Seven more books on China

Completing my reading list.

By Tyg728 - Own work, CC BY-SA 4.0

There’s only a very limited amount that you can understand about another country by reading books about it. I know this first-hand, from having read a ton of books about Japan while also living there for years. To the extent that anyone can ever really “understand” a whole country, you really just have to live there. Still, books can do a few important things for you here. They can open up a window into parts of a country that you probably wouldn’t encounter in your daily life — assembly lines, prisons, or national security think tanks. They can provide important historical context in order to understand modern politics. They can give you a good intro to the narratives that other people use when they think about a country. And so on.

A little over a year ago, I decided to read a bunch of books about China, since U.S.-China relations are so important and have become so fraught. I am not, and will never be, a China expert — if you want those, check out Dan Wang, Damien Ma, Shuli Ren, Liqian Ren, Victor Shih, George Magnus, and Barry Naughton, or follow my Twitter list for China news. But China is an important topic that any economics blogger needs to think about, and the books I’ve read over the past year have definitely helped fill in some gaps in my background knowledge. In January, I did a writeup of the first six books:

Six books on China

Here are seven more to complete the baker’s dozen.

1. Middle Class Shanghai, by Cheng Li

This book came highly recommended by people whose viewpoints on China I trust, and I had high hopes for it. So that may be part of why the book left me bitterly and comprehensively disappointed.

Middle Class Shanghai purports to be a book about U.S.-China engagement, and yet the book spends astonishingly little time on that topic. Mostly, it’s about the city of Shanghai — its history, its politics, its economics, its art and culture. That’s a fascinating topic in and of itself, but the book mostly discusses these topics in a very dry, high-level way, full of statistics and names and dates. Anecdotes and stories would have really helped the book here. Shanghai is one of the world’s great cities — a place where a number of my friends have lived, and which all of them universally praise. But none of the color and energy of that city comes through in this infodump.

More fundamentally, though, it’s not clear exactly why the author, Cheng Li, believes that Shanghai is the key to U.S.-China engagement — that the city and its middle class will somehow create a bridge between the two countries that will moderate the hawkish instincts in both. This is the thesis of the book, yet exactly how this is supposed to work is never really explained. The author’s own statistics show that the attitudes of Shanghai people who returned to their home city after studying in the U.S. are complex — they pick up liberal ideas like concern for the environment, but they also tend to be nationalistic. A quote at the beginning of the chapter on the attitudes of Shanghai returnees is “I hate American hegemony, and I love NBA games.” That’s hardly encouraging; I’m sure many of the citizens of Wilhelmine Germany loved French wine back in 1914. Anyway, if that typifies the attitude of the typical Shanghai exchange student, I am not optimistic about the attitude of the average Shanghai resident, to say nothing of the attitudes in China’s far less cosmopolitan regions.

In any case, other than cultural contact and exchange, there are few other suggestions for how Shanghai’s middle class can reshape U.S.-China engagement. It’s clear that the author really loves Shanghai, and that he also really wants the U.S. and China to put aside their differences and get along, but I think it was a mistake to try to shoehorn both of those things into a single book.

That said, I also think that Li’s plea for engagement falls flat even on its own. By the time Middle Class Shanghai was published in 2021, it was already clear that the countries had grown too far apart. Li’s arguments that engagement is still feasible often take on a desperate character — first insisting that China is far from constituting a threat to the U.S., then insisting that China’s rise is inevitable and the U.S. cannot hope to contest it, sometimes even within the same paragraph. It feels like throwing a bunch of arguments against a wall and hoping something will stick. Nothing really does. And in the year since the book came out, Xi’s industrial crackdowns and utter marginalization of any political factions besides his own have already invalidated many of Middle Class Shanghai’s more optimistic pronouncements.

I do believe that the U.S. and China will be friends someday. They’re natural allies, and they were often allies in the past, and great-power conflict is a very bad thing. Their societies and cultures are far more similar than either would readily admit. But in the short run, the hope that these two societies would grow together happily and peacefully in the early 21st century has been decisively dashed. Middle Class Shanghai feels like the last gasp of that failed dream. But someday the dream will rise again.

