Shortcuts: It’s Not a Problem if You (Foreigners) Cannot See It

When charged to keep an economy running at 10+% economic growth year in and year out, there are going to be times where shortcuts are going to be taken, and accepted. At times, the shortcuts are (fortunately) benign enough to not have a wider impact on the economy, community, or environmental, but in China the issues of financial malfeasance, environmental destruction, and consumer safety have begun to reach epic levels.

So much so, that action to hide the problems is being taken.

The recent announcement by the CSRC that VIE would be banned from listing overseas. Solves the issue of those pesky accountants finding out that China’s books are cooked. The recent shutdown of Jinko solar. It damaged the environment to the point the riots broke out 3 years after this problem was to be “resolved”. Problem “solved” once again…. and don’t even get me started on the issues of food safety and the fact that even after committing to “fixing” the problem that sickened 300,000 CHILDREN, the shit keeps popping up in supermarkets.

Part of the issue is related to the (sometimes perverse) incentives that have positioned the economy above all, but wider than that, it comes down to the systems that are meant to keep things in order and makes (quick) adjustments when processes/ people step outside accepted boundaries. It is a process that results in a lot of “open secrets” being placed in a vacuum where the general public / media do not have access to the facts.

Where this is particularly difficult at the individual / corporate level is that big scandals aside, this cancer resides in nearly every system, supply chain, that exists in China. It is the equipment operator who is failing to QA their pieces before passing them on, and a 50% scrap rate at the end of the line. It is the student plagarizing 70% of their paper. It is the food buyer that substitutes food grade chemicals for industrial

It is China’s greatest hurdle in developing stability

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