What do you think?
Rate this book
Schism: China, America, and the Fracturing of the Global Trading System
China's entry into the World Trade Organization (WTO) in 2001 was heralded as historic, and for good reason: the world's most populous nation was joining the rule-based system that has governed international commerce since World War II. But the full ramifications of that event are only now becoming apparent, as the Chinese economic juggernaut has evolved in unanticipated and profoundly troublesome ways.
In this book, journalist Paul Blustein chronicles the contentious process resulting in China's WTO membership and the transformative changes that followed, both good and bad – for China, for its trading partners, and for the global trading system as a whole. The book recounts how China opened its markets and underwent far-reaching reforms that fuelled its economic takeoff, but then adopted policies – a cheap currency and heavy-handed state intervention – that unfairly disadvantaged foreign competitors and circumvented WTO rules. Events took a potentially catastrophic turn in 2018 with the eruption of a trade war between China and the United States, which has brought the trading system to a breaking point. Regardless of how the latest confrontation unfolds, the world will be grappling for decades with the challenges posed by China Inc.
In this book, journalist Paul Blustein chronicles the contentious process resulting in China's WTO membership and the transformative changes that followed, both good and bad – for China, for its trading partners, and for the global trading system as a whole. The book recounts how China opened its markets and underwent far-reaching reforms that fuelled its economic takeoff, but then adopted policies – a cheap currency and heavy-handed state intervention – that unfairly disadvantaged foreign competitors and circumvented WTO rules. Events took a potentially catastrophic turn in 2018 with the eruption of a trade war between China and the United States, which has brought the trading system to a breaking point. Regardless of how the latest confrontation unfolds, the world will be grappling for decades with the challenges posed by China Inc.
280 pages, Kindle Edition
First published September 10, 2019
45 people are currently reading
820 people want to read
About the author
Paul Blustein
10 books41 followersPaul Blustein has written about economic issues for more than 40 years. A graduate of the University of Wisconsin and Oxford University, where he was a Rhodes Scholar, Paul spent most of his career reporting for The Washington Post and The Wall Street Journal. He is currently a Senior Fellow at the Centre for International Governance Innovation.
Paul's books have received critical acclaim from leading publications including The Economist, Financial Times, Foreign Affairs, and the New York Review of Books. He especially loves hearing from professors and college students that his books help make complex economic subjects interesting and intelligible. A resident since 2010 of Kamakura, Japan, where he lives with his wife, Yoshie Sakai, he is the father of four children and in 2018 attained his most cherished status yet--grandpa.
Paul's books have received critical acclaim from leading publications including The Economist, Financial Times, Foreign Affairs, and the New York Review of Books. He especially loves hearing from professors and college students that his books help make complex economic subjects interesting and intelligible. A resident since 2010 of Kamakura, Japan, where he lives with his wife, Yoshie Sakai, he is the father of four children and in 2018 attained his most cherished status yet--grandpa.
Ratings & Reviews
Friends & Following
Create a free account to discover what your friends think of this book!
Community Reviews
Displaying 1 - 16 of 16 reviews
March 8, 2020
5.0/5.0
This is one of the best books I’ve read in my lifetime. It is insightful, detailed, well-researched, and well-written. The author demonstrates immense knowledge on China’s trade relations in the past two decades. For a book that dives deep into the technical details of international trade laws, it is extremely captivating. The tone and conclusions of the book are very even-handed, and the book is not as hawkish as its title may suggest.
The majority of this book chronicles the saga of China’s accession to the World Trade Organization, as well as the country’s subsequent economic opening. The drama and details of the trade negotiations behind closed doors are not only entertaining, but also give a unique perspective of how trade disputes are handled. Blustein argues that the problems of unfair trade practices in the current era are not due to the US being too soft on China in trade deals of the past 20 years. Rather, politicians and trade negotiators fundamentally misjudged how different China’s political structure and ambitions are compared to the rest of the world. Therefore, many unintended consequences were overlooked as China had gone in directions not anticipated nor imagined by almost everyone at the time.
Blustein is not shy about criticizing various mis-steps of every US administration, from Clinton to W Bush to Obama to Trump, in handling China. The 2008 financial crisis also dramatically changed the power dynamics between the US and China, when the Americans lost the credibility and moral superiority as a paragon of market discipline.
