Red Capitalism by Carl Walter and Fraser Howie is not an easy read--rather a slog, sometimes. This is partly due to the absence of journalistic polish: they might have done better to take onto an "as told to" junior partner. But in fairness, it'also because they are trying to describe something new, outside our conceptual structure. That would be the system of finance that the Chinese have created--one is tempted to say "that has created itself" in the near-30 years since the crafty old Bolshevik Deng Xiaoping told us that maybe some parts of the free market weren't such a bad thing after all.
As with virtually everything about modern China, the numbers are staggering: Walter/Howie repeat the old (and for all I know true) story about how the Chinese virtually had to search under the sofa to send Deng on his first foreign trip; now they are by convention (if not conventional measures) the second strongest nation in the world. Along the way, they've created a financial system with all the accoutrements of a modern financial system--banking, stocks and bonds,the works.
Except that's the problem--they haven't. They've created the appearance of a modern market, but if Walter/Howie are to be believed, the structure of Chinese finance has about as much to do with modern capitalism as the carved imitation temples at Petra have to do with the gravely powerful edifices of Ancient Rome--a plausible imitation devised by builders who seem never to have understood exactly what they should be doing. They've created in some ways a worst-of-both-worlds mix of old and new where the appearance of capitalism is bolted over the interior of an old, shambolic socialist state.
All this might be no more than amusing if it were just a matter of sloshing money around. But Walter/Howie also present China as an economy in deep trouble--far more than we know, far more perhaps than they know themselves, considering their apparent knack for papering over differences and kicking the can down the road. You can't leave this book without a thrill of unease at the prospect of what will happen if (not when) the whole structure comes unhinged.
Walter/Howie couple their account of Potemkin capitalism with another, newer and perhaps even more unsettling tale. That is the story of how the institutions of this new "market" economy, and all the money attendant upon them, seem to have been pretty well trussed up and demobilized by China's emerging elite--the network of families whose claim to legitimacy seems to be rooted in their ancestral association with chairman Mao, together with their prof\iciency at manipulating the levers of the new system.
China from this perspective begins to remind the reader of nothing so much as Ancient Rome--but no, not the Rome of the emperors; rather the earlier Rome of the republic, when a loosely connected network of privileged families jockeyed for control over resources in a polity that barley deserves the name of "state" at all.
And that's the ultimate challenge of this book: we seem to have entered age in which the familiar models of statehood, of public/private, simply aren't serving us well any more. We get glimmers of the new world as we consider offshore tax havens, sovereign wealth funds, and transnational networks of criminals, human rights advocates, NGO salarymen and whatever other institutions we find emerging out of the shell of the nation-state. My guess is we are just beginning to articulate the categories and concepts we need to understand such a world. But when we do get a handle on the job, it seems likely that we will find China occupying a central chapter in the story.