These books address two critical issues concerning China's economic performance in the post–Mao Zedong era. Between Politics and Markets makes a seminal argument about the dynamics of China's transition from a centrally planned economy to a market-oriented system. Digital Dragon provides an engrossing account of China's efforts to develop nongovernmental high-technology firms as a means of increasing the country's indigenous technological capability. Together, the books reflect both the high quality of recent scholarship on China's political economy and the need to further integrate this emerging body of work more systematically into the comparative political economy literatures on economic transition and industrial development.

One of the foremost puzzles of the so-called reform era is how China has achieved such robust economic growth and substantial transformation of its economic institutions while the political system remains relatively unchanged. For many observers, the answer is that economic markets operating largely outside the institutional parameters of state control have generated a powerful competitive dynamic in China's economy that has progressively marginalized the bureaucratic mode of resource allocation. While the role of economic markets in China's transition is undeniable, Between Politics and Markets identifies the interaction of economic and political markets as the key to understanding a variety of important phenomena, including differences between urban and rural areas and differences between state and nonstate firms. According to Yi-min Lin, previous work on China's economic transition is characterized by a misplaced dichotomy between a focus on market relations among economic actors (the “economic competition thesis”) and a focus on authority relations among political actors (the “local developmental state thesis”). In an effort to synthesize and expand upon this literature, Lin argues that three distinct sets of exchange relations should be conceived of as market phenomena: relations among economic actors, relations between economic actors and state agents, and relations among state agents.

Using macrolevel industrial data and microlevel case studies of firms and administrative localities, Lin offers a sophisticated argument about the “dual marketization” of economic and political competition. He makes an important analytic distinction between “markets” (defined as “concrete markets for products and resources” [p. 17]) and “the market” (defined as a “mode of resource allocation and economic coordination” [p. 8]). While he readily acknowledges the growing pervasiveness of concrete markets in China's economy, Lin warns against assuming that they are the critical forces in shaping the decision making and the performance of firms (as would be assumed in neoclassical economic theory). In this sense, he argues that China's economy is not “marketlike” even if it is increasingly marketized (p. 10). From this perspective, a firm's competitiveness depends as much on particularistic state action as on economic efficiency. Specifically, what matters most is a firm's ability to play the “favor seeking game” (p. 189). While economic competition (understood in conventional terms of resource efficiency) has certainly grown more intense, the central focus of Between Politics and Markets is the hardscrabble world of political competition familiar from the literature on corruption and rent seeking. In the context of China's reform, however, the author contends that “competitive favor seeking” has actually facilitated a transition away from central planning, rather than reinforced the status quo.

With its argument that China's odyssey from plan to market has been driven by both political and economic competition, the book will certainly spark a new debate among scholars working on this subject. In this reader's opinion, Lin occasionally overstates the failings of the economic competition thesis and the local developmental state thesis, although he does certainly provide fresh insight into reform dynamics by extending the argument that China's particularistic state remains influential in mediating economic activity. Moreover, his data has some limitations. As he forthrightly admits, the selection of his case studies was based entirely on access avail-ability. Moreover, the evidence provided does not allow the reader to fully assess the importance of particularistic state action relative to other factors in shaping firm behavior and performance. It is difficult to fault the author for these short-comings, however, as Lin has made the most of the data available to him. Indeed, he is refreshingly modest in his claims, repeatedly declaring that his research only provides “useful clues” (e.g., p. 216) for understanding China's post-Mao transition. Drawing on the case study materials, Lin identifies “hypothesized causal links” (p. 183) that he acknowledges will need to be verified through additional research.

Between Politics and Markets makes little effort to place China in comparative perspective. For example, the economies of the former Soviet Union and Eastern Europe are noticeably absent as reference points. Moreover, it is unfortunate that a book about the causes of rapid economic growth in China fails to place its argument within the vast literature on East Asian development. Except for a single reference in the book's final pages, Lin's discussion of competitive favor seeking and industrial development proceeds as if the extensive literature on exchange relations between economic actors and state agents in Japan, South Korea, Taiwan, and Southeast Asia does not exist. Especially in the wake of the Asian financial crisis, the concept of political markets (e.g., crony capitalism) has considerable resonance for analysis of countries such as South Korea, Indonesia, and the Philippines. Even if Lin would have argued that this literature has limited relevance to his study of China, it is a curious omission.

These criticisms aside, Lin's focus on the interaction of economic and political markets in China's industrial transition represents a significant challenge to existing accounts of China's economic transition. Although his book is not intended as a history of China's post-Mao economy, Lin indirectly provides a wonderful primer on the subject. Moreover, he combines macro- and microlevel analysis as well as or better than any recent book on China's economic transition. The case studies, in particular, provide fascinating details that both illuminate the logical argument he advances and inform the reader's general knowledge.

