Category Archives: Books

Dealing with China – Book Review

Dealing with China: An Insider Unmasks the New Economic Superpower by Hank Paulson. Published April 2015. 403 pages.

This book is true to its name.  Paulson has occupied a singular position of leadership in some powerful organizations, and there are plenty of tidbits drawn from his experiences:

  • CEO of Goldman Sachs (1999-2006)
  • U.S. Treasury Secretary (2006-2009)
  • Nature Conservancy (2004-2006)

The minor details that only he would have been privy to are the most fascinating – Zhu Rongji’s visible long-johns, Paulson’s irritation at Chinese leaders that read scripted remarks during meetings and then dozed off, or sharing take-out with Chinese and non-Chinese leaders during the sausage-making process that would shape a deal.  Even the origins around how Paulson assumed responsibility for China in 1990: after being named one of three co-heads of investment banking, he got China primarily because he was based in Chicago and was deemed to be “closer” to China than the folks in New York.

Each of the chapters is organized around a particular transaction or case study, and I found some of the specifics to be somewhat tedious at times, particularly in the first section that details Goldman Sach’s experiences with China.  While interesting to see what it was like to live through the drama surrounding some of those transactions (e.g., guiding companies in the telecom, energy and banking spaces through the IPO process, or considering making a strategic investment pre-IPO in a Chinese bank), much of it followed a similar theme: there was a massive opportunity, the Goldman team encountered some tough challenges operating in China, but through the hard work, intelligence and persistence of key folks within Goldman and the Chinese government, they were able to overcome those obstacles and get the task at hand done.  There is a remarkably high correlation between the Chinese leaders Paulson finds particularly praiseworthy and their current political standing.

The conclusions and observations did not seem to be particularly groundbreaking:

  • China’s objectives continue to be stability and economic development.  Paulson does not think they would jeopardize their economic interests through a military or security conflict.  China will continue to act more assertively, but they will look for ways to find a workable solution.
  • China’s leaders believe they live in a tough area, surrounded by countries that they have fought wars against in the last century, including Japan, India, Russia and forward-deployed U.S.
  • Two key China issues for the U.S.: (1) national security for cyber-war-making capabilities and (2) pilfering of American companies’ secrets.
  • Principles for the U.S. to keep in mind:
  1. “Help those who help ourselves”: help the Chinese reform on their own, and it will benefit us
  2. “Shine a light”: push for more transparency and adherence to universal standards
  3. “Speak with one voice”: be wary of over-complicating complex issues.  It’s better for there to be one go-to person to organize and lead the discussions
  4. “Find China a better seat at the table”: the U.S. should be pragmatic and prepared to compromise to encourage China to take a bigger role on global issues (e.g., WTO, open markets, greenhouse gas emissions)
  5. “Demonstrate economic leadership abroad”: China has taken the initiative in the developing world.  The U.S. must step up and compete with China from a position of strength
  6. “Find more ways to say yes”: better to devise new policies together with China than to attempt to persuade China to adopt our approach to everything
  7. “Avoid surprises but be alert for breakthroughs”: China combines thorough preparation with consensus-driven decision making, so the key to breakthroughs is to always be on the lookout for openings, to be opportunistic and creative
  8. “Act in ways that reflect Chinese realities”: need to focus on what is doable.


As an added benefit, this book gave me the motivation to get some more grounding on how the Chinese political structure is organized.  Paulson is very attuned to who holds power, and Chinese leadership can be very confusing.  I needed to refer to the Wikipedia entry on Chinese political leadership to get my bearings.  The Politburo Standing Committee is the most powerful body, consisting of 7 members who are the top leadership of the Communist Party.  It’s confusing because the members hold positions within the Communist Party as well as within the China state, although this has not always been the case.  For example, Xi Jinping is both the General Secretary of the Communist Party as well as the President of the People’s Republic of China.  Then you have Li Keqiang, the Premier of the State Council of the People’s Republic of China, or effectively the Prime Minister.  The President is the nominal head of state, but the General Secretary actually holds the highest political position.  Both positions are held by the same person, but this was not the case before 1993.  To add to the confusion, the post of Chairman of the Communist Party of China was the highest ranking position until it was abolished in 1982.  Most of the Chairman’s powers were transferred to the General Secretary.

