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on September 29, 2012
I bought this because the introductory price was so great. On balance, I would have to say that it was worth it. The whole book can be read through in about 3 hours (if it has the read of an extended broadside, that's because it is). In the index, it had a nice synopsis of what each chapter was about. The chapters could also be read out of order if you wanted to focus on some particular subject.

There's a lot of what you would already know if you read the newspaper every day (which was basically the source material for this book, plus a few books by China watchers):

1. Consumption as a percentage of GDP is too low, and the leaders of China know this.
2. The SOEs (less government subsidies) yield negative rates of return-- and yet they are the backbone of the economy.
3. The innovation strategy of China, Inc is emphatically NOT to innovate, but to find some way to trick their foreign partners out of their hard-developed technology through some variety of dishonest means. (Did you ever doubt this? "Co-innovation"? "Re-innovation"? "Assimilation of imported technologies"?)
4. It's not quite clear even what *is* an SOE nor how much they participate in the economy. But the (vague) answer is that they are "many" and participate "a lot."
5. The Chinese companies use the technology that they have stolen from foreign companies against those very same companies in the role of competitor.
6. Yes, the Chinese are in Africa. No, they are not popular there.
7. The strategy of the Chinese government is tit-for-tat and intimidation of the foreign companies that work for them. What McGregor included was a few more examples than what we might remember from reading the papers every day.
8. No, the WTO has no teeth to solve the problems put before it. And even if it did, there is nothing like an impartial legal system in China to carry out any investigations/ make rulings anyway.

Some things were new:

1. The subsidization part of the SOEs takes place basically through: a) Free use of land; b) Preferential interest rates.
2. Some specific examples of things that we might have missed were included. One example was the Cathay Industrial Biotech debacle.
3. There was some talk about the steps that people take to keep their conversations secret-- something very much like a James Bond movie. (Flying to South Korea to make phone calls. Removing batteries from cell phones to not allow them to be turned on by remote listening devices. Deleting one's entire laptop on traveling from one country to another.
4. As this author sees is, the exchange rate is a minor factor in the trade imbalance (Loc 1640), and that much of the US damage is self-inflicted by other poor policies.

What would I have liked answered (none of which were since this was essentially a broadside):

1. I would like to have seen the actual Chinese characters included for ALL of the 4 character idioms. There were also just acronyms ALL OVER THE PLACE. That is not the nicest thing to have when reading on Kindle. In a book, you can just mark the page and go back to it. But on Kindle, it takes several steps to get back to the page of acronyms. There were also no page numbers.

2. The purpose of all this mercantilism is to acquire gold (fiat currency). But that brings its own set of problems. How is China getting around them?

3. How is this case so much different to the all powerful MITI (Japan)? Books were written about the omnipotent and omniscient Japanese Ministry, which came all to naught. There has been more than one case of a country that was trying to choose between underdevelopment/ absolute political control and development/ devolved political control. Is China really so unique in this regard?

The writing of the book seemed a bit....disconnected. A chapter will start of on one topic, and then have an insert of several points. Then it will get back to the chapter. Sometimes it seems like the insert will be a synopsis of what was written above. Other times, it will be a miniature article.

Overall, this is a pretty good read. For $3.99 and a few hours, you can't go wrong.
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on April 7, 2013
Those with deep background knowledge on the Chinese political economy, or anyone accustomed to rigorous research, will find this book wanting. Mr. McGregor reaches reasonable conclusions, and therefore offers a sensible treatment of the topic. However, there is little to no original research, and I was frustrated by the endless pages filled with material drawn from previous reporting. For example, three consecutive pages are consumed by the demise of one private Chinese firm, Cathay Biotech. The firm's abuse at the hands of state-owned enterprises and their supporters within the Chinese bureaucracy highlights the institutional obstacles that indigenous private enterprises face, but the anecdote is drawn entirely from a single report by the NY Times which I had already read. Such reliance on single sources to occupy large spaces of a very small book suggests an unwillingness to conduct thorough, independent research on the part of the author. As a consequence of the author's over-reliance on previous reporting, readers are unlikely to be introduced to original knowledge or unique perspectives. Instead, the book serves as a copy and paste job of mainstream business and political reporting from the past few years. This book is not the product of scholarship or investigative reporting. For a more original and insightful introduction to China's political economy, look elsewhere.
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on January 14, 2013
The book explains how the Communist Party owns and operates large companies in China. It also explains the clever ways which the Party uses to suppress foreign competition by operating within the letter, but not the spirit, of international trade agreements. From the title, I had expected a little more discussion of the philosophy behind this, but the focus was primarily a description of the mechanics. The book could use two more chapters: one explaining more reasons why the Party moved into owning business after Mao's death, and another discussing the future implications of this unique state-managed economy.
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on December 25, 2012
This book introduced me to James McGregor, whom I'm now following on Twitter. The thesis of the book is simple and well presented. By simple I do not mean "light-weight" - just uncomplicated and clearly presented. I enjoyed what I read and found it enlightening, but I had hoped for more. Still, this is worth reading for anyone who is interested in the development of China's economy, as any investor should be these days. McGregor presents his case clearly and supports it well. Following him on Twitter has proven to be worthwhile as well since he tweets about articles and news reports that supplement his book.
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on November 5, 2012
Jim continues his recent pattern of ranting against China--often on topics that the government has opened itself to criticism. However, this book has little new information or revelations. He does little to explain why China's model has proven so resilient even as underlying factors like wage inflation, massive debt and weak demand abroad point to a potential serious slowdown. Instead, he clings to broad generalizations about the lack of legitimacy of the Party and its inherent troubles.

