A commentary on the cash economy of China that intersperses economic discussions with personal asides from Cavolo’s (Catalysts to Change, 2013) experiences living and working in the Far East country.
Despite this book’s provocative title, the author’s central argument focuses on less of a lie than a secret: how Chinese daily spending and saving habits contribute to a sturdier economy than state-provided numbers reveal. At the outset, he notes a discrepancy between citizens’ income and spending patterns, concluding that the bulk of the Chinese economy must be based on cash—specifically, a vast pool of up to $10 trillion in “unknown, uncounted, off-the-books cash” held by its citizens. He notes that Chinese frugality provides a practical approach for a system dependent on an unregulated “gray market” for buying and selling goods. He delves into the daily minutiae of the Chinese middle class, projecting a street-cart hawker’s savings in the six figures, based on his extremely low-cost but high-volume production. Cavolo never doubts that the juggernaut Chinese economy will continue barreling along because of this burgeoning middle class, and he provides relevant statistical bullet points, such as the projected number of shopping malls in China over the next decade and the mounting revenue from foreign-movie ticket sales. The book also includes several companionable anecdotes about daily life in China’s industrial cities, ranging from a few short paragraphs to long, interwoven supplements to the author’s larger economic analysis. One particularly enlightening chapter uses nine examples of everyday Chinese people to examine the macroeconomic forces at play; he also ties their actions to aspects of Chinese culture, such as the use of cash “commissions” to maintain business relationships. He turns away from narrative-based analysis for the second half of the book, which draws on articles he wrote that were published on the website of investment adviser Rick Ackerman. There are some imaginative conceits (such as a fictitious diary entry of a typical Chinese middle manager), but much of what the author discusses in the book’s first half is reiterated here, as he gets the last word in disagreements with a wide range of skeptical economic forecasters.
A breezy overview of Chinese spending habits that predicts a rosy future for the world’s fastest-growing economy.