In the Jaws of the Dragon: America's Fate in the Coming Era of Chinese Hegemony

By Eamonn Fingleton
(St. Martin's Press, March 2008)

       "What if in, say 2025 or 2030 the United States finds itself facing off against a China so rich that it has surpassed all the other nations in military technology, yet a China that remains openly opposed to Western values?" asks journalist Eamonn Fingleton in his latest book, the absorbing and, at times, alarming, In the Jaws of the Dragon: America's Fate in the Coming Era of Chinese Hegemony.

       By Fingleton's reckoning, the U.S. government and some of this country's most prosperous corporations have allowed themselves to be misled by the Chinese government. As a result, our government and these companies have given away the farm, in the blind hope that China (1) will switch over to a Western-style democracy and (2) will open its doors to the U.S. as an equal trading partner and facilitate America's profiting mightily from selling American-made goods to its 1 billion-plus citizens.

       None of those hopes or rather, changes, will take place, argues Fingleton, until Washington wakes up and does something about it-that something is to impose muscular U.S. tariffs that will slash the trade deficit with China in the short term, and, over time, force the Asian nation's hand to allow more freedom and transparency for its own citizens and those dealing with it.

       The author's interest in China grew from a 1986 meeting as part of a U.S. financial delegation with the Chinese supreme leader Deng Xiaoping. Fingleton, a former editor for Forbes and the Financial Times, who now lives in Tokyo, has written two other books. They are Blindside, in which he contended that America was losing its manufacturing dominance to Japan, and Why Manufacturing, Not the Information Economy, Is the Key to Future Prosperity, in which he predicted the 2000 Internet crash.

       Fingleton maintains that China is simply following in the golden footsteps and the protectionist trade policies of other economic "miracles" in East Asia-South Korea, Taiwan and especially Japan-with which it engages in cozy and mutually beneficial business ventures.

       In the chapter "In a Confucian America," Fingleton cites the experience of the American Motors Corporation (AMC), which after unsuccessfully operating in China, converted to a system more in line with the current Chinese government and began making a profit. "Not only did it [AMC] set a salary scale that penalized workers who had more than one child, it provided financial incentive for women to have abortions," writes the author.

       As for China's elevated savings rate and its reported use of credit cards, there's more to the story as well, Fingleton argues. While the steady savings are definitely good for a country (Americans, take note!), Fingleton spells out how the Beijing government has instituted policies of suppressed consumption that force its citizens to save so much that they live in a perpetual state of deprivation. The widely reported use of credit cards in China today is untrue, writes Fingleton. In reality, the Chinese are using, debit-not credit-cards.

       The solution, Fingleton contends? Start with tariffs gradually by imposing them uniformly across all imports and eventually leveling off at 15% or 20%. In addition, improve America's savings rate, eliminate the federal deficit and adopt a value-added tax; just as European nations and China do. Whether his suggestions can be put into effect is debatable. But without dispute is that the U.S.'s wishful thinking toward China is a losing proposition for America, its corporations and citizens.