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China: Staying Competitive?

Every so often I'm jolted from my assumption that it is only a matter of time before China is pulled away from the draconian treatment of its citizens as it modernizes its economy and becomes more interdependent with the West. That happened today when I read that "China executed the former head of its food and drug watchdog on Tuesday for approving untested medicine in exchange for cash." The New York Times then drily notes that this is "the strongest signal yet from Beijing that it is serious about tackling its product safety crisis."

I'll say. I'm all for careful inspections and swift intervention when safety is compromised, particularly when the problem goes beyond negligence to corruption. That's good business from China's perspective when markets like the U.S. react to tainted products quickly by cutting Chinese imports across the board.

But when will China learn that in the modern economy, you don't just export products, you export a brand? Granted, China does not compete widely (yet) on its brand; it competes on price. But as it seeks to climb the value-added ladder, producing more complex products and services, it's going to need a good brand. It will only be able to sideline human rights, due process and humane sentencing -- among other issues -- for so long before the lack of these makes brand China unpopular.

But of course markets and human rights don't always work as neatly, or cooperatively, as we might like them to. It takes time -- and often a popular movement -- to push things along.

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