2. China’s Gilded Age, by Yuen Yuen Ang

This book is only somewhat about China itself; really, it’s a fascinating study of the relationship between corruption and economic development, using China as an example. The conventional wisdom is that corruption is bad for growth, but Ang argues that this depends on what type of corruption prevails. Basically, she argues, there are two types, which I will paraphrase as:

1. government officials embezzling money and assets from the state, and

2. government officials letting private businesspeople bribe them into giving them favorable treatment.

Ang is not the first person I’ve seen argue that the second type of corruption can actually speed development instead of slowing it down, but she brings the best data and chooses the best examples. The basic argument is that “access money” aligns the incentives of the private and public sectors — basically creating a development state by the back door, by giving government officials an unearned but effective equity stake in the companies they oversee. That can obviously lead to negative consequences in the long run (inefficient cronyism, perceptions of unfairness, environmental destruction and other negative externalities), but in the short run it helps get a lot of things built very quickly.

The most fascinating part of the book is when Ang shows that the U.S., during its own Gilded Age, was marked by a very similar type of corruption. I’m reminded of George Plunkett’s speech on the difference between “dishonest graft” (i.e. theft) and “honest graft” (facilitation of development for personal gain), in which he declared:

"I could get nothin' at a bargain but a big piece of swamp, but I took it fast enough and held on to it. What turned out was just what I counted on. They couldn't make the park complete without Plunkitt's swamp, and they had to pay a good price for it. Anything dishonest in that?"

This is basically access money, and if Ang is right, it could help explain how the U.S. rose to be the world’s premier industrial power. Just another way in which the U.S. and China are more similar than they’d like to admit.

3. One Child, by Mei Fong

This book, about the consequences of China’s now-defunct one-child policy, is very well-written. It’s chock full of eye-popping anecdotes, useful statistics, and cogently made arguments. If you’re interested in what China’s society was like in previous decades, you should definitely read it.

That said, one of the book’s arguments tends to undermine the importance of the others. As Fong notes, China’s fertility rates were dropping fast well before the implementation of the one-child policy, and other East Asian countries that never had a coercive policy (South Korea, Taiwan, Japan) have also seen fertility fall to low levels. That means that many of the changes Fong describes would have happened without the policy.

Many, but not all of them. The most important effect of the one-child regime, and one which Fong documents extensively, is an increase in social control. The policy gave the Chinese government an excuse to be extremely intrusive into people’s lives, which helped get the populace accustomed to such intrusions. We can see this vividly playing out in the era of Zero Covid, which has in some sense replaced the one-child policy as an excuse for totalitarianism.

4. China’s Economy, by Arthur Kroeber

This book, recommended to me by Dan Wang, was truly excellent. It doesn’t have anecdotes, but it doesn’t need them; it tells you interesting facts, clearly and plainly. And unlike many books about China’s economy, China’s Economy taught me a lot of stuff that I didn’t already know from reading news articles, academic papers, and think tank reports.

For example, I didn’t realize how fiscally decentralized China is. For some reason, almost no one talks about this. Local governments are required to raise a lot of the country’s revenue on their own, which is a major reason they developed the system of selling land for money rather than implementing a property tax. That system worked well enough while it lasted, but eventually everything gets built out and you can’t do it anymore, and you have to switch to property taxes. In the meantime, local governments get more money in the short term if they encourage and hype a bunch of development projects that may not be long-term viable. And that helps to explain the unusual importance of real estate to the Chinese economy, as well as the country’s stupendous and ongoing housing crash. That link is well-known, but Kroeber is smart to connect it to the fundamental problem of fiscal decentralization.

There are many other useful nuggets in this book. Kroeber managed to successfully predict the timing of the housing boom’s end, and the book explains his reasoning — including, crucially, the fact that floor space per person is approaching rich-world levels. He also discusses China’s difficulty in shifting from low-value middle-of-the-supply-chain manufacturing to high-value advanced manufacturing and branding, which has obvious implications for decoupling. All in all, a very readable and highly useful book.

5. The Long Game, by Rush Doshi

At the beginning of my reading series, I read a book called The Hundred-Year Marathon, by Michael Pillsbury. I found the tone quite lurid and alarmist, which detracted from the book’s overall message that we should be worried about China’s plans to supplant U.S. hegemony. The Long Game has basically the same thesis, but with the exact opposite tone, which makes it less fun to read but far more convincing (at least to a dry, analytical nerd like myself).

