Weidenfeld £18.99 pp304

Early on in James Kynge’s sweeping, fluent essay on how China is changing the world, he compares the price for which its people work to the era before the Industrial Revolution in Britain. More than 700m Chinese get by, he says, on less than $2 (£1.14) a day.

Westerners are well aware that this creates a pool of labour willing to work at “pre-industrial” wages. Few, though, understand what this really means for us. Kynge explains. Chinese peasants are streaming into factories where the speed of production is thousands of times faster than in any dark satanic mills. Here is the most frightening thing, however: their wages, adjusted for value, are about half those of a manual worker in Chicago in the late 1850s. The result, as Kynge points out, is a “compression of developmental time” without equal in economic history.

The rise of China and India has rightly been described by Martin Wolf, Kynge’s colleague at The Financial Times, as the most significant development for humanity since the expansion of Europe after the Renaissance. As the China bureau chief for that newspaper between 1998 and 2005, Kynge was well placed to grasp the transformational significance of myriad micro-events rushing by in the hurly-burly of daily news. The author’s touch is as deft as the brushstrokes in a Chinese landscape. His sketch of a swarm of Chinese workers dismantling a German steel mill is a motif for the work. He conveys the authentic reek of tobacco and arrogance in offices and factories across the country. His report from a conference of bemused middle Americans in Illinois, a state gutted by Chinese competition, is masterly.

However it is the conclusions of this book that make it worth the reading time. They ought to shock young westerners, whose working lives will be dominated by China, out of their complacency. China’s rise, Kynge says, cannot be mitigated by a few incremental reforms or trade barriers hastily flung up by Peter Mandelson to suit a bunch of squabbling Europeans. “It is a challenge unprecedented in the annals of global capitalism,” he states.

“The simple, unpalatable truth is that, in many areas of manufacturing, European companies cannot compete in the longer run.”

For America, the challenge divides the losers in small-town Illinois from the fat cats of the Fortune 500. Multinationals, as Kynge shows, were the first to grasp the meaning of China’s opening up and the fastest to exploit it. They have reaped significant profits in the short term, even though the Chinese seek to strip them of their technology as the price for admission to the market.

All this foreshadows a political crisis, says Kynge, because middle-class voters in western democracies could turn against free trade with China in large numbers and force politicians to shut the door to the Middle Kingdom. Kynge says that this is quite possibly against the interests of those very same voters. He makes a sophisticated argument that by interweaving Chinese interests in peace and prosperity with those of the west, both parties will ultimately benefit. From a global point of view, he explains, China’s emergence is of enormous virtue. More than 400m people have been raised from poverty, 120m have migrated to cities, and their drive to better themselves and their children has unleashed “one of the greatest ever surges in general prosperity” (troubled Americans should note that $700 billion in Chinese reserves finances US federal spending, pays for the war in Iraq and keeps housing loans cheap).

There are other dangers, too. Modern China is weak in many ways. Its ascent is neither smooth nor guaranteed. Its culture lies in fragments and its politics are primitive. It has a wallet but not a soul.The author compares China to 19th-century America, Chongqing to young Chicago, Chinese migration to the opening of the west: both generated “deflationary booms” worldwide.

Open the pages, though, of Orlando Figes’s A People’s Tragedy (1996), and you find a different, even more haunting comparison, with tsarist Russia in 1891, with its frozen ruling class, its industrial boom and displaced peasants, its harsh values and its suppressed turbulence. Reformers in China have prevailed so far through “flexibility and pragmatism” , Kynge says. But in a history that includes the glories of the T’ang dynasty and the crimes of Mao, theirs may be just another interlude in an epoch of troubles.

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