China is huge population-wise, but crammed into a country the size of the United States (continental). It is hugely fragmented. Six major dialects of language which are more different from one another than French and English (so why do we still call them "dialects"?). You've got tropics and sub-artic. And you don't have an integrated nationwide logistics network, so tastes are incredibly local.ARTICLE: "Retail's One-China Problem: Immense, Fragmented Market Poses Problems for Wal-Mart, Other Chains Seeking to Expand," by Mei Fong, Kate Linebaught and Gordon Fairclough, Wall Street Journal, 28 October 2006, p. B1.
OP-ED: "Chinese checks: A protectionist backlash in Beijing," by Harry Harding, Wall Street Journal, 24 October 2006, p. A18.
POLITICS & ECONOMICS: "EU to Get Tougher on China Trade: Strategy Shift Aims to Quell Protectionist Sentiment, Strengthen Hand at Table," by John W. Miller, Wall Street Journal, 24 October 2006, p. A8.
WEEK IN REVIEW: "The Chinese Go After Corruption, Corruptly," by Jim Yardley, New York Times, 22 October 2006, p. WK3.
No wonder you need to bribe everybody and their brother to get anything done in China.
Also, no surprise that as China opens up to globalization, the protectionist backlash there will be both local and national, with Beijing incredibly desirous of making sure it's Chinese companies that ultimately unify the nation economically the way the party unified it politically.
But smart Harry Hardin puts it right: "China's economic nationalism is a marginal adjustment to, rather than a fundamental repudiation of, Beijing's broader embrace of globalization."
Simply put, the force overcomes the friction here. Rarely pretty, but good enough to deepen its status in the Core.
Naturally, the Old Core will constantly push China on this point, and the EU's role here is indicative of the sort of "regulatory superpower" role I see Europe assuming in coming years.
Internally, we can expect the CCP to continue to treat anti-corruption campaigns as more political sport than serious economic reform. The phrase, "some accounts [of corruption] seem out of Dickens" is very telling. That's exactly where China's political system stands in relation to its economic development, which is why "Deadwood" is the best American media presentation of capitalism in China today.
What will drive serious Chinese government reform will be a serious economic shock. When that shock inevitably comes, the question will be, Does the CCP strike outward politically in order to deflect its own guilt or does it move the pile forward internally?
For us, the question will already be decided by then--as in, Did we do enough to deny China that enemy image that we forced that fear inward toward productive change?
Either way, the tipping point is coming. China's slide on corruption cannot continue indefinitely. Eventually, the cost will simply outweigh the pain.