Rent-seeking with regards to China research refers to companies obtaining cooperation from the government through methods such as bribery, exchange of benefits for the company's own benefit, or the government's misuse of power by showing favoritism to obtain benefits from companies.

However, information regarding rent-seeking touches on the dark side of companies doing business in China, making it difficult or impossible to gather the quality and volume of information necessary for case studies. Taking the Cross-Strait relationship as an example, China and Taiwan began negotiations in the 1990s, but due to deterioration in the countries’ political relationship, their economic relationship was not institutionalized until 2008. For this reason, to deal with uncertainties concerning investments in China, Taishang (台商) had no choice but to build “relationships” on their own with government officials. Much of the research regarding the Cross-Strait relationship has already analyzed the contribution Taiwan's businessmen have made to the development of the Chinese economy. However, for reasons mentioned above, research that analyzed the formation of the “relationship” from a micro perspective is nonexistent. What caused a stir and changed this situation is this book written by Jieh-min Wu.

This book, which examines for the first time how Taishang became involved with rent-seeking in China, is a result of extensive work that built a theory and analyzed the practical from a macro and micro perspective. The summary of the book is as follows. The preface raises awareness of the issues by discussing how Taishang contributed to China's economic growth; how China, the “World's Factory”, came about; and how China's state capitalism policy developed. In Chapter 1, the author digs deeper into the awareness of issues raised in the preface, examines the theoretical model to analyze China's economic growth, and builds a modified model called the GDL model (globe-industrial district-local linkage model) to analyze rent-seeking. In other words, this model analyzed the links between the global market, industrial districts, and local regions. Chapter 2 explains changes to the Guangdong model, comparing it against the development models of other regions, including Shanghai, and conducts analysis. The author states that Guangdong Province achieved economic growth from investments in the special economic zones by foreign manufacturing industries, including Taiwan, to manufacture goods for export, as well as by developing the processing trade with cheap and abundant labor through the exploitation of wages and interests of migrant workers from the inland countryside.

Chapters 3 and 4 take a micro-level look at rent-seeking, using the example of Taiyan Company (under a fictional name given by the author), which invested in Guangdong province from 1979 to 2010 and ran its business with payments of “administration costs” to state companies with connections to the regional government or directly to regional governments, and, in return, received different favorable treatment and guarantees for the safety of personnel.

In Chapter 5, the author analyzes the interests of those migrant laborers who were subject to discrimination and exploitation given the current political, economic, and social structures in China. Chapter 6 discusses the rise in wages and the payment of social security surrounding labor–management relationships and the 2008 global financial crisis, and also analyzes how Taiwanese and Chinese companies in Guangdong Province dealt with the central government's policy that intended to prevent corruption by reducing the taxation power of local governments. The author points out that for companies from Taiwan, without making advancements in technology development, they will either lose out to Chinese companies that have learned about technology or will have to withdraw abroad. The author also mentions that IT industries with Chinese capital, such as Huawei or Xiaomi, have support from the country and have poached personnel from Taiwanese companies, and have achieved growth through a cooperative relationship with Taiwanese companies. Chapter 7 uses the GDL model to analyze how China acquired foreign currency, technology, and management know-how in the processing trade to achieve industrial upgrading and transformation. The author asserts that Red Supply Chain and Made in China 2025 are policies that China must undertake in order to promote industrial upgrading and transformation.

Lastly, the author summarizes his three conclusions. The first is that although China achieved economic development quickly through rent-seeking, the inequality and corruption resulting from rent seeking will be a pitfall for China's economic development moving forward. Second, regardless of whether or not Made in China 2025 will succeed, China's hard-line foreign policy has caused Western countries, beginning with the United States, to be on guard. Third, due to the development model that began with rent-seeking, control by China's central government has gained strength, beginning with state capitalism.

The factors that make the book distinct and noteworthy are as follows:

First, the author has succeeded in formulating a theory for rent-seeking using the Guangdong model. The GDL model created by the author through modification of the theoretical model based on development economics provided a theoretical explanation for the connection of global capitalism and China, the links to Taiwan's businessmen, the role of rent seeking, and the role of the mechanism in which the government and companies exploited laborers.

