March 7 (Bloomberg) -- Shirley MacLaine features in an anecdote occasionally told about gullible foreigners in China.

During the Cultural Revolution, the actress visited Mao Zedong's communist dictatorship to make a documentary. There, she met a nuclear physicist who, banished to work on a farm, told her that growing tomatoes was as meaningful to him as splitting atoms.

Years later, MacLaine enthusiastically related this encounter to pragmatic Chinese leader Deng Xiaoping during a reception at the White House. ``He lied to you,'' Deng replied.

This tale crops up in a new book by James Mann, a former Beijing correspondent of the Los Angeles Times who uses it to illustrate the way skewed information warps the views foreigners have of China. The difference, these days, is that the Chinese aren't the only ones doing the skewing, he writes.

In ``The China Fantasy: How Our Leaders Explain Away Chinese Repression,'' Mann points an accusing finger at the most powerful people in U.S., Europe and Asia -- politicians, corporate executives, scholars and diplomats.

These decision makers and opinion formers offer what he terms the Soothing Scenario whenever critics attack China's one- party regime and grim human-rights record: No one should worry, they argue, because increasing trade and investment will do more than speed China's economic transformation; it will also bring dramatic political change.

That, Mann contends, isn't true. ``Day after day, American officials carry out policies based upon premises about China's future that are at best questionable and at worst downright false,'' he says in these crisply written and pugnacious essays.

Upheaval Scenario

Not all Western analysts and investors are bullish about China's transition to democracy. Some argue vehemently that China -- with its banking system ridden with bad loans, growing wealth gap, rampant corruption and peasant unrest -- is headed for economic and/or political collapse. Mann calls this the Upheaval Scenario, and he doesn't hold with it, either.

He instead offers a third scenario, in which China's Leninist political system will remain unreformed even as its economy continues to liberalize and integrate with the world.

That, he suggests, could have far-reaching implications. Apart from dashing the aspirations of 1.3 billion Chinese, an undemocratic regime would become increasingly unstable, given that there's no mechanism for resolving disputes within the leadership -- a problem that has sparked crises in the past.

`Pick a Dictator'

An undemocratic China would also continue to undermine democratic values around the world. ``Pick a dictator anywhere on the globe, and you'll likely find these days that the Chinese regime is supporting him,'' Mann writes.

It's hard to disagree with that when you see Beijing courting countries like Sudan and Myanmar. Yet perhaps Mann overstates the case when he portrays next year's Olympic Games in Beijing as a key test of his third scenario.

He wonders whether the games will compare with Rome (1960), Tokyo (1964) and Seoul (1988) -- showcases for nations that opened their political systems. ``Or will the Beijing Olympics follow the much darker precedent of the Berlin Olympics of 1936, an ominous demonstration not merely of national recovery, but of an ugly new era of assertiveness and intolerance?'' he asks.

Mann knows China. He has written two volumes on the subject, including his 1989 ``Beijing Jeep,'' one of the best China business books of its day. He was the Los Angeles Times Beijing correspondent from 1984-87 and more recently covered U.S. policy on China from Washington.

Still, this book could do with more balance. For instance, Mann omits to mention how authoritarian China has pulled off the unprecedented trick of lifting 300-plus million people out of poverty since 1980, according to United Nations figures. Nor does he offer much advice to China investors. That may not be the purpose of this book, yet it's something readers of ``Beijing Jeep'' will want.

``The China Fantasy'' is a thin volume -- just 144 pages. That's about right for those 12- to 13-hour flights to Beijing from New York or Europe. Overall, it's worth the read.

The book is from Viking ($19.95).

(William Mellor is a writer for Bloomberg News. The opinions expressed are his own.)

To contact the writer of this review: William Mellor in Beijing at wmellor@bloomberg.net.

Last Updated: March 6, 2007 19:02 EST