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Sol Sanders Archive
Friday, July 27, 2007

China in crisis: Export disaster, eco-mess threaten Party's economic gameplan

Perhaps it tells us something about contemporary America that food and medicine adulteration in products the Chinese use themselves and increasing sell the world should come to light because American pets suffered. It was no secret that the nominally Communist Chinese regime had for decades looked the other way when scandals involving Party members or government officials came to light concerning lapses in health and safety standards.

But the current continuous foreign – and even domestic — media reporting of poisoned products for pet food, adulterated tooth paste, deadly cough syrup, fish products containing cryogenics, defective pharmaceuticals, dumplings which may or may not have been stuffed with cardboard, etc., etc., are all part of a pattern of the virtually complete failure of Chinese regulatory agencies.

It is not as new story. When the 72-year-old Dr. Jiang Yanyong in 2003 exposed the outbreak of China's SARS, a deadly respiratory virus which could have turned into an international pandemic, he and his wife were arrested and the government attempted to continue to cover up the whole outbreak. –

Also In This Edition

A half million people suffered from the negligence of the responsible authorities and the greed of the underground "blood heads" organizing the sale of blood for plasma in the villages in eastern and southern Henan Province. This led directly to the eruption and spread of AIDS to whole villages. Again the authorities tried to hush it up.

Although the death toll in Chinese coal mines was officially put 661 in the first three months of this year, less than the official figures last year, the official State Administration for Coal Mine Safety Supervision reported a succession of “cover ups” of fatal accidents in March. China, with vast reserves and a desperate need for energy, accounts for around one-third of the world's coal output, but accounts for four-fifths of industry deaths — 50 times higher than in the United States, the world's second largest producer, but also even ten times higher per ton of coal than in India where accidents are also far too prevalent.

These are only a few examples of a failure of a rapidly growing economy to cope with the demands for health and safety required of any modernizing society. True, China’s rapid growth rates make it difficult to institute new safety and health requirements. An impoverished society is trying to catch up and environmental concerns, as one Chinese spokesman has said bluntly recently, will have to take lower priority to economic development.

But just as environmental concerns now threaten the water supply for some of China’s largest cities and industrial water resources may curtail that very development, the bad publicity for China’s exports has taken on economic consequences. The China brand is increasingly becoming suspect in foreign markets.

Toward the end of July, faced with potential boycotts of Chinese products abroad and a massive array of reports of inferior products, the government has set up a team of top officials to steer efforts at repairing the stained reputation of the country's food and products at home and abroad. The government gave no details of how the new agency would operate – especially important given the already existing proliferation of half a dozen regulatory agencies with conflicting jurisdictions.

The execution of the head of China’s food and drug regulatory agency for taking bribes to validate pharmaceuticals and the sentencing of a second official of the agency also to death was intended to tell the world Beijing means business. It also dramatized the acceptance by Beijing authorities that the problem has now become a critical politico-economic issue, perhaps at home, but certainly abroad..

The reason is clear: China’s economic development program is overwhelmingly dependent on its export-led product manufacturing and sale of intermediates and components overseas. The avalanche of reports of faulty manufacturing and adulteration threatens that whole economic program. A government media report in July claimed that 19.1 per cent of goods for domestic consumption checked in the first half of this year failed quality standards. Among smaller manufacturers, the failure rate was 27.1 percent. The statistics are probably not less bogus than other statistics that take on imaginative and creative aspects in the China environment.

But having virtually abandoned any ideological or national goals except economic growth – however unequal and limited to elite in the major port cities – the very raison d’etre of the regime is now jeopardized by this sudden explosion of revelations about the seriousness of the problem of inadequate standards and Party greed gone berserk.

