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14 of 16 people found the following review helpful
on November 1, 2012
China's Superbank by Henry Sanderson and Mike Forsythe is, simply put, a superb introduction to the arrival of China Development Bank on the world stage. The book traces the evolution of the CDB from funding development at home to securing oil and influence for China in Africa and Latin America.
Before I continue my review of China's Superbank, I must make two disclosures. First, I work with both of the co-authors in the Beijing office of Bloomberg News, so they are friends. I like these guys. Secondly, while I had no hand in the writing or editing of this book, the authors did draw on some of my reporting for passages on Huawei and ZTE. My work is cited in two footnotes to the text. These two factors preclude me from claiming to be an entirely objective reviewer.
That being said, the authors did not request that I write this review, and I paid for my own electronic Kindle copy at $30.69 through Amazon.com. Perhaps that's my first criticism, the price. For a slender volume some 203 pages in length, it would have been nice to see at least the Kindle version priced a bit more affordably. There is practically no discount from the $31.65 price on the hardcover, which is not yet available for shipment.
With my initial disclosures in mind, I believe I can still fairly say that even if I didn't know the authors, and despite the price, I would still give this book a strong recommendation. China's Superbank is a highly insightful and readable account of the role of China Development Bank both in its home market and abroad.
I have been following developments in China since my first trip to Beijing in 1991 and I've lived in the country three times for a combined total of about 12 years. While I know firsthand a fair bit about China and its development in the past two decades, there is plenty in this book that I did not know. I'd imagine the same is true for just about anyone who hasn't been pouring over Chinese-language bond prospectuses as Sanderson and Forsythe have.
The book traces the China Development Bank from its founding, and shows how in its home market it pioneered a model whereby local governments financed development loans by the expropriation and transfer of land rights. They explain how this became the central mechanism for paying back loans to the CDB and, as a result, people must be removed from their land at below market prices, feeding into rural unrest.
``Without suppressing land compensation, local governments can't make the margins to pay back the banks,'' the authors quote U.S. scholar Victor Shih as saying.
The book chronicles CDB's role in development of the country's bond market, and shows how CDB is unique among Chinese lenders in being financed almost completely by bond sales rather than deposits. The commercial banks that buy those bonds then assign them a zero-risk rating, and so set no capital against them even as CDB ramps up lending to new commercial sectors, and begins to spread its wings abroad in countries with long histories of default, including Venezuela. Thus the bank gives new meaning to ``too big to fail'' the authors say.
China is now lending more to developing countries than the World Bank. In the case of Venezuela the lending is a staggering $40 billion. The authors show how the CDB's oil-for-loans programs help China secure large deliveries of oil for its growing economy, and that's not all. Since much of the proceeds of those loans are then used to buy Chinese goods and services, ``China wins twice,'' the authors say.
I highly recommend this book for anyone looking for an introduction to how the CDB moved from funding development at home, to the frontlines of both China's global quest for energy and natural resources as well as the expansion of Chinese enterprise abroad.
One wishes the authors had been able to drill into these subjects in even greater detail. Also, more context and comparison of CDB with other development banks globally would have been useful. While more would be better, there is plenty here to get you started on the global role of the little understood and increasingly influential China Development Bank.
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9 of 11 people found the following review helpful
on March 2, 2013
I just bought the kindle version and found quite a number of editorial comments (e.g., "add sentence"). How can I get the FINAL version of this book?
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3 of 4 people found the following review helpful
on March 11, 2013
Update 2
7/22/2013

Definitely recommend getting this book. I have a much better understanding of what is happening in China & especially with all of the changes that are going on, this book has been a go to resource for keeping up. Strong recommend.

It was a shame that the kindle version was put out in such a shoddy fashion (fixed now), but the content is just too good to allow that to continue to mar the review.

UPDATE:

3/20/13 One of the authors contacted me (and I assume other Kindle customers) and said the kindle version had been fixed. I downloaded the new version and the "insert sentence" placeholders are indeed gone. I am going to reread the book and update the review afterwards. Moving the stars to 3 from 1 right now.

