Can `Phone Calls` application permission allow developer to read my contact book? I wonder if other people can read my contact list when the app permission(s) has Phone Calls permision like below snapshot.
Not quite: this permission allows the app to read the IMEI of your phone, your phone number, your network operator, and to know whether you are making a call. It does also let the holder of the permission know the number at the other end of the call, but not any of the contact data associated with that number. These uses are described in the developer documentation for TelephonyManager.

A good use for this might be to disable some ongoing process while you're in a call, or show an indicator, or to help you report your device as stolen. A bad use for this would be for invasive ads to track your identity across different apps, in order to push targeted advertising at you; or to record your phone number and those you call, to make nuisance calls to you afterwards, maybe claiming to be from your network operator.

Reading your contacts is controlled by the permission called read your contacts.