The book also describes in detail China’s statist interventions in corporations, both domestic and foreign. One of my favorite quotes from the book:
“At one session in which a foreign technology firm was undergoing investigation, the government official in charge snarled at his interpreter, ‘I want you to translate my curses.’”
Another quote from the book I really like is:
“Why were so many experts – from across the political spectrum – so mistaken?” Lighthizer asked, and his answers were withering: “They failed to adequately account for many unique facts about China, including its political system, its commitment to mercantilism, and the potential size of its economy…. They suffered from hubris about the ‘inevitable’ triumph of democracy and capitalism… They assumed that acceding to the WTO would cause China to become more and more Western in its behavior – almost as if it were merely a more exotic version of Canada.”
Towards the end of the book, the author proposes his own solutions to the current situation. This is where Blustein’s conclusions and mine diverge. Blustein suggests multilateral pressure within the WTO framework to change China’s behavior. While WTO has its shortcomings, he suggests fixing the existing gaps and loopholes, rather than starting bilateral trade wars as Trump has. While I agree with multilateralism, I am not convinced that WTO is an effective body to deal with the current unfair trade practices anymore.
Despite my disagreement with the book’s conclusions, I whole-heartedly recommend this book to anyone who has an interest in international trade or geopolitics.
This is one of the best books I’ve read in my lifetime. It is insightful, detailed, well-researched, and well-written. The author demonstrates immense knowledge on China’s trade relations in the past two decades. For a book that dives deep into the technical details of international trade laws, it is extremely captivating. The tone and conclusions of the book are very even-handed, and the book is not as hawkish as its title may suggest.
The majority of this book chronicles the saga of China’s accession to the World Trade Organization, as well as the country’s subsequent economic opening. The drama and details of the trade negotiations behind closed doors are not only entertaining, but also give a unique perspective of how trade disputes are handled. Blustein argues that the problems of unfair trade practices in the current era are not due to the US being too soft on China in trade deals of the past 20 years. Rather, politicians and trade negotiators fundamentally misjudged how different China’s political structure and ambitions are compared to the rest of the world. Therefore, many unintended consequences were overlooked as China had gone in directions not anticipated nor imagined by almost everyone at the time.
Blustein is not shy about criticizing various mis-steps of every US administration, from Clinton to W Bush to Obama to Trump, in handling China. The 2008 financial crisis also dramatically changed the power dynamics between the US and China, when the Americans lost the credibility and moral superiority as a paragon of market discipline.
The book also describes in detail China’s statist interventions in corporations, both domestic and foreign. One of my favorite quotes from the book:
“At one session in which a foreign technology firm was undergoing investigation, the government official in charge snarled at his interpreter, ‘I want you to translate my curses.’”
Another quote from the book I really like is:
“Why were so many experts – from across the political spectrum – so mistaken?” Lighthizer asked, and his answers were withering: “They failed to adequately account for many unique facts about China, including its political system, its commitment to mercantilism, and the potential size of its economy…. They suffered from hubris about the ‘inevitable’ triumph of democracy and capitalism… They assumed that acceding to the WTO would cause China to become more and more Western in its behavior – almost as if it were merely a more exotic version of Canada.”
Towards the end of the book, the author proposes his own solutions to the current situation. This is where Blustein’s conclusions and mine diverge. Blustein suggests multilateral pressure within the WTO framework to change China’s behavior. While WTO has its shortcomings, he suggests fixing the existing gaps and loopholes, rather than starting bilateral trade wars as Trump has. While I agree with multilateralism, I am not convinced that WTO is an effective body to deal with the current unfair trade practices anymore.
Despite my disagreement with the book’s conclusions, I whole-heartedly recommend this book to anyone who has an interest in international trade or geopolitics.
December 26, 2019
Given the recent release and the importance and newsworthiness of the topic, I'm surprised I hadn't heard more about this book. I thought it was excellent -- great details, readable, and a concise 250ish pages. It's more about “how we got here” than “where to go next” in trade policy, but sets the scene very well.
Three things I learned:
1.China nearly entered the GATT (toothless WTO forerunner) in the 80s, but international reputation suffered after Tiananmen Square
2.There were no effective tools in the WTO to address currency manipulation -- instead that was the IMF's domain. After some delays, the IMF was moving toward taking action against China in the late '00s, but the report was due to be published a week after the Lehman collapse (which derailed everything).
