Ling Chen has produced a well-researched and highly detailed account of the ways in which, among other things, China's local bureaucrats have responded to the incentives placed before them by central policy-makers. I was looking forward to reading her book, as I am currently engaged in a research project exploring the internationalization of one of China's locally owned multinational enterprises (MNEs), the Northern Heavy Industry Group from Shenyang, which has become one of the leading tunnel boring machinery makers in the world – partly as a result of local government supports and technological upgrading via acquisition of other highly successful foreign MNEs in its sector. I was therefore eager to get more insights into how policy-making is enacted at the local level – why local governments, for example, may respond differently to the same central diktats. I was also interested in learning more about how China is attempting to improve its indigenous innovation capabilities, so as to break out of the “middle income trap.”

The analysis and content of Chen's book certainly proved very useful in these regards. I found the industry level details and cases particularly relevant and insightful (chapter five), perhaps because of my own personal research interests. But there is plenty of scope and variety in her book (seven chapters in total, including surveys and a good deal of quantitative analysis as well, all undertaken to back up her arguments), which I am sure will be of interest to a wide range of academics. The discussion of MNE group offshoring in China, for example, (whereby Chinese local officials looked to attract “dragonhead” MNEs which in turn might bring in the entire foreign supply chain, i.e. lots of inward FDI, or alternatively foster local supply chains) was illuminating. This was partly because of the direct quotes and narrative taken from government officials and business people (for example, an interviewee reflected upon the problem of the dragonhead policy – that sometimes there was no dragon body or tail!). In fact, a real strength of this work is the detailed qualitative insights into policy-making and policy responses which permeate the narrative. These are taken directly from the officials (and others) involved in the actual processes. Clearly, Chen has gone to great lengths to undertake this qualitative research. While some of the arguments (i.e. about the problems associated with the “dragonhead” policy) may not always be unknown, the first-hand details still reward the reader with a real feel for how policy-making has unfolded.

In brief, Chen argues that the way in which some provinces fostered inward FDI has shaped subsequent responses to evolving central policy, which in recent times has moved away from the (perhaps naïve?) stance that foreign MNEs would spur domestic innovation, to one in which domestic “indigenous innovation” (i.e. by domestic Chinese businesses, primarily) should be enhanced. This policy shift has brought confrontation between different interest groups within the government and business, and these conflicts are illustrated by different responses at the local level. Some regions, less dependent on very large foreign MNEs (the systems integrators), have found it easier to embark upon “indigenous innovation” policies. By contrast, those which attracted larger MNEs (sitting at the top of their value chains) have found it less appealing to support indigenous innovation. She argues this may explain the reasons for disparities in the impacts of indigenous innovation policies between regions.

The book certainly sheds further light on the nature of Chinese capitalism and, more generally, the nature of the developmental state. This type of research can really help us better appreciate Chinese development. Too often I have attended academic conferences where the discussion falls into the trap of generalizing about China as a whole – i.e. “China” is doing this or that. There may well be central Chinese policies and they may be worth knowing about, but what is arguably more interesting and germane, as Chen shows, is how they are implemented and realised at the ground level in the melting pot that is – at the end of the day – China.

The book will be of interest to many different academic fields, including business, management and economics as well of course as political science and Chinese/East Asian studies. I am sure it would also be popular as a teaching course text, as although it covers quite a bit of ground it is still an engaging read and offers enough of the real-life detail and events that generate student interest.