by wishful-thinking arguments that China will either break up or be Westernized (299-301). China’s polcies are producing both economic and military clout (30103). Americans must choose “either globalism or democracy. They cannot have both” (303). American politics is

increasingly influenced by money “lined up . . . against the American national interest” that comes from unidentifiable sources (304-07). “The Chinese Communist Party sees itself as the bulldozer and America as the dune” (306). “The solution to America’s China problem can be summed up in one word: tariffs” (307), combined with withdrawal from the WTO, eliminating the budget deficit, raising the savings rate, and adoption of a value-added tax (308). But globalist ideologists for “extreme freetrade ideology” use fear-mongering to discredit such measures (309). “If America’s policies do not change, the nation’s decline will quickly become irreversible. . . . If we felt threatened by Chinese authoritarianism when China was poor, how much more threatened will we feel when China is rich?” (310).

devoting himself to authorship in 1991. He was among the early critics of financialization, warning against the consequences of the decline of manufacturing industries. His work has been praised by James Fallows, John Kenneth Galbraith, Ralph Nader, Sen. Ernest Hollings, Roger Milliken, Bill Clinton, and Chalmers Johnson. The New America Foundation (James Fallows was a co-founder) has sponsored him as a lecturer, where he gave a talk on In the Jaws of the Dragon in 2008 [http://fora.tv/2008/03/12/Eamonn_Fingle ton_Discusses_In_the_Jaws_of_the_Drago n] on his new book, which he describes as “contrarian.” — His first wife and their two children were killed in an automobile accident in London in 1974. He has lived in Asia for 22 years, currently in Tokyo with his wife, Yasuko Amako.]

Notes. 23 pages. Bibliography. 130 books, 95% of them published since 1990. Acknowledgments. Literary agent; James Fallows, Robert Kuttner, Paul Craig Roberts, inter alia. Index. 13 pp. About the Author. Eamonn Fingleton was formerly an editor at Forbes and the Financial Times of London. In Blindside (1995) he warned of the rise of Japanese manufacturing. In In Praise of Hard Industries (1999) he anticipated bursting of the dot.com bubble. [Additional information. Eamonn Fingleton is Irish and bears more than one trait of a leprechaun, including irreverence, fearlessness, wit (albeit of a dark or mordant sort), and prescience. He was born on Aug. 19, 1948, and was educated at Trinity College, Dublin (economics, mathematics, English). He pursued a journalistic career in Dublin, London, New York, and Tokyo before

[Critique. Fingleton’s book is calculated to alarm, and it succeeds. — Upon reflection, though, one notes some weaknesses in his case. The documentation is thin, for one thing. For another, Fingleton’s opposition of a “Western truth ethic” to a “Confucian truth ethic” understates hypocrisy in the West, where references to the ideas of Machiavelli, the policies of Richelieu, Staatsrecht and raisons d’état, perfidious Albion, state propaganda, lying politicians, etc., etc., ad nauseam, are nothing new. Furthermore, Fingleton often freights offhand and dubious remarks relating to national, even racial character with undue weight (e.g. 22425) when they support his general thesis, and is too inclined to embrace Samuel Huntington’s dubious clash-ofcivilizations thesis (cf. 227). — Also, surprisingly, one does not learn much about the Chinese economy, and the U.S. debt that China is carrying is never discussed (except for two paragraphs on pages 305-06). — Still, the book is compellingly and courageously written by someone whose experience gives him

considerable authority, and its frank pungency in a field where this quality is

rare earns it a right to the reader’s attention.]