What is Dealing with China about?

Dealing with China is Henry Paulson's account of thirty years of engagement with China's political and economic leadership, first as head of Goldman Sachs's Asia operations, then as the bank's CEO, and finally as US Treasury Secretary under President George W. Bush. The book is organized around Paulson's direct relationships with Chinese officials — Zhu Rongji, Wang Qishan, Jiang Zemin, Xi Jinping — and the specific transactions and negotiations he participated in or observed over that period. It is not a comprehensive history of US-China relations but a practitioner's report from someone who was in the room.

The core argument Paulson makes is that the transformation of China's economy since the 1990s was the most consequential economic event of his lifetime, and that the key to understanding it is understanding the Chinese state's relationship to economic policy. Unlike Western democracies where economic decisions emerge from distributed political processes, China's leadership could make large-scale strategic commitments and execute them rapidly. This was an advantage in building infrastructure and attracting foreign investment, and a source of fragility in sectors where market signals needed to override central planning.

The Goldman Sachs chapters cover Paulson's work bringing international capital into Chinese state enterprises, advising on the partial privatization of large banks, and navigating the particular combination of pragmatism and political constraint that characterized Chinese economic reformers of the 1990s and early 2000s. Paulson is frank that Wall Street's interest was commercial, and he is also persuasive that the opening of Chinese capital markets to international participation accelerated reforms that Chinese reformers themselves wanted.

The Treasury Secretary chapters, which cover the period through the 2008 financial crisis, are the most detailed account available of US-China economic diplomacy at senior level during that period. Paulson's Strategic Economic Dialogue with Wang Qishan is described from the inside. His analysis of why the financial crisis tested the bilateral relationship in ways previous crises had not is unusually candid. The book does not resolve the tensions it identifies — between engagement and competition, between short-term commercial interest and long-term strategic alignment — but it maps them with more precision than most accounts written from outside.