Last week I had the pleasure of spending two and a half hours discussing contemporary China with twenty senior US and international military medical officers (none from China, alas) at Fort Sam Houston in San Antonio, TX. This was one small part of a program the Army Medical Command runs several times a year.

I had a long presentation prepared, but the group was lively and engaged and I spent most of the time responding to their (thoughtful) questions. I found as I went along that I prefaced many of my responses (on human rights, China’s policy toward North Korea, the effect of China’s huge foreign exchange reserves, development of the Chinese military, etc.) with the phrase, “Well, it is complicated…”. Soon this became a running joke with the participants and as soon as someone asked a question the entire group would chant the phrase in unison before I began my response.

Even a casual reader will note that many of my posts in this blog have tried to convey the complexity of China and of issues in our bilateral relationship. And every now and then something catches my eye that really brings this complexity home to me:

Most China watchers will by now have read accounts of the edict issued by county-level officials in Hubei Province requiring local civil servants (collectively I guess) to smoke 230,000 packs of locally made cigarettes over the course of the year (Reuters piece on this: The ostensible goal was to support the local cigarette company (too many local folks preferred the cigarettes from a neighboring province), increase its sales, and thus raise the county’s tax revenue. After a large local uproar and national and international press attention the edict was rescinded.

To an American this is pretty silly stuff. One of those humorous little pieces that newspapers or tv news shows throw in to lighten the day’s stories. But to me, this episode should be required study for all US diplomats and businesspeople contemplating work in China. Think for a minute what this episode tells us about the challenges of governing and doing business in China:

1. Motivation: what motivates local officials in China? Health of the local citizenry? Nope, increased tax revenue/increased economic growth. The system is sending clear signals that local officials are responding to. (Note: the same could be said with environmental protection vs. economic growth. Efforts have been made to factor “green GDP” into the evaluation of local officials, but I’m not sure that this has yet shown much impact.)

2. Education level/worldview: The fact that these officials could be so blind to the negative health and public relations aspects of this edict says a lot. I suspect their education level is low, they have little experience outside their province, and their view of the world does not extend much beyond the county borders in fact. We need tax revenue; cigarette factory is major employer; let’s set a quota for smoking local cigarettes. Think of the challenge of running a country with enormous numbers of local officials with such limited vision.

3. Government/industry relationship: A major problem in China is the “too close” relationship between government and companies, esp. at the local level. The impulse to favor local companies over those from “outside” is strong and well documented in the Chinese press, which often notes examples of “local protectionism”. It can be a desire for tax revenue and economic growth, personal relationships between company managers and government officials, or corruption. But how do you build an open and competitive market under such circumstances? And imagine the challenges if you are a foreign company going up against a local (or national) champion!

4. Level of government involvement: Today the Chinese government has much less control over personal behavior than in the past, but this episode underscores the extent to which there persists a much broader view of the scope of government involvement in personal, economic, and political matters than in the US. I have no doubt that Central government officials were appalled and embarrassed by this incident. And yet, on issues such as the development of China’s IT sector, they readily embrace a broad involvement by the government in nurturing and protecting chosen Chinese companies. Very different issues, but there is an underlying consistency of perspective re the role of government. I have also commented on this in the context of the requirement that Chinese films must get government approval before being submitted to international film festivals. We’ve had too little government oversight in the US in recent years in the financial sector, but China has had way too much across the board for several decades.

5. Role of media: this is a positive. Years ago this incident would never have come to light. At best it might have found its way into one of the internal reports prepared for central government officials to monitor developments at the local level. The report might or might not have resulted in action. However, this story was splashed across domestic Chinese news (with tv news anchors criticizing the local officials on the air), the internet, and foreign media. Within days of exposure of the incident, the edict was rescinded. This is a huge change for governance in China. It highlights the extent to which media controls have been relaxed somewhat and the positive role the media can play in improving the work of government when given the chance.

Explore posts in the same categories: China, Economy, Environment, Internet/Media

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