Mr. Paulson is hopeful that the book, an eye-opening account that praises China while acknowledging the challenges, will be published there and that the government won’t seek to press him to remove his critique. “I have just begun discussions with a Chinese publisher,” he said. “I will only authorize publication if it is published completely and accurately. I am unwavering on that.”

Mark Zuckerberg, the founder of Facebook, just added “Dealing With China” to his book club, an interesting choice given that Facebook is blocked in China.

In the book, Mr. Paulson says he is particularly worried about China’s opaque trust companies, which have nearly $2 trillion and make up a big part of the country’s shadow banking system. These companies sell high-yield investments known as wealth management products and use the money to make loans to often-risky borrowers.

Mr. Paulson is not the first person to sound the alarm. A Credit Suisse analyst called the trust companies a ticking “time bomb.”

Perhaps most unnerving is a “too big to fail” mind-set among the financial industry’s senior leaders that sounds all too familiar. In their view, if a trust company were to fail, the government would come to the rescue, leading all of them to take even greater risks.

“One of the biggest problems in China’s banking system is the moral hazard created by the expectation that the government will always step in to prop up a failed institution and assume losses,” Mr. Paulson wrote. “If the government is to discourage bad behavior on the part of market participants counting on a government bailout, it is crucial to decide clearly and decisively which institutions are systemically important and need to be supported and which creditors and investors should share in the losses.”

Of course, the tricky part for China’s government will be picking the winners and losers. As was his approach in the United States, Mr. Paulson advocates saving certain institutions, calling it “an unpleasant necessity” and suggesting that inside China, unlike the United States, there is “the political will to bail out failing financial institutions.”