Ceteris Paribus

Overview

The Elephant and the Dragon is an excellent portrayal of two looming super powers, India and China. The book tells the story of each country and details how the current situation has been shaped by previous events. The first chapter, “Where Mao Meets the Middle Class”, describes China’s history and the effect Mao had on society. It shows the extreme poverty created by Mao’s actions and the extremes that many families were pushed to. An example of this is yi zi er shi where a family trades one of their children for a neighbor’s child who is then killed and eaten. Meredith’s portrayal of China under Mao provided insight into why many Chinese are seemingly content in their current situation. The chapter continues with the reform regime of Deng and portrays the subsequent change from collectivized farming utopia to state capitalism.

The second chapter, “The Spinning Wheel to the Fiber-optic Wire”, explains India’s arrival as a dominant economic power. India had closed their doors to the world with laws and subsidies that discouraged trade with other countries. The catalyst for change was Rajiv Gandhi’s assassination and the fact that India could only pay for less than a months worth of oil imports. The selection of Narasimha Rao as prime minister started a two year series of reforms that effectively opened India to private investors and improved the economic situation. The remaining chapters describe the current state of events in India and China and detail what the author sees as important events for understanding these two powers. The book finishes with a call to action for America in order to remain competitive against India and China.

Application

The book contains a great deal of information about both India and China and provides the reader a much better understanding of these two countries. Meredith includes a lot of practical information that can be applied to doing business with or competing against these countries. The analysis of India and why they seem to be struggling more than China is very helpful and provides insight to what a company could try to change to help push India forward. Meredith’s argument that the world is shifting to a “disassembly line” has large implications for businesses everywhere. The argument shows that while smaller countries such as Bangladesh or Vietnam may not be sophisticated enough to create entire products, they still play a role in providing simple components. Many think that China has taken all of the world’s manufacturing and will eventually put other countries out of business. This is not true as China seems to actually be increasing the volume of trade to and from these small countries. The countries are instead producing the smaller components mentioned above. With everyone focusing primarily on India and China, there could be an excellent opportunity building businesses in these smaller countries. In addition, it is important for companies to identify these smaller countries as possible suppliers so they do not end up buying the same product from a middleman in China.

The book also has applications in the political realm. Meredith analyzes India and China and the chance of future political problems or even wars, drawing the conclusion that China is a greater threat. India has been an ally and has an inclination towards supporting the US since they also support democracy. Meredith explains how the US doesn’t understand China’s opinions about Hong Kong and other issues. Misunderstandings could easily occur and an unprovoked attack by China against Hong Kong could pull US into a war with China. China also holds a large amount of US Treasury bills and could cause a lot of damage if they decided to take their money out. It is believed that interest rates are approximately 2% lower due to China’s involvement. These elements paint a complex political picture that should be managed delicately by both businesses and governments in each country. The past decade has benefited from a lack of major wars for these countries and this is one of the reasons their growth has been so consistent. A war would be harmful to the economic situations in each of these countries and could damage them in a way that would be difficult to recover from.

Critique

The Elephant and the Dragon is a well written book that includes a massive amount of information. Meredith successfully jumps between India in China and weaves the two into a global picture where every country is reliant on the others. The book does not seem overwhelming and instead provides the information in a story-like format which is a pleasure to read. Sadly, the last chapter of the book does not maintain the quality of the rest. It shifts to a call to action for America to improve the education system and remain competitive with upcoming generations in India and China. The tone is different from the other chapters and does not flow well. It also seems like this last chapter is the motivation for writing the book instead of providing information about India and China, which hurts the author’s credibility. Even though this last chapter is not expected, the book is still an excellent read for anyone who wants to learn more and understand both the current state and the history of India and China.

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