Basically, Doshi has pored over untold mountains of Chinese official documents, including speeches, statements, communiques, and so on (it is a marvel that this did not drive him clinically insane). The Chinese Communist Party tends to emphasize a few key phrases or slogans that it repeats ad infinitum — “common prosperity”, “comprehensive national power”, etc. — and the main task of figuring out what the CCP wants to do is just to figure out how they interpret the phrases they made up. The key phrase Doshi focuses on is “great changes unseen in a century”, which Xi Jinping likes to talk about a lot in connection with foreign policy.

Doshi’s thesis is that “great changes unseen in a century” basically just means China supplanting the U.S. as global hegemon. The entire book is really just one long, careful defense of this interpretation. Doshi painstakingly goes through a bunch of possible alternative interpretations of China’s phrasing and actions and shows that they don’t really make sense. So now we can be pretty sure — China, or at least Xi Jinping, really does want to supplant the U.S. as the global hegemon. If you read the news, this might strike you as obvious, but international relations people take this stuff very seriously and try to be very careful. Or at least, some of them do.

6. The World According to China, by Elizabeth Economy

Elizabeth Economy is an extremely knowledgeable and skilled writer, and a perennially great source of China news and analysis. Her fatal weakness as a book author, however, is that she chooses to write books about extremely up-to-date events, so that by the time the book comes out, events have already moved on. I say this in a tongue-in-cheek manner, because The World According to China is a good and comprehensive book about China’s aforementioned attempts to supplant the U.S. as the global hegemon. It covers technology, diplomacy, economics, internal repression, and so on. But because it came out almost a year ago, and events are moving very fast, it doesn’t include things like Biden’s recent export controls. If you’re interested in China’s competitive strategy and you want a backgrounder on what it’s been trying to do over the past five or seven years, grab a copy of The World According to China — just realize that you’ll still have to read a lot of news in order to fully catch up.

7. The Search for Modern China, by Jonathan D. Spence

Many people suggested that I read this long and magisterial history of modern China, which covers the period from the late Ming dynasty through the Tiananmen massacre in 1989. I found it extremely fun and fascinating. Much of it was stuff I already knew, but there were a few tidbits that were new to me:

• I didn’t realize, until now, how deeply involved Russia was in the creation of the modern Chinese state. Soviet advisors were deeply enmeshed in both the nationalist KMT and the CCP, and were constantly trying to direct the country’s development. Soviet technology and military organization also had a big influence. When you think about Russia-China relations in the era of Putin and Xi, you should probably be aware of this history.

• Mao’s leadership strategy was markedly different from that of Xi Jinping, or even other contemporaries like Stalin or Hitler. In order to maintain total control of a huge, fractious, and quickly evolving Chinese state, he provoked all possible rivals into a constant state of internecine warfare. One of his favorite strategies was to elevate a favorite subordinate to a position of prestige and power, then denounce them, and carry out a major campaign designed to purge the manufactured rival’s supposed influence from Chinese culture and society. This strategy was incredibly effective at keeping Mao in supreme power, but had the unfortunate side effect of killing millions of people and making sure the country stayed poor and violent.

• China’s aforementioned problems with fiscal decentralization date back very far — the Ming dynasty had similar issues.

• As far back as the early 1900s, a lot of people around the world expected China to become the world’s manufacturing hub, based on its massive reservoir of cheap labor. Only the constant internal and externally-imposed chaos delayed this.

• I really knew this before, but Spence’s history reinforces the fact that Deng Xiaoping is truly the Great Man of modern Chinese history, for better and for worse. Until Xi came in and started trashing the system Deng built, of course.

What I’m reading next

So that’s it for the China Book Series. Right now I’m reading a bunch of different stuff, but I’m trying to read all the good books about WW2 production and public-private cooperation in that era, in order to better understand how industrial policy can succeed. I still have to read Destructive Creation, The Economic Consequences of U.S. Mobilization for the Second World War, Tuxedo Park, and The Struggle for Survival. I’m also planning to read The Idea Factory (about Bell Labs), and Markets, Minds, and Money (about the U.S. university system). So I think my next “reading list” post will probably be about industrial policy. As always, let me know if you have any good suggestions!

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