In This Review

Beyond the Middle Kingdom: Comparative Perspectives on China's Capitalist Transformation
Beyond the Middle Kingdom: Comparative Perspectives on China's Capitalist Transformation
By Scott Kennedy
Stanford University Press, 2011, 280 pp

 

With this book, China joins the flourishing scholarly literature on “varieties of capitalism.” The country resembles Japan, South Korea, and Taiwan in its use of a state-controlled financial system to channel investment to favored industries but differs by imposing sink-or-swim conditions on tens of thousands of lower-tier companies. Not unlike Brazil and France, China protects big, well-connected firms -- but in China, the state directly owns those companies. China is so big that the central government’s efforts to consolidate enterprises in some sectors (including the automobile industry) have been frustrated by powerful provincial governments, which has not happened in dirigiste economies with smaller populations. As Margaret Pearson puts it in her contribution, China’s adoption of capitalism has been “superbly ambivalent.” China is capitalist but does not have what Americans would call a free-market system. In all, China has more in common with large developing countries, such as Brazil and Indonesia, than with states in any other category, which suggests that the China miracle may face similar limits to growth.