Breakdown of law and order at the local level now all too often occurs under the auspices of village level party leaders who abuse their power for personal gain. Mao Mingshan, the village chief, also joined the attack. Mao Mingshan declared to police during detention that he was a 'black society' (triad society) leader. He then threatened to murder all staff working at the hotel.

This brings into question how government can be implemented at the grass-roots level in a society where gangster tactics are more a norm than an anomaly. Police are the only body that can be turned to for protection in the absence of law enforcement mechanisms. But police also often have their hands tied. They cannot protect innocent civilians from harm and businesses from extortion until actual violence occurs. Peculiarly, the Chinese legal system offers negotiated compensation for physical damage done as a solution outside the legal system due to lack of legal remedies.

One who is partially handicapped by an extortion attack is in a better position to claim dispensation which must then be negotiated from the attacker, hopefully with the help of the police. Many Chinese simply want the money and are happy to become crippled for life just to squeeze back compensation.

The value system in Chinese society today inadvertently advocates ugly extortion as a means towards income. This has become imprinted on the minds of many, forming distorted psychologies. That will be difficult to remedy through just a 'harmonious society' campaign at the 17th National Party Congress this autumn.

How Mao Mingshan was 'democratically elected' village chief seems mesmerising, but can be explained. One reason is that at the local village and county levels, seamless family relationships form a network of connections that can easily link organised crime to government protection. Election, regardless of whether through coercion, helps solidify the position of local mafia within village government, effectively turning local government into mafia.

Even China's media has reported local mafia's assumption of power, through government control, in areas just outside the capital's gates. In nearby Tangshan city, one mafia boss acquired four military convoys, 38 guns and 10,000 rounds of ammunition. With his own little army at his disposal, this thug extorted money from local businesses raising 800 million yuan for himself.

These are the kind of warlord antics which plagued China during the republican era (1911-1949), when a system of local gang rule emerged in absence of actual authority after the collapse of the Qing dynasty. Today, China's Communist Party has authority, but many are asking whether authority can be expressed as power, especially at the local levels of the party's organisational feeding chain.

During the republican era, the Kuomintang government became irreversibly corrupt in a society hopelessly debauched. Local gangs stepped into the power vacuum and, to a great extent, in the end KMT leader Chiang Kai-shek depended upon their loyalty to assure his own standing. So a territorial imperative assumed the day.

Fortunately, government officials assure us, this will never happen again in China.

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