"Through stories of entrepreneurs and visionaries, factory workers and store clerks, China Shakes the World explains how China's breakneck rise occurred, the extraordinary problems the country now faces, and the consequences of both for the twenty-first century."--BOOK JACKET.

James Kynge, a journalist in Asia for two decades, is the former bureau chief of the Financial Times in Beijing. Fluent in Mandarin, he has visited every Chinese province and is the recipient of numerous journalism awards. He has spoken at the World Economic Forum and the National Committee on U.S.-China Relations and has appeared on CNN, the BBC, and National Public Radio.

Acknowledgments

viii

Introduction

xi

Rags to Riches

1

(22)

The Future Is the Past (Except When It Isn't)

23

(22)

The Population Paradox: Innovation, Piracy, and the Grail of Market Share

45

(28)

The Ties That Bind: China Goes to Europe

73

(28)

America Bought and Sold: Acquiring Technology for a Great Leap Forward

101

(28)

Not Enough to Go Around: Natural Resources and Environmental Catastrophe

129

(28)

The Collapse of Social Trust

157

(26)

Communism vs. Democracy

183

(30)

Can We Be Friends?

213

(30)

Notes

243

(10)

Bibliography

253

(4)

Index

257

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1 Rags to Riches By the time I got there, there was only a scar. A scar of ocher earth twenty- five times the size of a soccer field. A dozen excavators pawed ponderously at the soil as if absently searching for something lost. The place where one of Germany"s largest steel mills had stood since before World War Two was now reduced to a few mounds of twisted metal scrap. I approached a man in overalls by the side of the road. He was hoisting a huge length of pipeline onto the back of a truck. After he had settled it in place, I called over to him. He said he had dislodged, lifted, and loaded fourteen pieces of pipe like this already and there were only three left, enough for another week"s work. Then it would all be over. I asked him where the pipeline was going. He straightened his back and made as if to throw something in a gentle arc far into the distance. "China," he said. The rest of the equipment had gone earlier: the oxygen converters that were housed in a shed two hundred feet high, the hotrolling mill for heavy steel plates that stretched out over two-thirds of a mile, a sinter plant, a blast furnace, and a host of other parts. They had all been packed into wooden crates, inserted into containers, and loaded onto ships, and then they were unpacked at their destination, near the mouth of the Yangtze. There, on the flat alluvial bed of that mighty river, they had been reconstructed exactly - to the last screw - as they had been in Germany. Altogether, 275,000 tons of equipment had been shipped, along with 44 tons of documents that explained the intricacies of the reassembly process.1 The man in overalls shook his head at the con- voluted nature of it all. "I just hope it works when they get it there," he said. The Thyssen Krupp steel mill in Dortmund once employed around ten thousand people. The communities of Horde and Westfalenhutte, where workshops clustered around smokestacks that could be seen from all over the city, had depended on them for generations. People had made iron here for nearly two hundred years, and when the drums of German conquest rolled in 1870, 1914, and 1939, it was this corner of the Ruhr Valley that supplied first Prussia and then the German empire with field guns, tanks, shells, and battleship armor. A pride in practical things was evident everywhere. A stumpy-looking iron blast furnace from the nineteenth century with a sign saying that it had been brought over from England stood as a monument by one of the gates of the former plant. Nearby, a plaque memorialized a local engineer. But on a warm, bright afternoon in June 2004, Horde was clearly no longer the pounding heart of the Ruhr. The place looked laid-back, becalmed. A few people sat in the sun outside an ice cream shop on Alfred Trappen Street, digging to the bottom of their sundaes with long spoons. Up the road, women fished into a wire basket outside Zeeman Textiel, a discount store, inspecting T-shirts for ninety-nine (euro) cents. There were three tanning salons in the vicinity and a tattoo parlor advertising its ability to emblazon ai, fu, and kang, the Chinese characters for "love," "wealth," and "health," on the bodies of its customers. But the tanning and tattoo places were shut. I had come to Horde to try to understand how life was changing now that the steel plant was gone. But my inability to speak German was a handicap. I tried calling on local officials, but they were unwilling to talk. People on the street, when approached, seemed to find my questions unwarranted. So I went to the Lutheran church and phoned each of the five fathers listed in a leaflet, inviting them for a coffee. Pfarrer Martin Pense was busy, Pfarrer Klaus Wortmann was out of town, Pfarrer Bern Weissbach- Lamay did not