Its own worst enemy

PUBLISHED : Tuesday, 04 September, 2007, 12:00am
UPDATED : Tuesday, 04 September, 2007, 12:00am

'We have to have tougher standards on what they import into this country,' declared US presidential candidate Senator Hillary Rodham Clinton at a recent pre-election debate hosted by American trade unions. 'I do not want to eat bad food from China or have my children having toys that are going to get them sick. So let's be tougher on China going forward.' Those are tough words from the former first lady whose husband, Bill Clinton, reversed China-US relations in the years after the 1989 Tiananmen killings.

During his two terms as US president, relations swung back from their lowest to their highest points as China entered the World Trade Organisation. Beijing was embraced by the Group of Eight club of industrial leaders and won privileges such as hosting the 2008 Olympics. But now, do Senator Clinton's words indicate that the mainland is losing its flavour-of-the-month popularity with a US election looming?

Since the mid-1990s, foreign investment has effectively rebuilt mainland China. Today, nearly 70 per cent of mainland exports come from foreign-invested enterprises. By themselves, mainland enterprises - with their blinkered approach to quality and management - could not have penetrated foreign markets.

Foreign multinationals investing in production facilities can be expected to apply international standards on the mainland. But this country's chronic problem is that people at lower levels refuse to follow the rules: they cut corners, pocketing kickbacks or the difference between a substandard supply source and the one budgeted for. 'How can you expect us to care about foreigners' children or pets?' asked one mainlander. 'In China, everyone worships money, so who would bother investing in standards or even care about enforcing them?'

This is why it is impossible to use local management at virtually any level if international standards are to be followed. That explains the massive migration of foreign managers to work on the mainland when, according to economists' predictions, every company should be localising by now.

Vice-Premier Wu Yi has been called into this crisis, just as she was to deal with the outbreak of severe acute respiratory syndrome. We must remember that the virus was contained because it went into its natural hibernation cycle. But greed doesn't hibernate, and we are seeing a national epidemic.

The State Council lacks control over provincial authorities, which cannot control local cities, townships and so on. This prevents any kind of leverage over raw-materials suppliers. So Ms Wu's scope for action is limited to trying for a mere facelift through positive publicity. That might counter the western media barrage, but don't count on any problems being solved too soon.

This has been the 'year of living dangerously' for international consumers. Monthly recalls have shattered international consumer confidence. In February, Hasbro recalled 1 million Easy-Bake ovens. Since then, recalls have included dog food, toothpaste and toys. At the height of American paranoia against Japanese exports in the 1980s, nobody worried about hazardous products. So we can expect, in a US election year, the phobia over mainland products to reach a higher pitch than the congressional Japan-bashing of two decades ago.

During Mr Clinton's administration, America's business community placed great faith in the mainland's reforms and its economic and human potential. Many felt that, after its past half-century of tragedies, the country and people deserved better. The mainland received a sympathy vote from foreign investors.

Yet how many of the mainland's trade disputes, diplomatic slip-ups and negative media coverage are brought about by its own people's short-term, greedy and corrupt thinking? Even Mao Zedong once condemned that as China's cyclical problem.

In the era of communism, greed and corruption existed in the form of raw power - demonstrated by the excesses of the Cultural Revolution. Today, such excesses continue, but in new forms: the commodity traded is no longer power. Instead, it includes cash, luxury cars and lead paint.

Laurence Brahm is a political economist, author, filmmaker and founder of Shambhala Foundation