Despite the heterogeneity of East Asian economies and the roles that governments assume within each of them, it is quite common to refer to an “East Asian model” of capitalism. This is a gross oversimplification, as is made clear by the excellent contributions to this volume, which provides a very interesting overview of the variations and changes in East Asian capitalism as well as in-depth analysis of individual country cases.
Besides the introduction and the concluding chapter, the volume comprises three major parts which focus, respectively, on business–government relations and development strategies, labour markets and industrial relations, and financial market structures. The introductory chapter provides a typology of East Asian varieties of capitalism and develops a conceptual framework for analysing the properties and patterns of institutional changes. Although the editors provide a theoretical framework for analysing the varieties of capital in the introductory chapter, each chapter stands on its own and does not follow a unified structure. Nonetheless, as the editors highlight, there are two major themes that run throughout the book: the continuities and changes in the institutional frameworks of East Asian economies and the major factors behind changing institutional practices in business, finance and labour regimes.
There are three chapters with a China focus, which analyse the changing structures of the Chinese government–industry relations, the Chinese labour regime and the Chinese financial sector. Shaun Breslin contributes an excellent overview of government–industry relations in China and the transformation from a state-planned to a state-led system in the 1980s and 1990s. Breslin highlights that the Chinese state maintains tight control of key industries and key resources, and therefore remains at the “commanding heights” of the economy. Even after reform of the state sector, the central government has preserved ownership of key enterprises in “strategically important sectors” such as armaments, electrical power and distribution, and telecommunications. It also maintains controlling shares in “pillar sectors” of the economy such as automobiles, machinery, IT, construction or steel. Most state-owned enterprises, however, are still owned by provincial and municipal governments. But the state exerts influence over the economy not only through ownership control, but also through regulating the space in which markets can operate. In his chapter, Breslin also highlights the central role of the financial system – which is of course still government-controlled – in allocating resources across the different sectors of the Chinese economy.
Ching Kwan Lee's chapter provides an account of the Chinese labour regime and its transformation since the 1980s. He describes two general trends in the labour regime that were induced by the restructuring of the Chinese economy away from state planning and the partial privatization of the state-owned sector: a commodification of labour and evisceration of the social contract on the one hand, and a “casualization” or informalization of employment across the entire economy on the other.
Richard Carney gives an overview of the structure of China's financial sector and the politics behind the country's financial development. Besides providing a historical account of the different phases of reform of the financial system, Carney points to the vested interest of local Party officials to pursue local growth with the help of banks under their control in order to boost their own chances of promotion, which regularly causes an accumulation of hidden costs which later have to be borne by the central government. Given the intricate promotion structure of the Chinese Communist Party, officials have a strong incentive to maintain a tight grip over state-owned banks and to use them to finance projects (habitually hidden from the local governments’ balance sheets) that generate higher growth in their own jurisdiction.
The chapter by Wataru Takahashi on the transition of the Japanese financial sector will be a worthwhile read for anyone concerned about the future stability of the Chinese financial system. It also includes a short but interesting section which compares the Japanese post-war financial system before liberalization with present-day China. But also the chapters that focus on other East Asian countries and provide no direct reference to China should be interesting for China-watchers and scholars. The account of how state–business relations, labour regimes and the role of the financial sector developed in countries like Japan, South Korea, Taiwan or those in Southeast Asia, and the analysis of the causes and effects of these changes, provide interesting insights that are relevant for the reform discussions in present-day China. In the book's concluding chapter the editors summarize the main patterns and trajectories of institutional change, and the causes behind these changes, in the eight country cases presented in the volume.
Unlike so many edited volumes, East Asian Capitalism: Diversity, Continuity, and Change is comprised of chapters that fit together very well and explore a common theme. It will be useful to readers with a general interest in this topic as well as scholars, and it could also be used for teaching purposes. Overall, Walter and Zhang and their contributors have done an excellent job in advancing the analysis of the varieties of capitalism in East Asia.
