Rupert Murdoch decided to drop a book written by Lord Patten about his time as Hong Kong governor in case it risked his plans to expand into China, the Leveson Inquiry heard.
Lord Patten said the media mogul made a "commercial decision" to stop his publishing house, HarperCollins, publishing the memoir because he feared it would damage his relationship with the Chinese authorities.
He told the hearing: "Plainly, Mr Murdoch took the view that publishing a book which was critical of the Chinese leadership would not improve his chances, so he instructed HarperCollins to drop the book on the grounds that it was no good.
"Plainly, there was much evidence to suggest that that wasn't the view of the main editor at HarperCollins."
Lord Patten, who was governor of Hong Kong from 1992 to 1997 and became BBC Trust chairman last May, sold rights to his memoir to HarperCollins for a £50,000 advance.
He said his editor Stuart Proffitt was so pleased with the first six chapters of the book that he threw a party for him at the Savoy Hotel in London.
"At about this time, apparently, Mr Murdoch learned that HarperCollins were going to publish it, and this coincided with his always-doomed attempts to extend his empire into China," he said.
The inquiry heard that Mr Proffitt lost his job for refusing to agree that the book was not good enough, but eventually Lord Patten secured an apology and a £50,000 payout.
The memoir was published in America with a sticker on the front reading "The book that Rupert Murdoch refused to publish", adding tens of thousands to sales, the hearing was told.
Lord Patten noted: "It was a commercial decision, which rebounded to my financial advantage."
Despite the claim, he denied he had “ a vendetta” against Murdoch, saying Britain would have had fewer successful newspapers without the News Corp. Boss.
East and West: China, Power, and the Future of Asia received largely positive reviews upon it eventual release in 1998. The New York Times Book Review called it "fresh", "eloquent" and "unblinkered" while a leading peer-reviewed academic journal of international relations praised Patten’s "electric wit"
Perhaps unsurprisingly China’s state-run newspaper China Daily was less impressed, declaring Patten a “cold war warrior” and accusing him of hurting their feelings with “extremely provocative language”.