Is China Buying the World? by Peter Nolan Polity Press This excellent book aims to demolish the idea - widely believed in the West - that, with its record level of foreign exchange reserves, China is 'buying the world'. The author, Peter Nolan, is professor of Chinese Development at Cambridge University. He 'knows more about Chinese companies and their international competition than anyone else on earth, including in China', says the Financial Times on the book's jacket. A statement that is flattering, if hard to verify. 'China has not bought the world and shows little sign of doing so in the near future,' Nolan writes. 'Their presence in high-income countries is negligible. This is a remarkable situation for a country that is the world's largest exporter and its second largest economy and manufacturer. In other words, 'we' are inside 'them' but 'they' are not inside 'us'.' His argument is that while China has been extraordinarily open to investment by multinational firms from the west, it has not been reciprocal. 'In the high technology and branded goods sector for the middle classes of developing countries and in the supply chain that surrounds these firms, large Chinese companies have made negligible inroads into the dominant position built up over many decades and now held in developing countries by multinationals from high-income countries,' he writes. These multinationals have billions of dollars in sales revenue every year in China and source billions more in goods produced there for export. From 2007 to 2009, foreign firms accounted for 28 per cent of China's industrial added-value, 55 per cent of exports, and 90 per cent of exports of hi-tech products. Banking is a good example of this imbalance. While China has 10 commercial banks in the FT 500, more than the US, they played no role at all in mergers and acquisitions in the international banking industry in 2008-2009. 'Their international operations are very limited and they have a minimal business in providing financial services for global customers outside China. The share of non-Chinese employees is extremely small.' On the other hand, the Chinese banks are, in their IT, dependent on foreign companies - IBM has a 100 per cent share of their mainframe computers, IBM and HP provide more than 90 per cent of their servers and NCR, Diebold and Wincor Nixdorf provide most of their ATMs. Chinese firms have had limited success in buying major foreign brands - only Volvo and the PC business of IBM - and many failures, such as Unocal and Marconi in 2005, 3Com in 2007-2008, and a major share in Rio Tinto in 2009. 'Western governments view China's national champion firms in a fundamentally different way from that in which they view companies from other Western countries with substantial state ownership.' Nolan correctly argues that the misunderstanding that China is buying the world damages international relations, especially at a time of deep crisis in the global political economy. His book is an important contribution to understanding this issue because China's global economic power has become an international issue. Everyone needs to be clear of what they are talking about, especially politicians and business leaders in the West who spin the issue to their advantage.