Review of Money Machine: A Trailblazing American Venture in China by Shan Weijian
Shan Weijian’s life has been one that constantly defies expectation and tradition.
Much of this is evidenced by his legendary transformation from a barefoot doctor in Inner Mongolia to a leading global financier presiding over one of the largest alternative asset investment firms in Asia, with many public commentaries highlighting his exceptional accolades and legacy. Such praise – whilst valid – glosses over an equally important fact: that Shan’s story also epitomises the very best of China’s reform and opening-up efforts, first kick-started and spearheaded by then-Chinese leader Deng Xiaoping in the 1980s. Engagement with the West has brought to China structural transformations in many dimensions of the country, including its financial sector.
In many ways, Shan typifies the grit, audacity, and tenacity that characterised the first generation of Chinese migrants to study in the West since the tumultuous days of the Cultural Revolution. Having first self-taught himself English through rebelling against the prohibition of foreign radio, Shan graduated with a PhD in Economics from UC Berkeley, then proceeded to a six-year teaching stint at the Wharton School at University of Pennsylvania. In Money Machine, Shan, the first China Tsar for JP Morgan and a Co-Managing Partner of Newbridge Capital, recounts his experience in leading an unprecedented takeover and restructuring by a foreign private equity firm of a Chinese national bank, the Shenzhen Development Bank (SDB).
Money Machine is divided into three sections – tracking a broadly chronological sequence of events from the initial visit by a veteran American lawyer to Shan’s Hong Kong office to the conclusion of talks between Ping An Insurance Group (PAIG) and Newbridge over the sale of the salvaged SDB. The first section delves into the elaborate negotiations and at-times mundane, byzantine tussles that took place for Newbridge to successfully acquire the seriously underperforming state-controlled bank. The second section outlines and unpacks the substantial reforms – including personnel reshuffles and appointments, debt restructuring (via a classic bad bank-good bank split), and organisational governance shake-up – by which the newly installed leadership turned things around at the ailing bank. The final section details the complex sequences of exchanges, first-personal relations and collaboration, and intuition-guided calculations in the run-up to Newbridge’s exit from a revitalised SDB.
As someone coming from a political science background, I find Shan’s read valuable in its offering of rare, unfiltered glimpses into the inner workings of the multi-tiered Chinese bureaucracy – which came across as meanderingly conflictual at places, yet ruthlessly efficient at others. In staking out the unprecedented acquisition of a Chinese bank by a non-Chinese entity, Shan had to deal with a plethora of enigmatic, caustic, and obstinate actors – both within and outside the sprawling Chinese bureaucracy. The description of the power struggles within the Shenzhen municipal government in the first part of the book was an intriguing revelation of how economic and financial policymaking in China often involved calculations fundamentally extraneous to economic rationale and productivity. Indeed, the backroom dealings and local factionalist tussles within Guangdong Province and the Shenzhen municipal government turned out to be surprisingly similar to what can oft be observed in Western politics, where the same kind of closed-room bargaining and juggling across competing demands and personalistic ties can be found.
In contemporary discourses about Chinese politics and governance, there is a frequent temptation to portray it through lenses of mystique that frame Chinese politicians as operating exclusively according to relations of ideological loyalty, personal familiarity, and nepotistic ties at large. Yet such accounts overlook two core takeaways Shan’s writing spurs in the reader – the first being that what underpins clashing policy decisions and judgments could simply be different levels of openness to risk and uncertainty; the second, that we should see China in the late 1990s through to late 2000s as adjusting to a new paradigm of financial policymaking, one that was desperately trying to catch up with international best practices and thus was defined by an attempt to overcome structural dredge through exposure to international capital and investors such as Shan’s Newbridge.
Through a mixture of vivid dialogue, breakdown of incentives, negotiating positions and options, and broader reflections over the structural forces molding the Chinese political system, Shan has painted a comprehensive picture of how he overcame the many obstacles confronting him and his team. Such exposition in turn raises many questions. Disagreements between Party Secretary and Mayor of a sub-provincial city were rarely openly aired – let alone in front of foreign financial actors. But why did this occur? Was the force driving a wedge here factionalism, personalistic politics, or merely different approaches to policymaking? For answers – at least partial ones – one must and ought to look to Shan’s captivating prose. For one, I could not help but wonder if the erstwhile-President of the SDB was driven by ulterior and self-interested motives or a twisted sense of duty in courting a rivalry with Newbridge. Indeed, what could possibly have explained his many abrupt about-faces?
Nevertheless, Shan commendably weaves into his exposition the fascinating transformations that China witnessed in its contemporary history. He interpolates his recollections with close-up snapshots and profound insights into how leaders at the very top, including former General Secretary Jiang Zemin and Premiers Zhu Rongji and Wen Jiabao, had tirelessly steered and embraced the continued modernisation of the country’s fledgling yet partially ossified financial sector. These leaders’ vision for a more internationally competitive, transparent, and sustainably governed Chinese financial sector was in turn channeled through the resolve and acumen of astute upper-middle regulators helming organs such as the People’s Bank of China (PBOC) and the China Banking Regulatory Commission (CBRC). Despite the outspoken nature of many of these leading pioneers in China’s bona fide age of ‘animal spirits’, they have often remained enshrouded in mystique. In this tell-all book, Shan offers his readers a no-frills, clinical deep-dive into the beliefs and views which have shaped these influential figures.
The ethos of pragmatism driving these generations of policymakers harks back to an era when financial and economic decision-making in China was palpably different. The events detailed in the book took place, after all, at a time when senior leaders in China had sought to render the country more compatible, and thus connected, with international financial best practices at large. The era of reform and opening-up was certainly one when competing ideas and visions for the country were debated freely amongst an expanding circle of business- and trade-oriented technocrats, entrepreneurs, and foreign investors.
Shan’s wondrous ability to tell stories is perhaps epitomised by his transformation of what would have been a pretty dry segment on share reforms (in the third section), into a compelling page-turner showcasing the very best of his negotiation skills. Additionally, by situating the ebbs and flows of finance within the broader sociopolitical context – citing events such as SARS in 2003, the Global Financial Crisis in 2008, and even Barack Obama’s inauguration ceremony in 2009! – Shan ensures that there is something in the book for every kind of reader.
I had the pleasure of reviewing Shan’s previous work, Money Games, which offers an equally riveting account of his adventures with the Korea First Bank. What has continued to impress me in this read is not so much Shan’s impeccable knowledge of the intricate ins-and-outs of financial dealmaking. Rather, it is his hyper-incisive perceptiveness of human nature: of what makes some people tick, what makes relationships stick, and what makes corporations click. The veteran banker parts with some wise words – Carpe diem, as he contemplates his life ethos and future towards the end of the book.
His search for proprietorship and a sense of directional control eventually spurred Shan’s interest in starting and managing a leading enterprise of his own. Through a joint venture between Shan and seasoned finance veteran Chris Gradel, he thus formed and came to helm the world-renowned Pacific Alliance Group (PAG). No doubt many amongst us are hoping for an account of the origins and rise of PAG, where Shan currently works as Co-Founder and CEO. A fourth book to come?
Until then, I would thoroughly recommend that you get a copy of Money Machine – it is a powerful, meticulous tour de force by a finance titan with unrivalled insights into modern China.