In Digital Dragon, Adam Segal seeks to explain how and why policies for creating high-technology enterprises have differed across China during the post-Mao era. Toward this end, the book presents detailed case studies of efforts in Beijing, Shanghai, Guangzhou, and Xi'an to develop non-governmental enterprises in information industries. According to the author, technology policies and outcomes are better explained by local institutional and cultural contexts than by national-level variables. Specifically, Segal maintains that the “range of policies available … has not differed significantly throughout the country” (p. 86). Moreover, the opportunities for high-technology zones and science funding were similar everywhere. In short, favoritism by the central government does not factor significantly into his account. Rather, he argues that varying local conditions led to “different development strategies and development paths” (p. 123). In particular, he argues that the successful development of high-tech enterprises has required the active but carefully calibrated support of local government officials.

From this perspective, national policy, market forces, and foreign investment are inadequate for China to achieve success in information industries. Through its rich case studies, Digital Dragon offers a complex picture of how high-tech enterprises must be nurtured by a mix of relative autonomy from state intervention and the creation of critical ties between local officials and technology entrepreneurs that fulfill important developmental functions in the “absence of civic organizations and other social institutions” found in the West (p. 156). Here, Segal likens the appropriate measure of support from local governments to that provided by a “good mother-in-law” (p. 15), one who does not interfere too much or too often but who is there when needed.

Given the delicate balance this role requires, the book emphasizes the “difficulties of creating a high-tech enterprise in China” (p. 156). In this connection, Segal argues that “Beijing was uniquely blessed” (p. 52) compared to the other cities he studied, a finding that does not bode well for China's ability to develop the indigenous technological capability it seeks. Contrary to regional stereotypes, which identify Shanghai and Guangzhou as more entrepreneurial in spirit, Beijing has proved most adept at facilitating the development of nongovernmental high-tech enterprises. In his explanation for this surprising finding, Segal focuses on how local features—namely, local institutional structure and local culture—interact to determine how officials respond to national policy. As officials pursue the creation of high-tech enterprises, they are constrained by such factors as the varying organizational resources (structure) and long-standing development practices (culture) they face locally.

In this way, the author provides a sophisticated path-dependent analysis that incorporates ideational as well as institutional elements. For him, the “shared understandings and routine practices” (p. 44) that constitute culture are as important in determining local strategy as the features that define the institutional context, such as the balance of power within local governments and the nature of state–society relations that shapes the entrepreneurial environment at the local level. In Shanghai, for example, development strategy was informed by the long-standing norm of relying upon large state-owned conglomerates in pursuing industrial goals. By comparison, Beijing's practices were characterized by a more pluralistic and experimental approach, both to enterprise size and ownership and to government supervision of enterprises.

As this discussion suggests, Digital Dragon hinges on the author's ability to meld institutional and cultural analysis effectively. For the most part, Segal succeeds. Critics of cultural explanations often complain that any behavior can be shown to be consistent with some aspect of national or local culture. This is especially problematic when culture changes, as he admits has happened during the reform era in the four cities he studies. That said, his argument that local culture can serve as a complementary explanation to institutional analysis holds up fairly well in the context of his specific case studies, even if structural factors sometime seem adequate on their own.

Almost by definition, his research agenda leads Segal to overstate the significance of local factors to China's development trajectory. Indeed, this reader expected the concluding chapter to provide a more formal explication of the author's thinking on the interaction of local, national, and international factors and how the Chinese case fits into the vast literature on East Asian development. Instead, the book moves directly from the final case study chapter to a concluding chapter (entitled “Technology and China's Future”) that is devoted—after a brief restatement of the major themes—to a discussion of technology-related issues concerning security affairs, Chinese foreign policy, and China's potential rise as a great power. The “big picture” implications of China's quest to develop a first-rate indigenous technological capability are certainly worth our attention, but Segal provides insufficient evidence to sustain the introduction of arguments unrelated to the book's main focus. Even more importantly, these arguments seem to come in lieu of fully extending the analysis that flows from the excellent case studies.

Digital Dragon, a rather slender volume at 170 pages of text, would have been well served by an additional chapter, ideally placed between the final case study chapter and the conclusion, in which Segal could have made a concerted effort to advance the comparative political economy literature on industrial development by laying out a more thorough conceptual framework based on his analysis of China. The author's notion that local government needs to act like a good mother-in-law is intriguing, but he fails to specify fully how he sees the role of the state differently than Robert Wade, Peter Evans, and others who have provided various ideal types to guide their studies of industrial development. In this respect, the book missed an opportunity to make an even bigger contribution than it does. That said, Segal's absorbing analysis is highly recommended to sinologists and generalists alike.

Between Politics and Markets and Digital Dragon both add significantly to our understanding of China's political economy in the reform era. At the same time, they also reflect the need for scholars both to place China's experience more explicitly in comparative context and to contribute as fully as possible to conceptual debates in the general field of comparative politics.