China’s unprecedented level of growth over the past three decades, combined with a financial crisis in the West, have led many to question whether free-market capitalism is the better system for generating sustainable economic growth. Not only have some of China’s political leaders already declared victory, but many Western observers have begun to question whether the Chinese may not have discovered a magic formula for combining free markets with state control.

Are the Chinese breaking the rules of capitalism, or are they re-writing them?

G.E. Anderson’s in-depth look at industrial development in China’s auto industry reveals not only how China surpassed the U.S. to become the world’s largest market for autos, but also political principles that have shaped China’s approach to industrial planning in general.

The picture that emerges is of a central government certain of what it wants, but willing to break its own rules to achieve higher level goals. It also reveals the inherent weaknesses in China’s state-centric system that may prevent it from becoming the innovator and industrial power it aspires to become.

Brief Table of Contents

Author: G.E. Anderson, Ph.D.

Author and consultant, G.E. Anderson is a specialist in finance and Chinese political economy who has been either living in or frequently traveling to China for nearly two decades. Through his consulting practice, Pacific Rim Advisors, he provides advice in political risk mitigation, business-government relations and business strategy to firms ranging from Silicon Valley startups to Fortune 500 multinationals with operations in East Asia.

Earlier in his career he held various positions in finance from commercial lending analyst to CFO, more recently serving as Finance Director for Charles Schwab’s Tokyo-based joint venture. He also taught at university in Chengdu, Sichuan, PRC.

He holds a B.S. in Finance from Louisiana Tech, an M.B.A. from Golden Gate University, an M.A. in Asia-Pacific Studies from the University of San Francisco, and a Ph.D. in political science from the University of California, Los Angeles (UCLA).

Anderson’s writing has appeared in the Wall Street Journal, HSBC’s Week In China, Forbes China Tracker, and his blog, ChinaBizGov.

Greg Anderson describes his networking and research methods in China. Video courtesy of UCLA Center for Chinese Studies, May 2010.

Available PDF Downloads

July 29, 2012 – Designated Drivers was reviewed by William Wadsworth in the South China Morning Post:

“Anderson’s excellent book reminds automotive investors to look in their rear-view mirrors for the sector’s nebulous political realities as the economy slows on the mainland.”.

May 5, 2012 – Designated Drivers quoted extensively in The Economist print edition: “Chinese Carmakers: Still in Second Gear.”

April 26, 2012 – Author Greg Anderson appeared as a guest on Kaiser Kuo and Jeremy Goldkorn’s Sinica Podcast, recorded in Beijing: Sinica: Chinese Industrial Policy and the Automotive Market.

April 24, 2012 – Designated Drivers mentioned on The Economist’s “Schumpeter” blog: “China’s Motor Industry: Stepping on the Gas.”

Book Jacket Reviews:

Refreshingly unbound by conventional assumptions about weak corporate governance in a state-dominated economy, and unconstrained by ponderous academic jargon, Greg Anderson uses his personal experience as a former financial executive to inform his analysis of the world’s fastest-growing automobile industry. In the course of his investigation, he discovers that the apparent success of Chinas SOEs is not about corporate governance, as he first suspected; rather, it’s about industry structure.  It’s about how central and local governments, in uneasy partnership with industry players both state-owned and private, have acted to create the complex, dynamic, rapidly-expanding industry we see today. This is a first-rate book on an important subject.

Richard Baum
Distinguished Professor Emeritus of Political Science, UCLA

CEOs, CFOs, and company boards will particularly like Designated Drivers because it gives real insights into how the Chinese government formulates industrial policy. This is what makes it special; it gives an inside-out view from the Chinese government perspective. If western companies had this kind of information before going to China, they would literally save millions!

Paul Denlinger
China startup guy and publisher, chinavortex.com

In Designated Drivers Greg Anderson manages to make sense of the complexity and contradictions of the Chinese automobile industry. Anderson is the first to capture the torturous three-way relationship among foreign multi-nationals, China’s increasingly nationalistic industrial planners, and the ambitious and (sort of) independent Chinese car-makers. Anderson is an excellent story-teller, yet has his feet firmly planted on a solid analytic ground. Highly recommended as an absorbing tale that provides real insight into the latest Chinese industrial heavyweights.

Barry Naughton
Professor of Chinese Economy and Sokwanlok Chair of Chinese International Affairs, University of California, San Diego

With Designated Drivers, G.E. Anderson provides an indispensable roadmap to the world’s most important automotive market.  Anderson gives a dramatic account of the growth of China’s auto industry and clearly lays out the key policies, institutions, and firms that have shaped this trajectory.  In doing so, he gives important insight not only into the automotive sector, but also China’s development path more generally.

Eric Thun
Saïd Business School, University of Oxford; Author, Changing Lanes in China.

More than a thorough accounting of China’s automotive ambitions, Designated Drivers is a primer on the quintessential challenge China presents to the West across every sector:  understanding the logic and forces at play in China’s drive for national wealth and security. In tracking the motives and behavior of regulators and planners, locally and centrally controlled enterprises, banks, privately owned companies and of course, the foreign companies doing business in China, Anderson’s book establishes the archetype for understanding Chinese industrial policy and how it affects all of us.

Janet Carmosky
CEO, The China Business Network

China has become the center stage in the battle for dominance of the 21st-century global auto industry, and Greg Anderson distinguishes himself by providing a practical guide for navigating its complex structure.  This book is essential reading for multi-national companies seeking to compete in the largest automotive market in the world.

Bill Russo
President and CEO, Synergistics Ltd.

China routinely launches new satellites into space. But the country has yet to develop a world-class car to call its own. This frustrates leaders in Beijing to no end. They want China to be the car factory for the world, yet cannot work around their own deeply contradictory policies. Greg Anderson expertly presents these complications in this highly compelling and finely researched book. If your business is China and autos, Designated Drivers is an indispensable guide to how the car business is shaped in the People’s Republic of China.

Michael Dunne
President, Dunne & Company Limited; Author, American Wheels, Chinese Roads

A problem with many books about China’s auto industry is that by the time they hit the shelves they are outdated in many respects. Greg Anderson’s book avoids this trap by explaining the framework in which China makes decisions regarding its auto industry.  This book will be required reading for years to come for anyone trying to understand why China’s government and its automakers behave as they do, and the development course the industry takes.

And while his subtitle is “How China Plans to Dominate the Global Auto Industry,” I think this book provides evidence of why China may not, in fact, achieve the world dominance many seem to believe is a fait accompli.

Alysha Webb
Former China Bureau Chief, Automotive News; Consultant and publisher of China-EV.org