By most accounts, China has quickly grown into the second largest economy in the world. In this controversial new book, Subramanian argues that China has already become the most economically dominant country in the world in terms of wealth, trade and finance. Its dominance and eclipsing of US global economic power is more imminent, more broad-based and larger in magnitude than anyone has anticipated. Subramanian compares the economic dominance of China with that of the two previous economic superpowers, the United States and the United Kingdom, and highlights similarities and differences. One corollary is that the fundamentals are strong for the Chinese currency to replace the dollar as the world's reserve currency. The final chapter forecasts how the international economic system is likely to evolve as a result of Chinese dominance.
Eclipse: Living in the Shadow of China's Economic Dominance
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Parts of 'Eclipse' read like a wonky version of 'Rising Sun,' Michael Crichton's 1992 novel of Japanese dominance over the U.S. when Tokyo was seen as speeding toward number one. But Mr. Subramanian is a first-class economist who uses his book to discuss provocatively U.S.-Chinese relations and the nature of economic power. --The Wall Street Journal
It's a very important contribution to an immensely important subject: essentially nothing short of the future of the world. And I admire much of it. It's brave, it's intelligent, and it's justly and rightly controversial. --Martin Wolf, chief economics commentator, the Financial Times
If you want to understand the true magnitude of the shift in economic power that is currently changing the world, Eclipse is the book to read--provocative, well argued and elegantly written. --Liaquat Ahamed, Pulitzer Prize winning author of Lords of Finance
'Subramanian makes a compelling point, which should receive wide attention.' -- Henry A. Kissinger
Defying conventional wisdom, Eclipse not just vividly imagines, but provides a plausible scenario for, the replacement of the United States by China as the world's dominant economic power. It persuasively underlines the need for Washington to get its act together. --Francis Fukuyama, Stanford University and author of The End of History and the Last Man and The Origins of Political Order
Eclipse must be read for a refreshing and deep analysis of what may lie ahead. It is an extremely well written and thought provoking book. --Mohamed El-Erian, Chief Executive, PIMCO and award-winning author of When Markets Collide
Eclipse is a fascinating read. Controversial, but meant to be, it has the potential to set the terms of our ongoing discussion on what is perhaps the hottest issue in the global economy--China's role. Its quantification of power alone will attract considerable interest. --Dani Rodrik, Professor of Economics, Harvard University and author of The Globalization Paradox
It's a very important contribution to an immensely important subject: essentially nothing short of the future of the world. And I admire much of it. It's brave, it's intelligent, and it's justly and rightly controversial. --Martin Wolf, chief economics commentator, the Financial Times
If you want to understand the true magnitude of the shift in economic power that is currently changing the world, Eclipse is the book to read--provocative, well argued and elegantly written. --Liaquat Ahamed, Pulitzer Prize winning author of Lords of Finance
'Subramanian makes a compelling point, which should receive wide attention.' -- Henry A. Kissinger
Defying conventional wisdom, Eclipse not just vividly imagines, but provides a plausible scenario for, the replacement of the United States by China as the world's dominant economic power. It persuasively underlines the need for Washington to get its act together. --Francis Fukuyama, Stanford University and author of The End of History and the Last Man and The Origins of Political Order
Eclipse must be read for a refreshing and deep analysis of what may lie ahead. It is an extremely well written and thought provoking book. --Mohamed El-Erian, Chief Executive, PIMCO and award-winning author of When Markets Collide
Eclipse is a fascinating read. Controversial, but meant to be, it has the potential to set the terms of our ongoing discussion on what is perhaps the hottest issue in the global economy--China's role. Its quantification of power alone will attract considerable interest. --Dani Rodrik, Professor of Economics, Harvard University and author of The Globalization Paradox
About the Author
Arvind Subramanian, an Indian national, is senior fellow jointly at the Peterson Institute for International Economics and the Center for Global Development. He was assistant director in the Research Department of the International Monetary Fund. During his career at the Fund, he worked on trade, development, Africa, India, and the Middle East. He served at the GATT (1988-92) during the Uruguay Round of trade negotiations and taught at Harvard University's Kennedy School of Government (1999-2000) and at Johns Hopkins' School for Advanced International Studies (2008-10). He has written on growth, trade, development, institutions, aid, oil, India, Africa, the WTO, and intellectual property. He has published widely in academic and other journals, including the American Economic Review (Papers and Proceedings), Review of Economics and Statistics, Journal of International Economics, Journal of Monetary Economics, Journal of Public Economics, Journal of Economic Growth, Journal of Development Economics, Brookings Papers on Economic Activity, Oxford Review of Economic Policy, International Monetary Fund Staff Papers, Foreign Affairs, World Economy, and Economic and Political Weekly. He has also published or been cited in leading magazines and newspapers, including the Economist, Financial Times, Washington Post, New York Times, Wall Street Journal, Newsweek, and New York Review of Books.
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12 of 14 people found the following review helpful
Format:Paperback
Author Subramanian's focus is on whether and how China might attain future dominance in the next 20 years, comparing it with the past economies of Great Britain and the U.S. Subramanian believes China's future dominance could be more imminent, broader, and larger than currently imagined.
