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Despite scandals, China still growing

Cartons and packages of milk are placed for display and sale at a grocery store in Beijing, China.

TEXT OF INTERVIEW

Kai Ryssdal: Melamine is back in the news. Chinese officials announced this week they are still pulling contaminated dairy products off store shelves. It has been almost two years now since the original scandal, which came amid a swarm of high-profile problems with Chinese exports. Corruption problems inside one of the world's fastest-growing economies don't seem to be slowing down at all. And our China correspondent Scott Tong is on the line to tell us more about that. Hey, Scott.

SCOTT TONG: Hello, Kai.

Ryssdal: So corruption we all know about. Give us some sense, though, of the scale, of how big it is.

TONG: It's definitely getting worse. So what are we talking about, well, we have this nice broad sampling of scandals that are going on in China right now. We have the white-collar model. If you think of the top executives at the Chinese equivalent of Best Buy or Verizon mobile, one is the former richest guy in China, and he's being investigated for stock price manipulation. The other just got canned for allegedly falsifying earnings, $3 billion in earnings. So you have that. And then you have the Chicago mob model. And next week, the top judge in the city of Chongqing, goes on trial, you've been there, right, Kai?

Ryssdal: Yeah, you bet.

TONG: Well, he is linked to this complicated web of business men, cops, mobsters, transportation...illegal gambling dens, prostitution, part of this huge investigation that goes to the center of the Communist Party leadership in Chongqing. So add it all up there are more cases this year, higher-level cadres, higher-level business leaders than ever before.

Ryssdal: Is it possible, though, that as the Chinese leadership recognizes it's role on the world stage, and the size of its economy, that they're just getting better at finding the bad guys?

TONG: That's the other way to look at this. That's there's more sunlight, and it's shining on a whole lot more of what's always happened in China. It is a top priority of the Chinese president Hu Jintao, and they at least have to give the perception that they're going after this. If the yardstick is the snarky taxi driver in China, I mean, one driver in Xinjiang province, which is clear on the other side of China, told me that the rich and powerful business types and bureaucrats, they're as bad as the old emperors of China ever were.

Ryssdal: Give me your personal perspective, though, Scott. I mean, you've been there three years, do you have people like slipping you envelopes full of cash and stuff?

TONG: One instance of the envelope.

Ryssdal: Seriously? I was kidding, actually.

TONG: I ended up at a press conference by a particular American profit-making institution that I'm not going to name, and checked in the press conference and got the press kit returned in an envelope with 200 RMB in it, which is about $25, and every journalist gets that. Didn't even know it was happening until I saw it and decided we probably need to give it back. But not an uncommon thing in China as far as their relationship with journalists. There's a widespread sense that the standard rules are for the people who aren't well connected.

Ryssdal: Do you have any sense though, Scott, that all this corruption can do actual damage to the China story as we know it?

TONG: Depends who you talk to, Kai. I mean the folks who think this train is going to derail say this is a systemic problem that shows that the system is just rotten to the core. They argue there's no accountability in China for these things in the form of independent courts, free and open news media, opposition parties. And this is going to not just affect China but the rest of us. Now, the other side says, look at this, this corruption issue has not slowed down this economic story, it has not stopped the foreign investors from coming in. Last time we checked China was growing at 8.7 percent annually, and these are just rules of the China game, and basically everybody understands those rules. Law professor Jacques deLisle at Penn put it this way, a whole lot of people have shorted China and lost a whole lot of money. So a lot of the smart money thinks this is just going to keep on going, and this is the Chinese model.

Ryssdal: Scott Tong in Shanghai. Thanks a lot, Scott.

TONG: Thank you, Kai.

About the author

Scott Tong is a correspondent for Marketplace’s sustainability desk, with a focus on energy, environment, resources, climate, supply chain and the global economy.
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Scott, I just posted this interview on my new blog chinasalesguide.com that deals with corruption. I would bet if you pulled this story, 5, 10, 20 years from now, it will be just as fresh as it is today. China's system based on rule of man and not rule of law and where relationships "guanxi" are the currency of doing business, corruption has just about as much chance of being eliminated as NYC has getting rid of its rat problem.

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