Overall, I found the book good, but not great.  There are many detailed war stories, but you may find yourself skimming over sections to find something more interesting.

Empires of Food – Book Notes

Empires of Food – Feast, Famine and the Rise and Fall of Civilizations by Evan D. G. Fraser and Andrew Rimas.  Published June 2010.  254 pages.

I really enjoy reading books by Jared Diamond (Guns, Germs and Steel, and Collapse) and David Landes (The Wealth and Poverty of Nations).  Those works explore the foundational elements around why certain societies succeed and others fail.  This was a pleasant contrast to how history was taught in school, where it was presented as a progression of major events but never really dived into why those events may have unfolded the way that they did.  This book takes a similar approach but examines it through the lens of food and food empires in particular, as the critical basis of a functional society that allows urban life to flourish.  In the authors’ words, “this book is about how food, economics, agriculture, and human empires are all strands of the same narrative.”

Food empires (from Egypt, to China, to today) exist if three criteria are satisfied: (1) Surplus – farmers need to produce more food than they can eat; (2) Storage/shipping – farmers need a practical means to store or preserve food such that it doesn’t spoil, and transport that excess food to willing buyers; and (3) Exchange – they need a mechanism for exchanging food between farmers and buyers.

In primitive forms, a food empire is a web of farms and trails, rivers and vegetation that deliver food from the cultivated land to a group of interested eaters

Food empires have a tendency to grow, almost cancer-like, until they exceed sustainable limits and implode.  Sometimes this is overextension is due to a sustained period of mild weather and rainfall before some climate change event (e.g., droughts that span multiple years, massive flooding, or cold weather such as the little Ice Age during the 1700s) that drastically reduce food yields.  Other times, it is rapid expansion into new farming grounds – cutting down trees and forests to plant crops that deplete the land of nutrients and exposes the soil to erosion.  Or, it is fixating on specific cash crops that eliminates diversity and makes the empire vulnerable to disease or pests.

The world believes that the modern food empire is sustainable, but that belief is based upon several mistaken assumptions: (1) The Earth is fertile, when in fact, modern food yields are the result of engineered breeds of specific crops (rice, wheat, soybeans) and clever fertilizers based on fossil fuels.  (2) The weather will continue to be sunny, mild, and with adequate rainfall.  However, the weather has always been dynamic, even setting aside the impact of human-induced climate change.  A slight change in average temperature can have a drastic effect on the length of the growing period.  We’ve had a great spell of good weather over the past century.  The major famines that have taken place during that time have had economic or political root causes – a failure of getting excess food from elsewhere to the right place, rather than uncooperative weather resulting in bad harvests.  (3) It is good business to do one thing well.  Planting one crop in one place might be good economics but terrible ecology.  (4) Food supply takes cheap fossil fuels for granted.

The information here is fantastic, and it’s presented in a way that is engaging and interesting.  For example, the book traces why monks began to brew beer.  It turns out that after the fall of Rome, monasteries formed the beginnings of a new food network for exchange.  The primary constraint to trade, without an adequate road system, was that food products would spoil before they could reach their markets.  In order to preserve their excess wheat for trade, the monks brewed beer, along with cheese from milk, and wine from grapes.  There were only certain food products that could be made available for trade.

Overall, this is an excellent and relatively short read.  I read it over two weeknights.  I noticed that not all of the Amazon user reviews were very positive.  The criticisms centered around balance in coverage and how the book jumps around, making it hard to follow.  Some also didn’t really appreciate the authors’ use of the adventures of a Florentine trader as a narrative device.  I think some of those comments are justified, but I found the individual chapters to be well written and packed with interesting tidbits and stories.  In addition to Part I that lays out the key points as summarized above, I found Chapter 5 (on Dirt and the importance of nitrogen and fertilizers), Chapter 6 (on Ice and refrigeration), and Chapter 7 (on how the spice trade became so bloody) to be particularly fascinating.  That’s actually most of the book, so for me, this was definitely time well spent.

P.S. If this is not available in the library, consider buying a used copy.  There’s quite a difference in price between used vs. new condition.