This book is the first of three volumes planned on the politics of corporate restructuring and system reform in East Asia and comes out of a summer 2006 project that brought young scholars to the Shorenstein Center at Stanford University to discuss corporate restructuring in the People's Republic of China (PRC), Japan, and the Republic of Korea (South Korea).
Beginning from the premise that firms exist within a specific political-economic context, the book considers questions of institutional complementarity and the politics of reform. Upfront, it should be said that while the book's title is a bit misleading, its subtitle is spot on. In particular, while examples and discussion of privatization are somewhat rare in the work, a number of different chapters in the book provide interesting descriptions of the politics surrounding the evolution of companies and economic institutions in the PRC.
In particular, Carl Walter's chapter on PRC stock markets, the career trajectory of Zhou Xiaochuan, and the evolution of the People's Bank of China and China Securities Regulatory Commission makes for fascinating reading. Similarly, Joo-Youn Jung's discussion of the evolution of the State Economic and Trade Commission and the State Development and Planning Commission in the context of Zhu Rongji's career also helps illustrate the degree to which individuals in the PRC influence institutions and the importance of people to the system. A political perspective is also clear in Worawut Smuthkalin's chapter on social security reform and Yongshun Cai's chapter on inequality in China's corporate restructuring.
Additional useful chapters in the book include Jean Oi's introductory first chapter; Oi and Han Chaohua's overview of corporate restructuring; Jin Zeng and Kellee Tsai's study of development, privatization, and state-owned enterprise (SOE) restructuring in Wenzhou, Xiamen, and Shenyang; and Sebastian Heilmann's chapter on the interaction and sequencing of local experimentation and national policy making. The first two provide a helpful overview of the ideas behind the project and some data (based on two surveys carried out in 2000 and 2005) on corporate restructuring in the PRC. The second two provide interesting theoretical perspectives that raise some pointed questions.
In particular, the Zeng and Tsai chapter challenges assumptions about the positive association between private-sector development and SOE restructuring, finding that a booming private sector actually delayed SOE restructuring in some localities and that, ultimately, the criteria used for evaluating local officials “has had a more direct impact on the timing and strategies of large-scale restructuring in a locality than the level of local private-sector development” (p. 41). Heilmann argues that “China's ability to experiment with policy prior to actual formulation and passage of policies or laws allowed a highly unusual degree of policy flexibility” (p. 97).
While Heilmann's appreciation of the PRC's “experience first, laws later” approach to breaking national policy deadlocks seems well placed, his seeming frustration with other systems—“in democratic polities, which are characterized by extensive institutional checks, regular electoral and leadership changes, contentious public-policy debate, and a constantly shifting mix of policy priorities, experimentation is subject to narrow limitations” (p. 113)—seems unduly downbeat. While policy making may, at times, be slower and more complex in democratic societies, it would seem liberal democracies also often provide more space for individual action, thereby reducing the overall need to solve problems through policy change.
In total, the book contains ten chapters, and while the volume is more focused than many edited books, the chapters still betray a certain unevenness. Given the variegated nature of the PRC, however, one might say the variability is in keeping with the volume's object of study.
Overall, an important theme of the book is that China's successful piecemeal development, its ability to move forward “with ‘imperfect institutions’ by taking a series of small steps” (p. 8), poses a challenge both to many conventional development prescriptions and those emphasizing the importance of institutional complementarity. As a starting point for thinking about political economy in Asia from a comparative perspective, one could do far worse.
