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Conventional wisdom recommends the superiority of private ownership of enterprises. The reality confronts it with a rich diversity in ownership and governance structures. This volume examines five types of unorthodox ownership and governance form emerging in the industrial sector across major economies. It analyzes two cases to demonstrate that there are alternative ways to harden budget constraints of state-owned enterprises. It investigates the driving forces behind these evolving dynamics and explores policy implications for developing and transition economies.

In China, aggregate investment levels have been high and the cycles of investment growth rate have been remarkable. In order to reveal the mechanisms which drive investment hunger and cycles, this book develops an integrated growth-cycle framework which integrates the standard theory of socialist economies, the distributive barrier-constrained growth theory of developing economies, and the recent technical progresses in the western business cycle theory. It also analyzes the evolutionary dynamics of China's state investment system and the policy trade-off between industrial expansion and agricultural development.

Does the spectacular development of China's stock market present a theoretical puzzle? On one hand, within a short period of a little more than a decade (1990–2002), the total capitalization of the market grew from a negligible size to a level equivalent to more than 50 per cent of the country's GDP, and even if excluding non-floating shares held by the state and legal persons, the capitalization level was still equivalent to some 16 per cent of GDP. On the other hand, until very recently few of the institutions that underpin successful stock markets elsewhere were present. This seems to be in contradiction to the teaching of neo-institutional economics, which holds that only when the state is credibly committed to clarifying and defending functional institutions will people feel confidence enough to engage in complex transactions like stock trading. Does this imply a paradox? The author argues in this book that it is not so straightforward.The book provides detailed and convincing evidence to show that the impressive growth of China's stock market since 1990 has been to a great extent a result of policy-driven development favoured by a lack of alternative investment opportunities for increasingly wealthy private investors. Chinese companies in general viewed stock listing as a privilege and a fund-raising mechanism. Market participants perceived that the quality of listed companies was generally poor but that investors were protected because of the constant financial and policy supports provided by both local and the central governments. As a consequence, market participants had little incentive to pay much attention to corporate governance and other fundamentals. Would such features lead to a pessimistic scenario, meaning that the development would not be sustainable? Not so simple, the author suggests.

This book assesses the extent of China's increasing integration into the global economy during the reform era and explores the likely global impact of China's membership in the World Trade Organization (WTO). The five chapters of the book cover China's pre-WTO trade reforms; the terms of China's final WTO accession package; and the implications of China's WTO membership for foreign companies, world trade, the international trading system, and US-China relations. It presents sober and reasoned analyses of these issues and represents a solid attempt to take stock of China's economic progress to date and its prospects over the coming decade.Witnessing the mounting publications on this subject, one may wonder what perspectives or insights from this book are still worth repeating and remembering. Within this short review, I would like to highlight the following three.First, Lardy contends that, contrary to popular wisdom in the media and research literature, China's economy had become far more open than Japan's and it was ready to join the WTO. Before WTO entry China had already achieved the lowest tariff protection of any developing country and had also shrunk non-tariff barriers impressively. Most price distortions were eliminated in the decade before WTO entry and much of the necessary industrial and agricultural restructuring was already underway before accession. Other substantial progress included expansion of trade rights, adoption of current account convertibility, vast expansion of the legal scope for foreign investment, legalized development of the private sector, and establishment of basic social security systems in urban areas. If this assessment is correct, why did it take 15 years for China to get into the WTO? Lardy argues that the long waiting "reflects as much the rising bar imposed by members of the Working Party . . . as China's slowness to embrace the principles of the multilateral trading system" (p. 9). This leads to the second insightful message.