China's Economic Challenge: Smashing the Iron Rice Bowl (review)

As a general overview of China's economic reform in the post-Mao Zedong era, China's Economic Challenge can be considered a qualified success. Neil C. Hughes draws upon his eight years as a project manager in China for the World Bank to write a rather conventional account of Chinese economic reform in which he describes the myriad problems that continue to bedevil the country's leaders. Unlike other recent books intended for a general audience, such as Gordon Chang's The Coming Collapse of China (Random House, 2001), Hughes' book is no polemic. Instead, it is a thoughtful, balanced account of China's trials and tribulations, one that studiously avoids both excessive optimism and excessive pessimism. Here, China's Economic Challenge also distinguishes itself from the likes of David Sheff's China Dawn: The Story of a Technology and Business Revolution (HarperBusiness, 2002). To his credit Hughes has produced a comprehensive survey that, while mainly descriptive, is peppered with incisive observations. Not surprisingly, Hughes is most comfortable in discussing the inner workings of Chinese economic institutions and ongoing efforts to restructure the country's state-owned enterprises. Another strength of the book is its concerted effort to place China's contemporary challenges in historical perspective, an undertaking seen too rarely in books written by the burgeoning class of non-sinologists who have served lengthy professional assignments in the People's Republic over the last decade.

Its strengths notwithstanding, China's Economic Challenge represents a missed opportunity in several respects. First, and perhaps most importantly, Hughes fails to provide an analytical framework to match the empirical story he tells. Indeed, the book too often reads like an unguided inventory of what ails China's economy, society, and political system. Chapter 1, which contains seventeen subsections in its thirty-five pages, illustrates this problem all too well. In addition to the sheer number of issues that Hughes attempts to introduce, there is a jarring lack of transition as he moves from one issue to the next. This reviewer could not help but wonder how students would cope when confronted in the space of a few pages with consecutive subsections on the pension system, Party supervision of enterprises, environmental challenges, and efforts to adopt Western accounting standards—all with no commentary explaining how each relates to the larger dilemmas of China's transition from state socialism. Indeed, nowhere in this introductory chapter does Hughes preview a larger argument or otherwise indicate to the reader how the laundry list of problems he so carefully documents is linked to a larger vision in which China's various challenges can be brought into focus. While the book is informative, the presentation of material is such that readers relatively unfamiliar with the specifics of the subject—namely, students and lay people—are likely to encounter great difficulty in identifying an organizing theme.

For experts, who will find the book's "story" quite familiar, there is no real conceptual or theoretical payoff. Even in his conclusion, chapter 7, Hughes offers mainly a summary rather than the kind of detailed analysis that would add to the existing popular and scholarly literature. The book's title notwithstanding, Hughes argues that the greatest economic challenge China faces is actually political in nature. In his words, China suffers from "a political climate of mistrust and hopelessness that is growing like a cancer in Chinese society" (p. 204). However much one might agree with this commentary, it does not serve as an adequate organizing theme for the rich empirical discussion that fills the preceding two hundred pages. Even at the book's end there is no analytical framework within which readers are supposed to pull together the threads of the story Hughes tells.

Hughes does make some provocative assertions, however. One is his argument that "Values have to change before fundamental changes in behavior can...