Is China Buying the World?

In this informed review of international business patterns, Nolan (Integrating China: Towards the Coordinated Market Economy), a professor of Chinese economy at the University of Cambridge, answers the title’s rhetorical question in the negative. As Nolan notes, the ascendancy of multinational corporations stemming from the liberalization of international trade since the 1970s has made allegiance to “home” countries a polite fiction in the global market. While multinationals seek access to the markets of developing nations, Nolan clarifies that foreign direct investment in other regions exceeds that in China. Although China’s immense foreign-exchange reserves, the largest of any nation, fuels apprehension in the West, this issue should be seen in context—the holdings of Western asset fund managers overshadow them. Unfortunately, Nolan slights some important considerations: for example, he acknowledges Beijing’s historic determination to build “a group of globally competitive giant firms to match those from the high-income countries,” but leaves largely unexplored the implications of the advantages these companies can derive from the state’s “majority equity share” and “high investment rate.” He also skirts the contentious issues of forced technology transfer, counterfeiting Western products for export, and displacing overseas labor with low-cost Chinese workers. Overall, Nolan provides an important perspective that challenges popular conceptions; no volume of this size can do more. (May)