3.China's entry into the WTO came with unique protocols for targeted US retaliation if effects on specific industries were too severe, but the Bush-era administration mostly refrained from using them.
Three things I learned:
1.China nearly entered the GATT (toothless WTO forerunner) in the 80s, but international reputation suffered after Tiananmen Square
2.There were no effective tools in the WTO to address currency manipulation -- instead that was the IMF's domain. After some delays, the IMF was moving toward taking action against China in the late '00s, but the report was due to be published a week after the Lehman collapse (which derailed everything).
3.China's entry into the WTO came with unique protocols for targeted US retaliation if effects on specific industries were too severe, but the Bush-era administration mostly refrained from using them.
August 20, 2021
Super detailed in terms of trade policy, but incredibly interesting and enlightening.
Read
February 22, 2020Disclaimer: Paul is a good friend, so my opinion here is biased.
If you want to understand how China interacts with the outside world in the Xi-Trump era, this is an excellent place to start. Paul has been writing about the WTO and the IMF for decades, from perches in Tokyo and Beijing, while employed by the Wall Street Journal and the Washington Post. He now lives in Kamakura, near me, and writes books. This is at least his sixth, and I think the fourth I've read. Each one draws me into a complex world of actors making decisions: some good, some bad, most the best effort of the individuals at the time, but usually without taking into account a truly global view.
Of course, this has consequences.
China felt left out of the WTO more or less from the beginning, but it took years of negotiations and planning to bring them into the organization. Financial and intellectual property practices inside China had to change, including upgrading the protection of the law for foreign companies.
Paul's inspiration for writing the book was the candidacy of Donald Trump and his fixation with China. Paul makes an excellent argument that even if Trump wins the individual battles (in which he certainly has a mixed record), the damage he is doing to the system will last for a long time and outweighs any gains.
One example is the WTO's Appellate Body. Trump didn't like some decisions, and is suspicious of any agreement the U.S. has entered into that he didn't create. The body nominally has seven members, and it takes a panel of three of them for each review. As the book was going to press, it appeared that the Trump administration would block reappoint of some of the members. Spoiler alert for this cliffhanger -- indeed, their positions expired in late 2019, and the body now has only two confirmed members. The U.S. is bullying people into other conflict resolution mechanisms that it thinks will benefit it.
Overall, you will learn a ton about how trade works, and a lot about how China works -- but only be scratching the surface of both deep institutions.
Highly recommended.
The one thing I'd like that the book doesn't have is an index of names, ideally listing both the romanization and Chinese characters for the Chinese players.
Next up, I'd like to find a book on Belt and Road
If you want to understand how China interacts with the outside world in the Xi-Trump era, this is an excellent place to start. Paul has been writing about the WTO and the IMF for decades, from perches in Tokyo and Beijing, while employed by the Wall Street Journal and the Washington Post. He now lives in Kamakura, near me, and writes books. This is at least his sixth, and I think the fourth I've read. Each one draws me into a complex world of actors making decisions: some good, some bad, most the best effort of the individuals at the time, but usually without taking into account a truly global view.
Of course, this has consequences.
China felt left out of the WTO more or less from the beginning, but it took years of negotiations and planning to bring them into the organization. Financial and intellectual property practices inside China had to change, including upgrading the protection of the law for foreign companies.
Paul's inspiration for writing the book was the candidacy of Donald Trump and his fixation with China. Paul makes an excellent argument that even if Trump wins the individual battles (in which he certainly has a mixed record), the damage he is doing to the system will last for a long time and outweighs any gains.
One example is the WTO's Appellate Body. Trump didn't like some decisions, and is suspicious of any agreement the U.S. has entered into that he didn't create. The body nominally has seven members, and it takes a panel of three of them for each review. As the book was going to press, it appeared that the Trump administration would block reappoint of some of the members. Spoiler alert for this cliffhanger -- indeed, their positions expired in late 2019, and the body now has only two confirmed members. The U.S. is bullying people into other conflict resolution mechanisms that it thinks will benefit it.
Overall, you will learn a ton about how trade works, and a lot about how China works -- but only be scratching the surface of both deep institutions.
Highly recommended.
The one thing I'd like that the book doesn't have is an index of names, ideally listing both the romanization and Chinese characters for the Chinese players.