PB

As others have noted the Kindle version is in draft form. The draft however is very good, but I can't give a full review until this gets fixed. I tweeted one of the authors 7 days ago, but haven't heard back. I contacted Amazon tech support, and they directed me to Wiley (the publisher) Tech Support. My chat transcript with them is included at the end.

Bottom line is right now this book is not ready for purchase. I will update this review once I hear back from Wiley.

Here are the relevant aspects of the chat I just had with the tech:

Discussion Thread
Chat Transcript 03/11/2013 11:05 AM
[10:52:19 AM] Hi, my name is Wiley Tech Support. May I please get the name of the school you are attending or the name of the company that you work for, and a description of the issue that you are currently having.

[10:54:26 AM] PB: k. the book in the kindle version is a draft. It has lots of "insert sentence" markings in it leading to incomplete paras
[10:54:46 AM] PB: The book is
[10:54:56 AM] PB: China's Superbank: Debt, Oil and Influence - How China Development Bank is Rewriting the Rules of Finance
[10:55:05 AM] PB: The amazon kindle version can be found here:

China's Superbank: Debt, Oil and Influence - How China Development Bank is Rewriting the Rules of Finance (Bloomberg)

[10:55:53 AM] Wiley Tech Support: Ok, thank you for the information and I am sorry for the issues with this eBook.

[10:55:54 AM] PB: and reviewers of the book have noticed the same thing in the kindle version so I know that it is not just a problem with my download

[10:56:30 AM] Wiley Tech Support: What I will need to do is escalate this information to our editorial team so that they can get a corrected copy of the eBook to Amazon.

[10:56:36 AM] PB: Great!
[10:56:55 AM] PB: do you have an eta on when this will be resolved?
[10:57:21 AM] PB: and will I be notified?

[10:58:16 AM] Wiley Tech Support: At this time I do not I am sorry to say. Unfortunately it will depend on what all is required to produce the corrected eBook. We will notify you via email at pb@XXX once this issue has been resolved.

[11:04:39 AM] Wiley Tech Support: I will get this escalated right away so we can get this resolved as quickly as possible for you.
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3 of 4 people found the following review helpful
Chen Yuan is chairman of state-owned China Development Bank (CDB), the world's most powerful banker and son of one of the founding fathers (the 'eight elders') of the People's Republic of China. Author Sanderson opens his book relating how that bank had lent Venezuela over $40 billion in the last four years, and now Chen Yuan was handing Hugo Chavez a 600-page book filled with recommendations on how he should run, manage, and build ports, roads, and railroads.

Its main objective is to support the macroeconomic policies of the central government, especially in infrastructure and basic/backbone industries (electric power, road construction, railways, petroleum and petrochemical, coal, telecommunications, water facilities and agriculture. CDB's 'tombstone' would list providing over $2 trillion across China in over 4,000 projects to build infrastructure and stimulate growth after the world-wide 2008 'Great Recession.' Elsewhere in Latin America, Australia, Asia, and Africa CDB lending is moving ahead of the World Bank. In the U.S., CDB recently came to an agreement with home builder Lennar to loan $1.7 billion for the building of upward of 20,000 new homes in San Francisco - provisions call for Lennar to work with a state-owned contractor.

CDB has collaboration agreements with 34 countries to carry out advisory services for their planning projects. (CDB has devised an integrated planning system that includes 14 special project planning processes and 6 regional planning processes.)

Funding for Huawei Technologies has helped transform it into the world's second-largest telecommunications equipment maker over the past decade.