This effort seems to validate the rumor that most of his work these days--like the recent Indigenous Innovation Report--has been heavily outsourced to his research team. If that's not the case, it is unclear why such a skilled writer has made such a weak effort. He barely manages to scrape together 146 pages--and comes up with such brilliant revelations as China has helped out SOEs by providing free land and giving them loans at preferential interest rates (something mentioned in every housing bubble article since 2007).

If you're thinking about buying a book that provides insight in China's current economic and political challenges Red Capitalism, China's Superbank, or Capitalism with Chinese Characteristics are all better bets.
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on April 10, 2013
Will China own the future? To many informed observers, both within and outside the country, an equally apt question is: can China cope with its current problems? McGregor, one of the best commentators on contemporary China, argues China must radically change to sustain and advance its development, but that strong forces will resist the needed fundamental changes, because 1) it is taken as axiomatic that the Communist Party must remain in charge (yet its monopoly on power and suppression of other institutions, including courts, private businesses, the media and other nonparty entities, hampers China) and 2) many individuals and institutions benefit from the current political and economic arrangements, even though those arrangements make it unlikely China can advance to the next needed levels of development. McGregor wisely does not say what the outcome will be, and of course no one knows (the Party may even find a way to muddle through). But readers of this book will understand the realities much better than those who merely offer uninformed opinions.
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on September 20, 2013
Despite some useful facts and information on the Chinese authoritarian capitalism, the author's treatment on the subject is superficial. Any in-depth analysis on the implications of the Chinese SOEs and the 'China model' is absent here. By the way, the book by Ian Bremmer on 'state capitalism', 'The End of the Free Market: Who Wins the War Between States and Corporations?' is much better. I agree with Bremmer that it is political more than economic considerations which justify the practice of state capitalism.
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on October 3, 2012
I've been involved with China for 30 years, and been living in Beijing for the past 8. For business people who want to "know something about China", I've long recommended McGregor's first book (One Billion Customers: Lessons from the Front Lines of Doing Business in China) -- it's an easy, fun read that uses true stories to give a glimpse of doing business in China.

Now, with this new book, McGregor probes much deeper. At first, the book seems to be "ripped from the headlines" since it's so up-to-date. But it's quickly apparent that his team has done a lot of new research, adding important facts to stories that are still playing out.

Most importantly, McGregor dares to go where so few others do: he holds a mirror up to the actions of both the Chinese and their multi-national corporate courtiers, revealing a scary and unflattering portrait of mutually-destructive behavior. I've seen this happening on the ground in Beijing, and heard it discussed at dinner parties in Beijing and Washington, but McGregor is the first to drag it out in the open, and call the core assumptions of both sides into question. It's a courageous approach that I hope resonates with business and political leaders, on both sides of the Pacific, as much as it did for me.

Bottom line: if you want to understand what's really happening in US-China business, and where it seems to be headed, read this book. You only need about 3 hours to get through it, but you'll be thinking about it for days.
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on November 12, 2012
This book shows how, when you negotiate with a Chinese company, you are really negotiating with the entire state apparatus. Most of what you see is a facade for the Party. Do not expect companies to be companies in the Western sense.

It looks like a behemoth that could sweep all before it, but it also has cracks. Has it feet of clay? We shall see.

Don't take your usual mobile phone or laptop with you when you go to China, and wipe them when you get home. And never accept any presents of memory sticks!
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on December 17, 2012
Every once in a while a China book takes the pulse of a decade before anybody else has quite got to grips with the issues, shining a light on the problems and altering received perceptions . Simon Leys' `Chinese Shadows' in the mid 1970s lifted the veil of what had really been happening during the Cultural Revolution, unblinkering Western eyes. Professor Yasheng Huang's `Capitalism with Chinese Characteristics' defined the true nature of corporatism in the Nineties, James Kynge's `China Shakes the World' ' published a few years into the 21st Century, revealed how China had surreptitiously become an economic titan on the international stage, and now James McGregor in his `No Ancient Wisdom, No Followers" has described the crisis that has crept up on China during the last ten years, explaining the true cost of double digit growth without political change, and pithily presenting the difficult choice now facing the Chinese Communist Party : reform yourself or face economic stagnation or at worst social revolt. An essential book both for students of China and for businesses that seek to understand what is really going on behind the headlines.
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