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The Rise of China, Inc.: How the Chinese Communist Party Transformed China into a Giant Corporation Shaomin Li. Cambridge and New York: Cambridge University Press, 2022. 346 pp. $29.99 (pbk). ISBN 9781009074926

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The Rise of China, Inc.: How the Chinese Communist Party Transformed China into a Giant Corporation Shaomin Li. Cambridge and New York: Cambridge University Press, 2022. 346 pp. $29.99 (pbk). ISBN 9781009074926

Published online by Cambridge University Press:  11 April 2023

Bruce Dickson*
Affiliation:
George Washington University, Washington, DC, USA
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Abstract

Type
Book Review
Copyright
Copyright © The Author(s), 2023. Published by Cambridge University Press on behalf of SOAS University of London

This book addresses broad themes of the CCP's industrial policy, government–business relations, and the role of political, economic, legal and cultural factors in China's rise, and its impact on foreign countries. The basic argument is that “successive Chinese leaderships increasingly realized that they should grab more and more power for their own control and benefit. … As a result, China has turned into one giant corporation run by the CCP” (p. 130), which he dubs China, Inc.

According to Li, China, Inc. is a country-sized company town in which the CCP controls where people live, what they can do, whether they can travel abroad, etc. “After four decades of learning by trial and error, the CCP has achieved total control over every aspect of society, including all resources, firms, and the population” (pp. 153–154). It is a vision of a totalitarian regime from the perspective of business organization: “To a great extent, SOEs are business units, state-related firms are subsidiaries, Chinese-owned private firms are joint ventures, and foreign firms are franchisees of the party-state, with the party leader being the CEO of China, Inc.” (p. 154). Like most concepts, China, Inc. does not fully fit the case it is based on. There is little attention to the variations in citizen autonomy, societal mobility and Party control over time. Li offers a simplistic portrayal of a dynamic and ever-changing context. That being said, Xi's China is becoming more and more like Li's China, Inc., but the description still contains significant exaggeration.

The consequences of China, Inc., will sound familiar to many readers: China takes advantage of the openness of Western markets (for trade) and universities (for advanced technology including those with military applications), but keeps its own markets closed; it buys influence over how international media portray China; has an industrial strategy favouring SOEs; disregards human rights; censors information, media and social media, and blocks access to most foreign social media. There is a vast literature on these topics, most of which is not referenced in the book. However, there are almost 20 references to Wikipedia and its Chinese equivalent, Baidu Baike, and over 20 references to the author's own publications. Li's argument owes a big debt to the East Asian developmental state and state capitalism models, although they get only passing attention. He does note that China, Inc. is similar to Japan, Inc., except that the CCP has “total” control over firms and resources, and it is a larger economy.

Throughout the book, Li notes several key differences between the current conflict between democracy and dictatorship and the past: unlike during the Second World War, democracies are not engaged in war with China; unlike the Cold War, China is not closed off from global markets as the Soviet Union was. Instead, China's rise was dependent on access to foreign markets and technology.

Li concludes that “China under the CCP's dictatorship needs the democracies more than the latter need China” (p. 249, italics in original). This leads to his identification of China, Inc.'s Achilles heel: if democracies stop allowing China to operate with its unfair advantages “then the way the CCP runs China as a corporation will no longer be successful or sustainable.” The result would be a legitimacy crisis for the CCP that would likely trigger political infighting among CCP leaders.

Li does not go so far as to recommend regime change, only that democratic countries should compel China to play by the rules in its domestic economy and international affairs. If China refuses to play by the rules, Li recommends the advanced democracies delink their economies from China's, a tit-for-tat strategy that will require coordination and commitment. That is a large prerequisite for success. Li acknowledges the collective action problem inherent in his policy recommendation: all would benefit if they teamed up against China, but each is trying “to maximize their own benefit by undercutting other countries to make a deal with China” (p. 262). What would make them change their behaviour?

Li assumes that the natural alternative to CCP rule is democracy, and that interaction with foreign countries brings knowledge of, and desire for, democracy. But many in China believe that Western-style democracy is not suitable for China and that current democracies are dysfunctional.

His advice to researchers, specifically to those in business management, is to investigate the CCP's policies toward business. While it is true that scholars have not come up with a place along the democracy-dictatorship and capitalism-communism continua that fits China's case, much research has been done on the nature of the CCP and its relations with social actors and private firms. Li cites none of the social science literature on these topics. His observation that “China is no longer a communist state” is not a new insight, nor an accurate one: China may not be Marxist, but it certainly is Leninist.

In general, the arguments in the book are not necessarily wrong, just overly simplistic. The book may be useful as your first book on the CCP's relationship with firms, but don't let it be your last.