Financial Markets and Foreign Direct Investment in Greater China By Hung-gay Fung and Kevin Zhang Published by M.E. Sharpe For the past two decades, China has witnessed dramatic changes in financial reforms and inflows of foreign direct investment (FDI). This book's publishers invited various writers, who know the Chinese market, to write on different aspects of the financial revolution that has taken place in this vast country since 1979. Co-editors Fung and Zhang say that the quality of the papers and the expertise of the authors should make the book a timely contribution to the understanding of the processes and prospects of China's financial reform and foreign investments. Chinese financial market reforms have shifted many economic activities from state control and have helped build a basis for a civil society, the co-editors say. Recent economic developments, inside and outside China, have made Chinese policymakers especially cautious about the potential for financial crisis to destabilise the national economy. As a result of financial reforms initiated by the late paramount leader Deng Xiaoping, who died in 1997, China has become one of the top recipients of FDI in the world. Financial market reforms have also enabled the mainland's state-owned enterprises and private firms to raise capital in domestic financial markets and offshore markets. The editors say the book has three goals: to provide for academic research in China's financial market reforms and the pattern of inward FDI; to provide policy guidance to the mainland's financial market reforms and for multinational shipping firms' activities, as well as investment guidance to foreign investors; and, lastly, the book could be used as a textbook in graduate training programmes at major universities in courses focusing on international finance. The first part of the book concentrates on the process of financial liberalisation in the mainland and the development of financial markets and banking reforms. The discussion of the critical aspects of financial liberalisation then leads to policy implications on corporate governance, Fung and Zhang say. Other chapters discuss the stability of the yuan in the post-Asian crisis period and argue that the central Government is able to, and will, defend the Chinese currency in the near future, but not for the long run. The cost for China to defend the yuan is not formidably high at present, but as the mainland implements an expansionary macro-economic policy, it will be economically unacceptable to peg the yuan to the United States dollar, argue the authors. A couple of chapters also tackle the development of the Shanghai and Shenzhen stock markets, and the integration of the A and B share markets.