Next up, I'd like to find a book on Belt and Road
January 4, 2021
Great, well-researched book. I’m interested in trade policy and the role of China both at the WTO and more generally. This is definitely a piece of writing I will be referring back to from time-to-time.
April 27, 2022
This book provides an interesting, informative narrative about the economic rise of China moving into early 2000s against a stark backdrop of a more primitive, less digitized, connected China. Prompts excellecent discussion and reflection at every corner, and provides detailed account of interactions between USA, China, and other WTO members as the org opened more widely. In addition, a detailed analysis is provided on the rise of China: Where it is heading, the choices the country will have to choose, and the unique dynamic in which China develops in a world far ahead, by economic policy and otherwise, then explaining the numerous disasters which may have resulted.
Further Refelection: As far as the wolrdview and thinking Blustein will set you in, its fascinating how a country with such a diverse group of people and economy, from high skylines to urban cave dwellers, slowly transformed into an industrial powerhouse that has a sword held against the legs of the largest giants in the global economy: Or was it a giant itself all along? This identity crisis as China attempts to refine its everchanging identity and role in the WTO and Global economy as a whole is a very exciting idea. Would recommend.
Further Refelection: As far as the wolrdview and thinking Blustein will set you in, its fascinating how a country with such a diverse group of people and economy, from high skylines to urban cave dwellers, slowly transformed into an industrial powerhouse that has a sword held against the legs of the largest giants in the global economy: Or was it a giant itself all along? This identity crisis as China attempts to refine its everchanging identity and role in the WTO and Global economy as a whole is a very exciting idea. Would recommend.
December 30, 2021
An incredible and rich narrative of China's modern international trade relations with the United States starting from its WTO accession to bilateral tensions under the Trump White House. Blustein clearly demonstrates an indispensable understanding of both countries' political economies in this book. It captured the critical elements and milestones of China's trade dynamics without squeezing too much technical jargons and gave us an intimate look at some of the inner workings of Zhongnanhai through oral accounts of people who worked closely with China's trade policy community. This makes it a fairly suitable reading for both those closely watching this space and to the casual observers. While I do have some reservations as to how he characterized RCEP at some points, his analysis and criticisms are well thought out. On his recommendations at the end of the book, I would add that conferring a more autonomous and significant authority to the role of the Director-General would provide, albeit in an incremental fashion, "more teeth" to the WTO to address some of its persistent challenges including China's. Highly recommended book.
January 16, 2022
Puts China's rise in the global trading system into perspective while dispelling some of the oft-cited myths about a Chinese plot to dominate the world order. Manages to go through issues such as joining the WTO, and the IMF's intervention with the RMB without being dull at all.
Very enjoyable for those interested in understanding the relatively new world order in which China and the US dominate, particularly in emphasising the centrality of good diplomacy and effective international institution (two things which Trump made every effort to dismantle during his presidency).
Very enjoyable for those interested in understanding the relatively new world order in which China and the US dominate, particularly in emphasising the centrality of good diplomacy and effective international institution (two things which Trump made every effort to dismantle during his presidency).
February 19, 2022
This was an outstanding book.
One of the best books on international relations and foreign policy between China and North America.
I particularly found the parts on economics interesting.
I learned a lot about some bearishness and trade relations.
Fascinating read.
4.9/5
One of the best books on international relations and foreign policy between China and North America.
I particularly found the parts on economics interesting.
I learned a lot about some bearishness and trade relations.
Fascinating read.
4.9/5
January 1, 2020
Comprehensive history of modern US-China trade relations, including China's efforts to join the WTO, concern over currency manipulation and the US response, industrial policy, IP theft, etc.
January 6, 2020
Really well written, informative, but not dry at all! Great info in here and I definitely have a much better grasp of the history of China and the US’ trade relationship.
January 31, 2020
Fascinating insight into the real drivers underlying the China / US trade war.
June 9, 2020
Authoritative and insightful.
September 1, 2020
A detailed explanation from the time China joined the WTC to current day and its effects on global trade.
December 21, 2020
Described the economic rise of China and its current conflicts with the United States that could lead to future problems with a separated internet where countries will have to choose between two systems. Bottom line, China is here to stay so we'd better get used to it and play nice.
Displaying 1 - 16 of 16 reviews