This book introduces a leadership approach to studying China’s politics and economy. Wendy Leutert argues that leadership helps to explain variation in reform outcomes in China’s public sector. She focuses on the effects of leadership in China’s large state-owned enterprises (SOEs). While Xi Jinping wields ultimate power, reform variation and outcome in China cannot be ascribed only to Xi and a handful of top leaders. Leaders at all levels in the vast Chinese public sector are important, according to Leutert. She coins the concept of “intra-organizational politics of reform” to denote the daily dynamics of cooperation and conflict between leaders and their subordinates at the firm level. She also discusses the tactics Chinese SOE executives apply to implement their agendas and the various ways their subordinates respond. The focus is explicitly on the effects of leaders’ decisions and actions rather than the factors that motivate leaders to make decisions and actions.
Data for the study is based on long-term participant observation in a Chinese central SOE. To my knowledge it is the first time a Western political scientist for so long has been embedded in a Chinese company. The result is a book based on unique empirical interview material. In addition, Leutert has conducted extensive desk research of documentary material. Chapter one provides an overview of the background and context of the book and states that the core argument is that leadership helps to explain variation of reform outcomes at the organization level. Chapter two outlines Leutert’s understanding of a leadership approach to studying the strategy and structure of public sector organizations. She argues that it should be grounded in examining the leadership effect on the balance among actors inside the Chinese SOEs.
A long chapter three details key enterprise reform in China’s state-owned economy since 1978, distinguishing between five periods: 1) emergence and decline of “dual-track” economic reform (1978–1991); 2) establishment of a socialist market economy (1992–1994); 3) retrenchment of state ownership in the “commanding heights” (1995–2001); 4) internationalization and consolidation of the state sector (2002–2012); and 5) limited economic liberalization combined with increased political control (2013 to present). For each period Leutert summarizes the key enterprise reforms – their content, implementation and results – and discusses the evolving constraints and space for leadership in the period in question. In a condensed way, the chapter provides an extremely useful overview of Chinese enterprise reform in the reform era demonstrating Leutert’s deep understanding of the topic.
Chapter four is a firm-based discussion on the relationship between reform and leadership in CI, a central SOE in the construction industry. The empirical material stems from 15 months of fieldwork inside the company, which gave the author the opportunity to conduct interviews at all levels of the company. By comparing consecutive tenures of chairmen and their leadership style and strategies, she establishes the empirical groundwork for her notion of “intra-organizational politics of reform” at the firm level.
Chapter five extends the study to include leadership impact on reform outcomes in four other central SOES: State Grid, China General Nuclear Power Group, Sinochem and China Railway Engineering Corporation. By comparing the consecutive tenures of the chairmen of these companies, the chapter provides interesting biographical information on key executives in the Chinese corporate world.
Chapter six outlines leadership tactics and subordinate responses to develop a framework of leader-subordinate dynamics at the firm level in Chinese SOEs. Subordinates may employ a number of different responses including support, resistance, delay, subversion, shirking, quitting, and expression of alternative views.
Chapter seven summarizes what to gain from a leadership approach to studying Chinese politics and economy. In theoretical terms a major contribution is the term “intra-organizational politics of reform”: the daily dynamics of cooperation and conflict between leaders and their subordinates within SOEs. Leutert claims that studies of leadership during the Xi era challenge the view that reform variation should be ascribed to the machinations of a handful of top leaders. It is the leaders at lower levels who decide how to respond to and implement central level goals. It is these individuals who decide how and when to execute Xi Jinping’s various initiatives and policies.
The book carries a useful Appendix A detailing the methodology and research design of the study including a discussion of the case selected, the data collection for the study, and researcher positionality. There is also an Appendix B presenting details about the participant observation and interviews at the case company. Finally, there is an Appendix C with a list of the more than 100 interviews Leutert has conducted with individuals in the Chinese government, central SOEs, state-owned banks, academia and think tanks.
This reviewer is generally in agreement with the observations and findings of the study. However, I would prefer to distinguish between central SOEs in terms of Party control rather than state control. The top executives of the centrally managed SOEs are managed by the CCP’s Central Organization Department according to the nomenklatura system. About half of them are core firms ranked at vice-ministerial level. Leutert labels China General Nuclear Power Group as a noncore firm at department-level rank equivalence (p. 91). In my view it is a core company at vice-ministerial rank.
This is a minor issue and cannot detract from the fact that Leutert has written a well-documented book on China’s state-owned enterprises and their internal leadership dynamics. She has once again showed her deep insight in a key sector of the Chinese economy. The book is a must for anyone interested in Chinese politics and economy.