Often the money goes straight to Chinese contractors and does not enter a host government. Lately the money is also being used to help Chinese industries move up the value chain and enter the renewable energy field. CDB, however, is not infallible - it's funded projects with questionable economic value such as a 30,000 seat stadium, an aquatic center, and a state-owned steel mill that lost about $300 million in 2010 in Loudi, one of China's many cities with millions of inhabitants but no professional sports team. In the process, more than a few local landowners were hurt when their land was taken, with little given in exchange. (Ironically, the author notes this is a reversal of one of the core principles of the Communist Revolution, when Mao took land from rich landlords and gave it to penniless peasants.)

CDB's hallmark innovation that has helped transform China's landscape came from Chen Yuan, who concluded that often local governments in China had land but no way to turn it into cash. However, once the land price went up, a new source of income was created to pay off loans; governments also promised to use future revenue to pay back loans in ten years if it couldn't sell the land.

When Chen Yuan, a believer in a strong role for the state, took over the bank he reduced its non-performing loan ratio from over 40% to less than 1% in a decade, while turning it into the largest overseas lender where China often wins twice - securing access to commodities and work for its state-owned companies.

But 'China's Superbank' is not about CDB, rather China's state capitalism featuring government-controlled banks and companies that many see as an attractive alternative to laissez-faire capitalism.
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1 of 1 people found the following review helpful
on August 9, 2014
The topic is interesting, the writers have a way with words, read it in one sitting! Having said that, I wish for books like this -- that deal with current events -- the authors would create some kind of online supplement to follow new developments. For example after the book was published the China Development Bank's agenda was scaled back in line with the new attempted reforms...
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on March 12, 2014
China's Superbank clarifies and dissects a major driving force behind China Inc's rapid and geographically expansive rise as a global economic force. By combining Chinese language bond prospectuses and interviews with people associated with the China Development Bank (CDB) Sanderson and Forsythe help English readers add to their understanding of what type of economic arrangements are driving Chinese economic growth and how such arrangements actually function.

Another strength of the book is that it compares the mission, scale and finances of the CDB with other development banks and, in so doing, shows that Chinese interests and priorities are firmly centered around economic and business development as opposed to other societal goals (i.e. around public health and poverty alleviation as is the case with the current World Bank).

The beauty of this book is that it is very clearly written and easy to understand. Superb work and many kudos to Henry and Michael for helping us better understand the drivers behind what is arguably China's most important economic actor. Many other books discuss "China" as a singular entity bent on economic domination of the developed and developing world - this book brilliantly and concisely clarifies this misconception.
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on January 22, 2013
There are few better observers of the political economy of Beijing then Michael Forsythe and Henry Sanderson; their Bloomberg series last year was unbelievably insightful, and "China's Superbank" is a great followup to that series as it sets the lay of the land of Chen Yuan and the increasing protean CDB.

The book examine the CDB role both domestically and internationally from the Chinese solar sector to structure of the loans extended to Caracas. If your trying to understand the rebalancing/non-rebalancing process or Beijing's foreign policy it's a terrific read. I particularly enjoyed the authors focus on the funding advantage the CDB enjoys given it's ability to issue debt and the potential downstream effects of that capital structure. But across the board I learned a lot - highly recommended!
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3 of 5 people found the following review helpful
on March 31, 2013
Several trends have accompanied China's rapid development over the past decade, including:

Urbanization
Land seizures
Local government fixation with land
High investment rates
Increasing inequality

In their book, "China's Superbank," Henry Sanderson and Michael Forsythe* identify the main driving force behind these trends: China Development Bank. Through local government financing vehicles stuffed with assets, primarily land, CDB has helped local authorities circumvent central government rules designed to cap their spending abilities. Able to borrow money on the bond market at rock-bottom rates, CDB has managed to fuel the urbanization that bank chief Chen Yuan described as the most important motive force in China's consumption and investment.

When reading the opening chapters, the expression that came to mind was Ponzi scheme, as it is really only the ability of the local government to continue securing cheap land, and for land prices to keep rising, that allows the financing vehicles to repay the debt. At some point, this virtuous circle is sure to end, and perhaps it will be no bad thing - the book quotes one U.S. scholar describing the local government financing vehicles as the "engines of inequality" in China.

