Lynette Ong draws on an impressive amount of fieldwork to explore the nexus between rural credit institutions and local governance in China, resulting in this welcome contribution to the literature on the political economy of rural development. Prosper or Perish provides both a useful discussion of the evolution of rural financial institutions and fresh insights into the interplay between rural governance and development generally. Although at times the key themes become muddled due to the sheer quantity of information, in the end the reader is left with a number of interesting and important insights.

This work sets out to address two main questions. First, “why have RCC [Rural Credit Cooperative] loans been allocated consistently to local government enterprises and projects?” (p. 10). This is an important question if this pattern of loans means that RCCs (the major depositories of rural savings) are not successfully fulfilling their intermediary role of allocating capital to its most productive use. In answering this question, Ong lays out an institutional explanation for why loans may be “biased” toward lending to government enterprises. She argues that this lending pattern is due both to the organizational design of RCCs themselves and to strong incentives that lead local officials to interfere in RCC lending. Strong incentives to generate revenue at all costs set in place by the central government (and formalized by the cadre evaluation system) lead local cadres to influence lending in the direction of government enterprises. While Ong convincingly argues for why these institutional factors have influenced loan allocations, her argument might have been stronger with more discussion of how important these institutional explanations are vis-à-vis economic factors (such as declining demand for loans for agricultural activity). Still, in addressing this question, the book provides a fresh and interesting framework for thinking about the interaction between rural financial institutions and local governance.

The second primary question that Ong addresses is: “What is the local variation in industrialization outcome from savings mobilizations?” (p. 10). Ong argues that, despite similar local incentive structures and credit institutions, rural savings have been successfully used to promote industrialization in some places but not others. Using case studies from eight townships, she discusses three “paths of rural industrialization”: publicly led industrialization that failed (i.e., “perished”), privately led industrialization that succeeded (i.e., “prospered”), and publicly led industrialization that succeeded. She distinguishes publicly and privately led industrialization by whether, despite similar incentives, governments intervened to direct loans to preferred uses. Success is chiefly determined by geography and proximity to urban markets.

Although this second question is the source of the book's title, the answer seems to be the lesser of its contributions. Her argument that local government has had little hand in successful industrialization does challenge a traditional (and early 1990s coastal-centric) view of entrepreneurial local government; however, that geography matters is hardly a new insight. Partly as a result of this argument, the discussion of this second question often seems disjointed from the first.

In addition to the central chapters that deal with these two primary questions, Ong also gives a very useful overview of the evolution of the rural financial sector in the introductory section of the book. In the concluding section, she also updates the work with a discussion of the recent bailout of RCCs as part of the 2008–09 fiscal stimulus. Although almost relegated to an afterthought, this is an important (though familiar) discussion of RCCs being “too big to fail.” Here Ong highlights the political importance of the viability of RCCs and the potential repercussions if they are allowed to fail.

In the end, the main contribution of this work is that it provides a fresh and interesting take on the role of the formal financial system in China's rural development. The book also gives an important framework for thinking about the intersection of rural governance and development and how these two have intermingled over the decades since opening up. Ong's book clearly fills a gap in our understanding of an important facet of rural development and, although effort is sometimes required to remain in tune to her key themes, most readers will find it worthwhile in the end.