Foreword
China is in a crisis of success. Big success. Big crisis. Like an infant that
has outgrown its baby shoes, China must refit itself to its new circumstances. Its old model of growth through exports and infrastructure
investment now piles up debt without proportionately valuable economic development. The old model of governance, running the country for growth in the manner of a business in single-minded pursuit of
profit, produces side effects for the environment and for people’s lives
that are no longer acceptable. While China’s leadership has produced a
wise and open strategy for what they need to do to fix a difficult but
manageable economic transition, it is struggling to manage the politics
of implementing that strategy and it has not produced a comparably
insightful strategy for addressing political issues that are as formidable
as the economic challenges.
Western nostrums, which assert a priori that China would have done
better if it had been governed more like India or the Philippines, are
unpersuasive to anyone who knows the region. But China’s successes
cannot persist if it continues to be managed the same way it has been –
or, worse, if it reverts to some of the bad habits of the Mao Zedong era.
This book analyzes China’s current crisis and seeks to illuminate the
enduring elements that have shaped China’s reform successes and
determine China’s future options. I detail the crisis, but always in the
context of a larger framework: the model of development. The key
questions we need to answer about China are as follows.
Why has China been so successful?
Why is it now facing a political–economic crisis?
What are the key issues and non-issues?
What are the principal alternative outcomes?
My answers to these questions vary considerably from what most
readers are likely to read elsewhere; of course, the range of views about
China is very diverse. Most discussions of China either extoll the

country’s strengths and project those into the future or focus on its
vulnerabilities. This book tries to explore both the strengths and the
vulnerabilities – across the economy, the society, and the politics.
Throughout the 1980s I wrote that Deng Xiaoping’s reforms
would make China a great power again and that Mikhail Gorbachev’s reform strategy would destroy the Soviet Union. The basis for
that argument was that Deng was emulating strategies that had
succeeded in South Korea and Taiwan, and to a lesser extent in
Japan and Singapore. Gorbachev was following priorities exactly
opposite to those that led to Asian successes. In my mind the only
question about Chinese success was whether the strategies of comparatively tiny South Korea and Taiwan could be scaled up. It turns
out they can. In 1992 I traveled the length and breadth of China and
compiled the main points from a decade of arguments into a book,
The Rise of China: How Economic Reform Is Creating a New Superpower, published in 1993.
At the time those arguments were the opposite of Western conventional wisdom. The leading review in London said that my bank must
have paid me a lot of money to write such nonsense. (Actually, my boss
banned me three times from writing the book before finally acquiescing.) The New York Review of Books expressed contempt for my
assertion that China’s superior growth derived from Deng Xiaoping’s
reforms. The local head of Reuters banned its reporters from interviewing me because I was “too optimistic.” (They interviewed me
anyway, and told me about the ban, but stopped quoting me.)
Gorbachev and his immediate successors, after all, were following a
strategy recommended by Americans and Europeans. Deng was doing
the opposite, and right-thinking Westerners ridiculed and denounced
him, as they had done with Park Chung Hee in South Korea and Jiang
Jingguo in Taiwan. It was common to believe, even at the top of the US
government, that China was on the verge of collapse.
From the early 1980s these bullish arguments had a good run of
nearly three decades. As the end of the third decade approached,
I became convinced that the model was diverging from the earlier
success stories and that the future was becoming much more uncertain.
I assembled early thoughts in “Reassessing China,” published in the
Washington Quarterly in 2012. The time for totally confident predictions was past. Now we need scenarios. That is what this book is all
about. The current economic and political turning point could lead to