Of particular interest to me where the chapters on Africa and Venezuela, two regions that I usually don't pay much attention to. I had no idea, for example, that CDB now lends three times more to Africa than the World Bank does. Into Venezuela it has pumped more than $40 billion, mostly to secure oil supplies, in a supposedly win-win deal. As the authors point out, in these deals it is really China that wins twice: CDB lends to the host country in return for a supply of resources, and the money is spent on contracts given to Chinese companies (whose operations are also funded through CDB loans). They estimate that around 60% of loans are earmarked for Chinese contractors, and this has helped the likes of Huawei, Sinohydro and even Chery Auto to realize the government's "go global" objectives.

"China's Superbank" is clearly a well-researched book, and the authors not only delved into the minutiae of bond prospectuses but also travelled across China and even to Ethiopia to get the details on a notoriously opaque institution. While heavy on Bloomberg Terminal-fuelled data at times, it is nevertheless quite readable and explores some of the social aspects of CDB financing.

If we were to look for something to criticize in "China's Superbank," it would be the authors' reluctance to predict what will happen next. In the final chapter, teasingly titled The Future, Sanderson and Forsythe concisely summarise the situation to date and reflect on the big issues CDB raises. But just as you expect them to give you some bold forecast, they retreat to the past: "This century will be dominated by the rise of Chinese capital overseas, and CDB has been the handmaiden of this trend." The book itself ends on the question of how CDB's next leader will be able to handle the bank.

Nevertheless, the book is a truly invaluable look at one of the driving forces behind some fundamental trends in China. And while it isn't bold enough to predict whether the house of cards that CDB has created will collapse anytime soon, it has certainly introduced us to one of the big players in global finance that we should have already been watching. Those interested in understanding how Chinese money is reshaping the world will need to read "China's Superbank".

*DISCLAIMER: I personally know Henry, and I moderated an event recently for the Foreign Correspondents' Club of China at which Henry and Michael discussed their book.
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3 of 5 people found the following review helpful
on February 26, 2013
What a book & what interesting insights into China's economic development, particularly since 2004. Not only did the authors delve into the CDB in good detail, they also mentioned tid bits of the most important historic events in China since the Communist Party had taken hold of power after WW2, including Deng Xiaoping vision of China becoming a prosperous nation which started this whole thing rolling. The main points of the book are:

1. CDB's clean up after an era of having a high non-performing loan ratio & corruption by their dedicated leader, Chen Yuan.

2. CDB's funding of large scale infrastructure/urbanisation projects within China e.g. The 3 Gorges Dam.

3. CDB's lending currency to local governments through the bond market, due to the federal government not trusting local governments, therefore not allowing them to raise any local taxes to restrict their power.

4. CDB's infrastructure-oil-lending cycle programmes (I made that term up) to nations in Africa, Venezuela & Ecuador, where mere Western lead development banks fear to do business.

5. CDB's financing upcoming & now large telecommunications & alternate energy companies, in turn undercutting the competition in the USA & EU.

If you now have the impression that the CDB has it's fingers in all the pies & is one of the most lubricated conduits to economic growth in China, you would be right.

Without giving too much away in this 180 page book, I find it interesting how Chinese Economists in recent decades tried to learn from the mistakes of the past, whether it be the Asian Financial Crisis (1997-98), The Soviet Union collapse & transition into a clepto-oligarchy autocracy, past industrialisations of Western nations, the defaults of Latin American nations in the 1980s from the recycling of petro-dollars from the Middle East & how the World Bank & IMF failed the 3rd World. There is a fair bit of injustice in this book as well, such as families being evicted from their farms & not being fairly compensated for their land. This is a great book on the blue print of China's rapid economic expansion, I highly recommend reading it. Thank you Mr Sanderson & Mr Forsythe for your contributions to this field.
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on March 11, 2014
The authors provide an excellent guide through the rise of CDB and the emergence of today's financial conditions in China. Great help! Thanks
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