Nor is it clear that despite Herculean efforts to remake Beijing, it would be able to provide a healthy environment for next year’s Olympic games. The regime has stake a great deal on the Games as an international accolade which crowns “a rising China’s” ambitions and progress. The Chinese capital suffers a perennial water shortage – the government has a massive canal underway to bring water from the south to the north across much of China and with many barriers. Its frequent dust storms — the loess blowing in from the increasing march of desertification now extending only a few miles west of the capital — leads to an almost permanent haze now worsened by the exhaust of a growing automobile traffic and unrestricted belching of fumes and particles from new industry..

It is far from certain, then, that the central government will be able to bring the whole chaotic mess under control because of the fissures opening in a one-party regime which is now functioning on pure opportunism.

Several factors lead to this speculation:

The Chinese Communist Party leaders appear to have lost control over local cadre, particularly in the rural areas. With no substantial investment in agriculture there are falling living standards in the countryside by all estimates of international organizations – and, indeed, by the Chinese economists themselves where they have been allowed to publish. Legitimate tax collection has given way to extortion by the local Party cadre. They have become the principal entrepreneurs as well in most instances since they have the only access to capital and the use of government fiat for appropriation of land and other resources. Increasingly they thumb their nose at the central government which is, nevertheless, given the nature of the state dependent on them for cohesion and order. Again, a situation pertains as the old saying about Chinese imperial governments, “The emperor’s writ stops at the village gate”.

In the major provinces and the larger cities, Party officials also blackmail the government with the proposition – which has validity – that unless they are given a free hand to pursue development, the government’s principal virtually only goal of rapid economic development will not be met. With the residue of a formerly failed centrally planned economy including giant moribund state enterprises, the country is dependent on these new relatively progressive enterprises for economic progress. Therefore, in instance after instance reported in the official media, when the government has intervened to impose higher standards of environmental controls or to curtail questionable infrastructure projects or to enforce intellectual property rights for foreign owners, Beijing has had to back down in the face of local Party “economic warlords”.

Mining is the perfect case study of central-government relations with local government in China," says Arthur Kroeber, editor of the China Economic Quarterly. "The clash is between the central government's desires and the local government's pressing economic needs, and in 99 cases out of 100, local government wins out."

So Beijing resorts to the kind of band-aid announcements of new regulatory devices that would make it appear that it takes the problems seriously and is solving it: it embargoes cargoes of food and raw materials from the U.S., damning them as inferior merchandise, in a tit-for-tat operation and to prove the problem is universal and no better in the West and Japan than in China. It issues public relations statement after statement that the whole problem is being addressed. But these moves are only propaganda which does not address fundamental problems.

It is not racist [nor “culturally intolerant” or any of those other PC charges] to point out that cleanliness has never had a very high priority in China’s incredibly rich and varied cultural history and inheritance. The Chinese Communists and their intellectual fellow travelers who came to power in 1949 recognized – as had earlier reformers –that the issue was one that had to be addressed if traditional Chinese custom was to be overcome. And so you had the incredible things such as the “no flies in China” campaign, or at least what was sold to starry-eyed foreign visitors as a new beginning for Chinese sanitary and health standards. But like so many of the projects of the Maoist era – not excluding the so-called “barefoot doctors” in rural areas – the reports of success were largely the imagination of the visitors and government propaganda than they concrete reforms. [The continued insistence that a health care infrastructure and other social emoluments under the Maoist regime had been allowed to lapse are observations of those who did not know the era and depend on official propaganda of that time.]

With a Party Congress looming on the horizon, President Hu Jintao and his fellow apparatchik Prime Minister When Jiabao are now exerting all their efforts to maintain their always precarious hold on power. The sacking of the Shanghai Party chairman in late July was one more evidence of the backroom games being played out among leaders in a Party which once had a grip on the country through terror and charismatic leadership but now is dissolving into irrelevance on every major issue, not excluding environmental concerns.


Sol W. Sanders, (solsanders@cox.net), is an Asian specialist with more than 25 years in the region, and a former correspondent for Business Week, U.S. News & World Report and United Press International. He writes weekly for World Tribune.com and East-Asia-Intel.com.


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