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07/14/2014

Book Review: Can China Lead?


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ChinaChina is viewed as the only real competitor to U.S. economic and geopolitical position, and its future is one of the most timely and high priority economic issues here. Can China Lead?: Reaching the Limits of Power and Growth focuses on the issue by looking at the role of the Chinese Communist party. The authors are well qualified to evaluate China's future as a potential world leader: William C. Kirby and F. Warren McFarlan are on the faculty of Harvard Business School, which has done many case studies of Chinese companies (sixty-six are listed in the book's Appendix). Regina Abrami is at the Wharton School, and Director of the Global Program of the Lauder Institute. PMc Farlan is a guest professor at Tsinghua University, and codirector of the HBS China Business Case Center. Kirby is Chairman of the Harvard China Fund, and a honorary professor at several Chinese universities.

To the question of, "Can China Lead?" and "...rule the world," the authors conclude, "We don't think so. And neither, we believe, do those who rule China today." The main reason for this is the Chinese political system, "stands in the way of the substantive changes needed." This means the, "China miracle as we have known it is coming to an end." It is, "under threat from within." The biggest threat originating from, "the pervasive influence of the Party in China," resulting in academic and intellectual freedom becoming "systematically constrained."

As the Chinese Communist Party views the Chinese people, it has decided they, "cannot be trusted to communicate with each other without official supervision." In short, the "people cannot be trusted." In Chinese universities, which should be the center and engine of innovation, the university party secretary normally outranks the president. The universities are, "plagued with party committees." In the private sector, "High-tech business parks" coexist with "low-tech surveillance and old fashioned thuggery." In response, the top elite group is sending its money and its children out of China.

In a list of the four most important topics for business people and investors to consider, the number one topic is, "sensitivity and adaptation to the requirements of the Party-State at the national level." The number two topic covers, "requirements of provincial and municipal Party administrators and government." The next two topics are technical infrastructure, and the emerging consumer economy. In our admiration for (and focus on) China's economic growth, we often overlook the all-important role of the Communist party. Another factor is that many of the experts on China do not want to publish any critical comments on the Party or the government for fear of being shut out of the financial gravy train. It is to the credit of the authors that they have written such a critical book. The Party itself is in the midst of constant self evaluation on its future and may well be concerned by some of the issues raised by the authors.

–Bill Hayes

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