Second, with regards to Red Supply Chain and Made in China 2025, which were raised as the primary point of conflict in the trade war between the United States and China, it has analyzed them from a perspective other than realism. In research to date, the US–China trade war has been explained from a realism point of view as one that more or less was started by the US, which views an emerging China as a threat. The author uses the GDL model in line with the realism perspective to analyze Red Supply Chain and Made in China 2025 from an industrial perspective.

The third factor is the wealth of information regarding the case study of Taiyan Company. As previously mentioned, information regarding rent-seeking touches on the dark side of companies, making it difficult or impossible to gather the quality and volume of information necessary to enable case study research. However, from the 1990s, the author closely monitored and documented a company called Taiyan.

Of course, regardless of its importance, there are still topics and questions that were not raised in this book. However, these are topics that the author has already addressed through his other research, or that any researchers of contemporary China have been able to resolve.

To start with, some readers may question whether a macro-level argument can be made with case study research on just one company. However, local government corruption, abuse of power, and the powerlessness of Taishang, who had no choice but to get involved, was vividly portrayed through the author's field research. The author also tried to protect the source of information by using aliases and fictional names. The author does not explain what enabled the long-term investigation of Taiyan Company, but as Taiyan Company has already withdrawn from China, we can assume they were proactively cooperative in the author's research. The case studies of other companies were mentioned and analyzed in other chapters, but the volume and quality of information was likely not at the level as that of Taiyan Company. Given the incident involving the detention of a Hokkaido University professor in the latter half of 2019, it is clear that conducting field research in China, where the political and economic structure is unclear and unjust, comes with a high risk for researchers and their cooperators. Reading this book, I was also once again made to think about the significance of this incident (the detention of the Hokkaido University professor).

Another is the fact that there is no reference to the type of responsibility held by Taishang in the Cross-Strait relationship. I am specializing in politics and foreign relations in the PRC and Taiwan, and the Cross-Strait Relations, so how China used businessmen from Taiwan to influence Taiwan's political situation is an important research agenda for me. For Taishang, who received favorable treatment and cooperation from central and local governments, it is likely they had no choice but to abide by China's position in disputes regarding the Cross-Straits relationship. In other words, as a result of rent-seeking in China, Taishang became a route or tool by which China could exercise power in Taiwan effectively. Therefore, it would have been preferable for this book to delve further into this discussion. However, as having multiple focal points in one book could make the analysis ambiguous, one cannot criticize this book for not considering the Cross-Strait relations and China's policy vis-à-vis Taiwan as part of its research and raising it as an issue. Furthermore, the author has already discussed these points in another research work. A section of that discussion's foundation concerns the details of the Taishang discussed in this book.Footnote ¹

It is worth mentioning as well that we can also think about Taiwan's current economy and management of Taiwanese companies from the management model of the Taishang analyzed in this book. In order to avoid the risk resulting from the US–China trade war that began in 2018, many Taiwanese companies that expanded into mainland China have begun to move to Southeast Asia and Taiwan. Prior to this, there was already a movement of factories from China to Southeast Asia due to the increase in wages as mentioned in this book. However, in Vietnam, laborers hired by Taiwanese companies have frequently held strikes over the past several years to demand improvements in labor conditions. Taiwanese companies that are looking to invest back into Taiwan are seeking more favorable treatment from the government. Additionally, in Taiwan, some of the labor unions and civic organizations are requesting increases in overtime pay and guarantees for days off, while companies are requesting that the government ease regulations on labor law in order to secure labor, thereby causing a conflict. In other words, some Taiwanese companies are still using the management model from the 1980s and ’90s, which focused on reducing management costs by exploiting workers with low wages, long hours, and labor-intensive work, and by receiving favorable treatment from the government or acquiring rent.

There is no doubt this book is important in explaining theoretically China's economic growth and the role played by Taiwan's businessmen, both at a macro and micro level. The issues raised and the analysis conducted by the author will offer an important clue to analyzing China's economy moving forward. I hope this book will be an impetus and that the theorization of China research, as well as empirical research, will further advance as a result.