Remember when you would go out to play as a child and try to dig a hole to China? Well, your fingers can stay clean now, because no longer do you have to shovel dirt to feel China's presence. Unless your head has been mired in mud, you'd have been hard-pressed to miss all of the China-related business headlines appearing over the last few weeks. This week alone, we've seen Yahoo! (NASDAQ:YHOO) buy a stake in Chinese website and Chinese search site Baidu (NASDAQ:BIDU) go public.

With more than one-fifth of the world's population, China has an economic engine that's powering ahead -- cruising at a 9.5% growth rate, according to China's National Bureau of Statistics. Ramifications of this revolution are reverberating around the globe, and most likely in your own backyard as well.

Even in Pekin, Ill., a city of just more than 33,000 people, its novelty name -- borrowed from the Chinese capital in the 1820s -- no longer remains its token connection to the Middle Kingdom. And the connections are not all the tales of woe that one would expect to come from a middle-American town losing jobs to foreign competition. Upbeat stories can be found.

For example, a local casting business, despite having already relocated 20% of its production capacity to China, faces such high demand from its expanding Chinese customer base that management actually faces a dearth of industrial workers. Pekin farmers, meanwhile, reap the benefit from China's increasing agricultural demand as their grains help feed Beijing citizens. Farmers also profit from China's overwhelming trade surplus, which facilitates heavy Chinese buying of U.S. Treasuries, thereby lowering interest rates, making it easier for farmers to repay their loans, and helping to raise land values. Consumers gain by saving money at the local Wal-Mart (NYSE:WMT), which relies heavily on China's suppliers to provide low-cost goods -- though, admittedly, at the price of potentially pushing smaller local retailers out.

China, Inc.
That's the kind of anecdotal reporting that Ted C. Fishman, a former futures trader and veteran journalist, employs in his book, China, Inc. Published earlier this year, the book makes the story of China's 30-year march toward capitalism manageable, interesting, and entertaining. As he chronicles the country's journey toward a market-based economy, Fishman documents the trip with historical references, insightful analysis, and a myriad of statistics. Surprisingly easy to read, the book is hard to put down and should be required reading for everyone since China's emergence as an economic powerhouse affects us all.

The author manages to convey the rise of this enormous land and its burgeoning population on both a macro- and microeconomic scale. While weaving in stories of new urban "chuppies" (Chinese yuppies) as well as that of the local worm seller, he opines that China's unequaled economic surge allows it to "plays the role of a new factory in an old industrial town. It can spend, it can bully, it can hire and dictate wages, it can throw old-line competitors out of work."

Fishman points out evenhandedly that American manufacturing was declining long before China began its ascendancy over other Asian and Latin American suppliers. And it's not just the United States feeling the effects. Manufacturing shifts are mirrored globally -- with the Japanese, for example, losing their television business and even the Germans their Christmas ornaments. He points out, in an ironic and not isolated twist, that Japan and Germany currently benefit from large trade surpluses with China because China is the largest buyer of factory machinery, some of it necessary to make the very products in whose production those nations once dominated.

As the debate continues over Chinese oil company CNOOC being denied its desired takeover of Unocal, particularly prescient is the subchapter "Cooking With Gas" in Chapter 11, in which Fishman briefly spotlights China's emerging appetite for foreign acquisitions, chiefly resource and commodity entities. Fishman warns of risks in China's acquisitive quest, such as the overpaying for assets, and then possibly turning to spend more on weapons markets if it finds itself still not in the economic position it seeks. He worries about an economically empowered China that is "still the sum of impoverished parts."

I would love to know how Fishman would cast his vote on the Unocal takeover or how much credence he would give to China's recent decision to revalue the yuan. His neutral, evenhanded reporting outlines many concerns over China's transformation, but he does not supply ready answers. Perhaps that is his very point: Ironies abound, no easy answers exist, and not even all the questions are yet known.

A book that raises questions
Does that mean we should stick our heads back in the sand? I don't think so. Even if you're not a member of Congress or a Unocal shareholder, China's growth raises questions for each of us, and in various guises. Consider the following:

  • As a global citizen, are you going to weigh in on China's abysmal human rights record or the massive environmental concerns coming in the wake of its rapid development? The United States certainly has its fair share of domestic problems and environmental concerns, but Fishman notes that "because China cannot control its own polluters, the world's best hope is to reach international agreements to contain pollution everywhere else."
  • As an American, are you going to rally for free trade or seek protective measures against the loss of American manufacturing and servicing jobs? Do you believe that our national security concerns come to the fore if China acquires energy and resource companies?
  • As an investor, do you want to chase the high-growth earnings potential in Chinese stocks? Foreign investment provides fuel to China's economic engine, with China reaping $53 billion to America's $40 billion in 2003. Or, if you choose to shun them for any particular reason, will you also divest your holdings of such major American companies as Coca-Cola, eBay (NASDAQ:EBAY), Microsoft, and Disney, to name but a few with a Chinese presence? Even Starbucks (NASDAQ:SBUX) is popping up throughout the cities.
  • As a consumer, are you going to buy only American-manufactured products? It's increasingly hard to do -- even the smallest component parts of your plumbing systems are likely to be imported from China. Or are you going to embrace the continued cost savings that come from outsourcing production?
  • As a parent, are you going to advise your child to study Chinese so that he or she can enjoy better future job prospects, or to pursue mathematics and engineering to spur a domestic resurgence in those waning fields?

So are your answers consistent, or do they reveal hypocrisies? Are you annoyed by these headache-provoking questions? If so, you could relax and open a fortune cookie to see whether it reveals any wisdom. Better yet, flick any remaining dirt out from under your fingernails and pick up a copy of China, Inc. Read this book and take a more informed part in the global conversation.

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Fool contributor S.J. Caplan welcomes comments. She does not own shares in any of the companies mentioned in this article. The Motley Fool has a disclosure policy.