Khilola’s Review of Dealing with China

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Henry Paulson (2015), An Insider Unmasks the New Economic Superpower

Review by Khilola B Zakhidova, 13 August 2016

Many policy students would have heard or read about Henry M. Paulson as U.S. Treasury Secretary who served under George W. Bush. Paulson was among the key policymakers who orchestrated the rescue of Bear Stearns, and the bailouts of Fannie and Freddie Mac, AIG, Citi and other troubled financial institutions in the US.

Yet, prior to his tenure as U.S. Treasury Secretary, Paulson held multiple senior leadership roles at Goldman Sachs, most recently as Chief Executive Officer. What is interesting about his time at Goldman, among other things, are the business and political connections he developed in China. Paulson’s book, “Dealing with China: An Insider Unmasks the New Economic Superpower” is a recollection of his on the ground experiences of doing business in China, particularly the political relationships he has had to cultivate in order for Goldman’s investment banking business to succeed.

The book is divided into three sections:

  1. Banking on Reform: covering Paulson’s deal making activities in China. For instance, he details how Goldman Sachs played a key role in “opening China for business” in the early 1990s and the role he and his Chinese contacts played in taking multiple State Owned Enterprises public through IPOs on Asian, European and American stock exchanges.
  2. Breaking New Ground: covering the time when he was U.S. Treasury Secretary under George W. Bush. The section covers Paulson’s efforts to facilitate a more constructive bilateral dialogue between the U.S. and China, and reflects on the policy constraints which his Chinese counterparts faced when launching reforms in the country’s financial sector. A particularly interesting chapter in this section is Chapter 14 – Global Reckoning, which depicts the Chinese policymakers’ reactions to the 2008 financial crisis.
  3. Building Bridges: highlighting the work he does at the Paulson Institute, a business and policy oriented think tank. This section is more “reflective” and full of “how-to” policy advice for business and policy leaders who deal with China on a regular basis.

In addition to policy analysis and the chronology of China’s financial sector reforms, Paulson’s book is also full of observations and biographical details about key Chinese government officials and China’s business elite. Referring to Jiang Zemin and Xi Jinping as “old friends” Paulson discusses how these individuals have been instrumental for his success while at Goldman, but also how his relationship with them has helped advance more constructive bilateral policy discussions while he was serving in President George W. Bush’s administration.

Paulson’s central message in the book is that business and policymakers will have to get accustomed to face an ever rising China, and to succeed, one has to focus on practical, constructive cooperation as opposed to idealistic rhetoric about how China’s political and economic system is ought to function. He argues that due to the nature of their inter-dependent trade relations, the US has an imminent self-interest in China’s success. For other western states, China is also important, because, it will be impossible, to tackle global challenges such as climate change, financial stability, infrastructure development, food and nuclear security without working closely with the Chinese.

Page created by: Ian Clark, last modified 17 August 2016.

Image: Amazon, at, accessed 17 Augus 2016.