In this book Will Hutton contends that China, rather than continuing as the export juggernaut, could soon derail much of the world economy because of a host of internal problems. It calls on the advanced democracies to help ensure that Middle Kingdom collapse does not occur.

The author, head of an independent business think tank in Britain, deserves to be taken seriously because he has studied his subject carefully and attempts always to be fair-minded. He also seeks to refocus the current debate with China's government towards principled international collaboration on vital issues such as climate change and world peace in places like Sudan.

Hutton's central argument is that the 21st century could belong to China—just as the previous two did to the United States and Britain respectively—but only if it embraces economic and political pluralism, including representative government, meaningful private ownership of land, independent courts and the rule of law, and the basic freedoms of any well-functioning civilization.

Interestingly, Hutton is highly critical of the U.S. and U.K., pointing at contemporary practices in each, such as actively undermining international law and multinational governance in their pre-emptive war with Iraq. Growing income inequality, the erosion of the public interest, media that increasingly fail to speak truth to power, companies more interested in short term profits than in customers or employees—these and other flaws in both nations illustrate the need for those who would persuade the next generation of Chinese leaders to choose pluralism to "walk their talk" more persuasively .

Hutton terms the system in China today "Leninist Corporatism," Leninist because of the primacy it affords the Communist party and corporatist because it does not foster economic diversity. The model is unsustainable because, for example, many Shanghai residents enjoy almost developed world living standards, whereas roughly half the overall population, including migrant workers and farmers, lives in abject poverty. Inequality nationally exceeds that of both the U.S. and Britain.

Approximately twenty-four million new jobs, moreover, are needed yearly for graduating students and the millions leaving rural China, but employment is growing much too slowly. Protests and strikes are increasing rapidly, especially among those whose land is seized with token compensation. Social disharmony and corruption are everywhere.

China's explosive export growth over three decades, observes Hutton, was driven by foreign businesses; the country itself developed neither a viable concept of the company nor an institutional framework to support them. The author concludes that most government-owned businesses across the country still have political rather than business priorities; the often short-lived small companies tend to be built around families or to depend on links with corrupt officials.

The present reality across China is mostly the result of really bad governance since 1949 and earlier. Mao's indifference to human beings and crime cost an estimated seventy million lives as direct or indirect consequences of policies such as his Great Leap Forward and Cultural Revolution. His successor, Deng Xiaoping, adopted more practical economic policies, but insisted on retaining political control, even closing the "Democracy wall" and ordering the brutal crackdown at Tiananmen Square a decade later.

During the 25 years after Deng took the leadership, however, investment astonishingly reached yearly as much as 40 percent of China's GDP, which the government directed mostly to state-owned businesses and infrastructure. The population saved at this rate in part because they could no longer rely on one child for support in old age and because social and medical services were almost continuously being rolled back by their "people's government."

The legal system, with a party committee supervising each rung of the court hierarchy from top to bottom, illustrates well the need for wholesale institutional reform. More than half of the judges are retired military, who are pleased to help the party to maintain political hegemony. The same pattern prevails in the media, including the vast sums the government has spent on screening the Internet. The Party is simultaneously the executive, legislative and judicial arms of the Leviathan, but modernization, like everywhere else, is possible only through democratization.

Approximately two thirds of the world's countries are now democratic in a broad sense and China's one party authoritarian state leaves it ever more out of synch with its trading partners. A fifth generation of leaders is supposed to begin to succeed President Hu and his team, who have resisted reform of virtually any kind, at the party congress in the fall of this year. We in the democracies, concludes Hutton, should encourage them not to retreat towards economic isolation or to freeze reform.

David Kilgour's latest book, Uneasy Neighbours, co-authored with former U.S. diplomat David Jones on Canadian-American differences will be published this fall by John Wiley and Sons. He was Canada's Secretary of State (Asia-Pacific) between 2002 and 2003.