Rule by Law

At first impressions, Australians and Japanese are very different, but once you understand the language and spend some time in Japan you realize that we share some very important fundamental values.  In spite of the occasional scandal and the odd incidence of corruption of public officials, there is a high level of trust in public institutions.  There is awareness of rights and a certain level of respect and consideration for other people.  In short there is some sort of unspoken social contract that impels people to behave well, without the need for immediate legal sanctions.   Things work because people generally see the value in cooperation.  Even strangers tend trust each other to some extent if there is no immediate reason not to do so.

When I arrived in China as a long-time Japanese speaker I was struck by a superficial resemblance to Japan.  The people were not affluent or as fashionably dressed, but they looked much the same.  Signage was largely legible to a Japanese speaker and there was some similarity in language due to the use of characters, although not in structure.   There were at a deep historical level a lot of shared traditions.

China however is not like Japan in many important ways and this quickly becomes very obvious to anyone doing business.  These differences stem from a lack of trust in the system and in each other.  I hear from friends that this was the same in Eastern Europe and the Soviet Union before the 1990s and even to some extent today as a result of the Communist legacy.  I suspect it goes back further than that and that the differences are as much related to the emergence of democracy in our parts of the world versus the lack of it in some less-developed countries.  Unchecked power is at the root of the problem.

But paradoxically it is not a police state as one might imagine prior to living here.  In some ways there is more freedom than in the West. Essentially in China, if Big Brother is not looking, do whatever the hell you like. And Big Brother doesn’t really care much what you do as long as you don’t challenge him in any way. The result is that today’s China is like the Wild West; a largely lawless place.  More correctly, there is plenty of law, probably too much, but there is no rule of law. There is “rule by law” and that is different.  The law is a weapon to be used to keep people in line when officials so choose.  The law is not applied universally, and certainly not without fear or favour.  If you do anything to rock the boat, or cause any kind of disruption, the law will come crashing down on your head.   One boss said to me the other day that every boss in China operates with one foot in gaol.  Local companies cannot operate within the law because to do so would mean going bust.  For example, how can you obey an edict that says “from tomorrow you cannot use any electricity for 20 days”? That happened yesterday in the village where I have my warehouse.  The choice is easy, if stark: Obey and go broke, disobey and hope they will not call your bluff.

Of course, as a foreign enterprise we are different.  We are more closely scrutinized and are unable to flagrantly flout the law.  However in this case it is different because we too have no choice, but we will wait a day or two and see what the locals do.  I think I know the answer.   And what is the reason for this new edict?  The local officials have been told that they need to reduce power consumption (from coal-fired power stations) if they want to get promoted.  Great policy objective, lousy execution.

So what is the point of this ramble?   I have only touched on one or two implications of this systemic dysfunction, but once you recognize the problem you can see its consequences everywhere.