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China is an alluring market for multinational companies, but those based in the United States have suffered from the foreign-policy demands that their government has imposed on relations with this emerging giant. The author, a former undersecretary of commerce in the Clinton administration and now dean of the Yale School of Management, reviews two new books that help point the way to a consistent foreign policy in the interests of both government and business. Big Dragon, by Daniel Burstein and Arne de Keijzer, takes a broad look at China and persuasively argues for a cooperative foreign policy that respects the country's power without treating it as an adversary. Greg Mastel's Rise of the Chinese Economy, which focuses on trade issues, delivers an important warning that the developed countries need China to reduce government intervention in its economy before they can safely integrate it into the World Trade Organization. Such change, Mastel says, would require a total restructuring of China's totalitarian political system; he urges the West to push China forward now, using WTO admittance as a lever. Whether we push China forward or not, Garten adds, the sheer size of the country combined with its serious internal strains means that it is likely to disrupt the world economy in a number of ways, and he advises companies on ways to minimize their risk. He recommends that companies maintain a wide portfolio of investments in China, appoint sophisticated government-relations managers, and invest heavily in local communities and projects of broad interest to the country.

Throughout the 1990s, financial investors, corporate strategists, and political leaders in the United States, Western Europe, and Japan have been intensifying their focus on emerging markets. And, indeed, emerging markets are the new frontier. But like all frontiers, warns Jeffrey E. Garten, dean of the Yale School of Management, such markets present a mix of opportunity and risk. The question now is whether businesses and governments in the industrialized world are sober enough about the problems that lie ahead. There is considerable evidence to show that the tides of capitalism that rose so powerfully after the collapse of the former Soviet Union are now poised to recede. What can business and government do to improve the economic environment abroad?