Many China observers lament the increasing dominance of the state sector in the Chinese economy, which distorts markets and breeds corruption. Analysts frequently suggest remedies such as privatizing more state enterprises and taking steps to level the playing field so that private businesses can better compete with state-owned firms. Liebman, Milhaupt, and their collaborators demonstrate in rich detail that the reality is more complicated and that such reforms would change little. Chinese state capitalism is rooted in institutions that permeate the economy and society. The Chinese Communist Party controls companies not only through ownership but also through its influence over employees who are party members. Courts favor state-owned enterprises, talented graduates aim for careers in state-dominated sectors, and private enterprises rely on favors from the government to survive. The Chinese brand of state capitalism is distinct from other versions owing to China’s Leninist-style party-state and the lack of genuine rule of law, which have left China ill prepared for the new challenges of global economic volatility. Chinese state capitalism cannot be undone through isolated reforms; what’s needed is a reform of the state itself.