Unbalanced: The Co-Dependency of America and China

343 Pages·2014·10.06 MB·English

by  Stephen Roach

UNBALANCED
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Stephen Roach
Unbalanced
The Codependency of America and China
new haven & london
Copyright © 2014 by Stephen Roach.
All rights reserved.
This book may not be reproduced, in whole or in part, including
illustrations, in any form (beyond that copying permitted by Sections 107
and 108 of the U.S. Copyright Law and except by reviewers for the public
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[email protected] (U.S. office) or [email protected] (U.K. office).
Set in Scala type by Integrated Publishing Solutions.
Printed in the United States of America.
Library of Congress Cataloging-in-Publication Data
Roach, Stephen, 1945–. Unbalanced : the codependency of America and China /
Stephen Roach.
pages cm
Includes bibliographical references and index.
ISBN 978-0-300-18717-5 (hardback)
1. United States—Commerce—China. 2. China—Commerce—United States. I. Title.
HF3128.R63 2014
337.73051—dc23 2013021900
A catalogue record for this book is available from the British Library.
This paper meets the requirements of ANSI/NISO Z39.48-1992
(Permanence of Paper).
10 9 8 7 6 5 4 3 2 1
For Katie
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CONTENTS
Preface ix
PART ONE IN THE BEGINNING 1
1 The Political Economy of False Prosperity 4
2 Who Depends on Whom? 23
PART TWO LEADERSHIP AND POWER 39
3 The Boss and the Maestro: Greenspan and Zhu 43
4 The Great Stability Debate: Wen vs. Bernanke 63
5 Two Takes on Strategy: Washington and the NDRC 83
PART THREE TENSIONS 103
6 A New Globalization 106
7 Bilateralism in a Multilateral World 125
8 The China Gripe 145
viii CONTENTS
PART FOUR WARNING SHOTS 169
9 Imbalances and the Great Crisis 172
10 Smoot-Hawley Redux 190
PART FIVE RESOLUTION 209
11 Rebalancing 213
12 The Next America Meets the Next China 233
13 Codependency, the Internet, and a Dual Identity Crisis 250
Notes 269
Acknowledgments 309
Index 313
PREFACE
China and America—or is it China versus America? The distinction lies at
the core of the most important bilateral relationship of the twenty-first cen-
tury. With 5,000 years of Chinese history dwarfing only about 240 years of
U.S. experience, it may seem audacious to contrast such an old civilization
with a relatively youthful country. But there can be no mistaking the sig-
nificance of the interplay between the world’s two largest and most power-
ful economies. The relationship between the United States and China may
hold the key to a global economy that is now in great flux.
Yet that relationship is afflicted by a unique pathology. Both nations are
trapped in a web of codependency. China has turned increasingly to the
United States as the sustenance of its economic development strategy. At
the same time, the United States has become heavily reliant on China as a
major source of its growth. Psychologists warn of the inherent instability
of codependency—of a mutual pathology that only worsens over time. That
warning applies equally to economies. Without treatment, codependency
presents great risks to both the U.S. and Chinese economies, with enor-
mous implications for the rest of the world.
But there is an important twist in assessing the shared pathology of
the United States and China. There are no guarantees that both nations
are equally afflicted. That raises the possibility of an asymmetrical coping
mechanism, with one economy lapsing into more destructive behavior than
the other, or even one that begins to heal before the other. Codependency
ix