America's economy has had to contend with slow growth, heavy public and private debt, and a middle class weakened by high and persistent unemployment and reduced labor force participation caused by competition from India and China. Inequality has increased even faster than debt. Meanwhile, China has become the world's largest manufacturer and the largest credit source, especially to the U.S. Sibramanian's introduction portrays the U.S. President and congressional leaders of both parties traveling to IMF headquarters to seek a loan. Inflation and interest rates have both risen - the former because of rapid increases in commodity and oil demand from emerging markets, the latter via the Federal Reserve because of its large debts and the dollar's potential loss of reserve-currency status. Oil-rich nations have already refused emergency financing because new Islamic leaders harbor resentment of U.S. Middle East interventions. China, the IMF's largest contributor, now has veto power and has made removal of U.S. naval bases from the Western Pacific a precondition. A national value-added tax, restoring the highest marginal tax rate to 40%, means testing for Medicare and Social Security, and substantially reduced defense expenditures are also being required. Complacency had ruled U.S. economic policy up until this point, based on 'American exceptionalism.' That was the United Kingdom's sentiment as well, prior to the sun setting on its empire and dominance.
Subramanian clearly believes China's economic dominance vs. the U.S. may already have begun, and that our future is more in China's hands than our own. He points that China's room for growth is considerable - large areas and numbers of its population have participated only slightly in its growth; further, it has considerable remaining opportunities to develop new high-technologies and move up the value chain of those it already participates in, and it is not hindered by the considerable outmoded sunk costs that impede more developed nations. By 2030 he sees China accounting for about 25% of the world's GDP (measured in purchasing power parity - PPP), compared to 12% for the U.S - even with China's GDP growth slowing to 6%/year. The renminbi will be in position to take over as the world's reserve currency, aided by China eliminating current restrictions on foreigners' holding it. It already has established currency swap agreements with Asian nations Indonesia, Malaysia, South Korea, and Hong Kong, as well as Brazil, Argentina, and Belarus; the dollar has lost 25% of its value in the last six years. (Currency swap agreements enable contries to trade directly with each other without having to swap for dollars first. China currently makes 1.2% on its dollar holdings, then loses up to 10% on the exchange rate and incurs Chinese inflation of 6% - Charles Dumas, Lombard Street Research.)
According to the IMF, U.S. 2010 GDP was $14.7 trillion, vs. China's $5.8, making the average American about 11X as affuent vs. China. But Subramanian cautions that these numbers are misleading because they are based on market exchange rates. PPP is a better estimate, and using this the average American is only 4X as wealthy, not 11X; overall, our two economies are currently about the same size, with China's growing much faster. Subramanian believes this, along with our creditor status, lagging manufacturing output and world trade, and China's assymetric warfare capabilities vs. U.S. Western Pacific power has already reduced our ability to influence China
Bottom-Line: Subramanian's book is a wake-up call for America to get its fiscal house in order.
America's economy has had to contend with slow growth, heavy public and private debt, and a middle class weakened by high and persistent unemployment and reduced labor force participation caused by competition from India and China. Inequality has increased even faster than debt. Meanwhile, China has become the world's largest manufacturer and the largest credit source, especially to the U.S. Sibramanian's introduction portrays the U.S. President and congressional leaders of both parties traveling to IMF headquarters to seek a loan. Inflation and interest rates have both risen - the former because of rapid increases in commodity and oil demand from emerging markets, the latter via the Federal Reserve because of its large debts and the dollar's potential loss of reserve-currency status. Oil-rich nations have already refused emergency financing because new Islamic leaders harbor resentment of U.S. Middle East interventions. China, the IMF's largest contributor, now has veto power and has made removal of U.S. naval bases from the Western Pacific a precondition. A national value-added tax, restoring the highest marginal tax rate to 40%, means testing for Medicare and Social Security, and substantially reduced defense expenditures are also being required. Complacency had ruled U.S. economic policy up until this point, based on 'American exceptionalism.' That was the United Kingdom's sentiment as well, prior to the sun setting on its empire and dominance.
Subramanian clearly believes China's economic dominance vs. the U.S. may already have begun, and that our future is more in China's hands than our own. He points that China's room for growth is considerable - large areas and numbers of its population have participated only slightly in its growth; further, it has considerable remaining opportunities to develop new high-technologies and move up the value chain of those it already participates in, and it is not hindered by the considerable outmoded sunk costs that impede more developed nations. By 2030 he sees China accounting for about 25% of the world's GDP (measured in purchasing power parity - PPP), compared to 12% for the U.S - even with China's GDP growth slowing to 6%/year. The renminbi will be in position to take over as the world's reserve currency, aided by China eliminating current restrictions on foreigners' holding it. It already has established currency swap agreements with Asian nations Indonesia, Malaysia, South Korea, and Hong Kong, as well as Brazil, Argentina, and Belarus; the dollar has lost 25% of its value in the last six years. (Currency swap agreements enable contries to trade directly with each other without having to swap for dollars first. China currently makes 1.2% on its dollar holdings, then loses up to 10% on the exchange rate and incurs Chinese inflation of 6% - Charles Dumas, Lombard Street Research.)
According to the IMF, U.S. 2010 GDP was $14.7 trillion, vs. China's $5.8, making the average American about 11X as affuent vs. China. But Subramanian cautions that these numbers are misleading because they are based on market exchange rates. PPP is a better estimate, and using this the average American is only 4X as wealthy, not 11X; overall, our two economies are currently about the same size, with China's growing much faster. Subramanian believes this, along with our creditor status, lagging manufacturing output and world trade, and China's assymetric warfare capabilities vs. U.S. Western Pacific power has already reduced our ability to influence China
Bottom-Line: Subramanian's book is a wake-up call for America to get its fiscal house in order.
0 of 1 people found the following review helpful
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The author of the book defends his theory regarding dominance of China in the world economy based on historic events, economic models and some unknown to the public political secrets.
