by Adam Segal
Cornell University Press, Ithaca, 2003, 188 pp.,Trade.
ISBN: 0-8014-3985-x

Reviewed by Stefaan Van Ryssen
Hogeschool Gent
Jan Delvinlaan 115, 9000 Gent, Belgium

stefaan.vanryssen@pandora.be

China has one of the fastest growing economies of the world and more than a tenth of global population. No wonder some regard it as a threat and others as the country of the future. Either way, it is fascinating to watch how the dragon has transformed itself from an underdeveloped and in many respects agriculturally and industrially backward behemoth into an internationally competitive player in telecommunications, materials, soft- and hardware and space markets. The process started with the reforms of Deng Xiaoping and continues at a pace many would have deemed impossible twenty years ago. How has this been achieved? The strange - and for Western minds unimaginable - combination of party politics and a capitalist economy still has to prove its viability in the long run but the fact is undeniable that it has created an environment where steady economic growth is possible. Of course there have been tremendous social and environmental costs, and with the rise of the market economy we may expect political opposition to gain strength. Of course opening the markets to foreign goods and capital will cause even more social unrest: the rich will become richer and the poor will stay poor. Of course environmental stresses will continue to rise and solutions will have to be found to contain the sprawl of the cities. Two supposedly contradicting forces will shape the coming decades: highly centralized and hierarchical political power on the one hand and decentralized, autonomous market-driven enterprises on the other. How the agents of these forces will cohabitate might decide the future of the world's largest country.

In this book, Adam Segal analyzes the wide array of policies adopted to raise China's technological capability and foster industrial growth. Ideologically, the government would not promote private-ownership firms, and instead it created a hybrid concept, "non-govermental enterprises" or minying qiye. They have not been clear successes nor abject failures. Segal analyzes minying experiences in four regions: Beijing, Shanghai, Xi'an and Guangzhou. Variations in local implementation of government policies on investment, property-rights regulation, and government supervision are the key to various outcomes. In and around Beijing, innovative high-tech companies have succeeded, elsewhere they have languished. It is a surprising tale of diversity and regional differences in a country that is sometimes seen as homogenous and monolithic.

This book is aimed at students of regional economics, development of high-tech markets and economic policy in China and elsewhere. Moreover, it will be of interest to everyone who is concerned with the future development of the Chinese and, consequently, the world economy. As such, it requires some basic knowledge of business administration, industrial development and recent Chinese history. Apart from that, Segal has succeeded in painting a vivid portrait of local backgrounds in the four regions under consideration, starting from interviews with local government officials and entrepreneurs. Anyone who wants to trade with or invest in China will gain a lot from reading this book.