I was recently asked which English-language books I would recommend for someone seeking to understand the Chinese economy and financial system. The list and some brief summaries are included here, but Pacific Money would love to hear from readers which authors and titles they have found useful on the subject. Please leave your ideas in the comments below!
1 – Avoiding the Fall – Michael Pettis.
Despite a faulty narrative of Peking University’s Michael Pettis being a “China Bear,” this book, like his popular blog, is not a scare story. Having been vindicated by unfolding events, Pettis’s previous predictions of growth falling (it already has) and reform becoming urgent (China’s leaders seem to agree) and debt building up unsustainably (it has been) leave this book as a key read for those seeking to understand the reform process in China. The book addresses the questions: What has been happening? What needs to change? What happens if it doesn’t change?
2 – China’s Superbank – Henry Sanderson & Michael Forsythe
Michael Forsythe’s recent fallout with Bloomberg over alleged censorship of a story embarrassed the NY-based news and financial information company. Judging by the detail and professionalism evident in this book, Bloomberg was foolish to lose him. Forsythe and Sanderson go further than just explaining the activities of the gigantic China Development Bank. The book also reveals a lot about China’s growth model, overseas resource acquisition strategies, and some international political risk profile problems that China’s investments might face.
3 – Red Capitalism – Walter & Howie
Walter and Howie’s book, when published in 2011, created quite a stir for being one of the first English language volumes to actually explain many of the more complicated aspects of China’s financial system – in particular how local government financing platforms were being established and capitalized, and the characteristics of the bond market. The book also examines the debt build up in China’s economy.
4 – Inside China’s Shadow Banking: The Next Subprime Crisis? – Joe Zhang
Joe Zhang’s personal hands-on experience in China’s finance system (both at the People’s Bank of China, UBS and in microfinance) gives him an interesting perspective on China’s shadow banking system. The book came out just as worries about shadow finance were increasing and is thus a must read for those interested in the sector.
5 – The Great Rebalancing – Michael Pettis
Michael Pettis’s second book was reviewed on Pacific Money last year. A brilliant explanation of the global trade system, and how domestic policies affect the international outlook.
6 – Factions and Finance in China – Victor Shih
A pretty technical book that delves into the mysteries of China’s financial developments throughout the 1980s and 1990s, Factions in Finance is a fascinating look at how politics can affect finance and how finance can affect politics.
7 – In Line Behind a Billion People– Ma & Adams
It has been a trend in recent decades to try and separate economics from political and social realities, so it is useful that Damien Ma and William Adams approach China through economic, political, and social lenses as they consider how scarcity will “define China’s ascent.”
8 – Tiger Head, Snake Tails – Jonathan Fenby
Jonathan Fenby’s broad look at China contains some interesting insights into the wider picture – including social, environmental and political factors facing China today. It doesn’t take too much extrapolation to link nearly all these factors to the economy.
9 – The China Price – Alexandra Harney
Getting right down to the human face of China’s growth miracle, Harney‘s book serves as a fascinating reminder that GDP figures, export numbers and other headline statistics stand atop a pyramid of human toil.
10 – Uprising – George Magnus
George Magnus’s (of UBS fame) book was originally published in 2011, and focuses on the problems facing emerging markets as they move up the growth pyramid. Aging populations and a lack of innovation are highlighted among key problems that must be tackled, and Magnus stresses how some fixes require institutional and political changes that will not be easy.