baozi.jpg[UPDATED] You've heard of chop suey, now try another Chinese delicacy, chopped cardboard. According to a recent report on China's state television, chopped cardboard, softened with an industrial chemical and flavoured with fatty pork and powdered seasoning, is a main ingredient in baozi, the steamed buns sold in Beijing.

Baozi are a common snack in China, with an outer skin made from wheat or rice flour and a filling of sliced pork. They are cooked by steaming in immense bamboo baskets.

The TV report highlights the country's problems with food safety despite government efforts to improve the situation. Predictably, the unusually frank TV report has triggered a flood of coverage in the western media and follows hot on the heels of the recent scares about contaminated toothpaste and pet food exported from China to the west — see this EngagingChina story.

BusinessWeek has an intelligent story that asks why is it so hard for the government to crack down on exporters of dangerously tainted seafood, toothpaste and medicine, despite the years of warnings by local and foreign experts.

The magazine blames much of the problem on “glaring administrative failures” ands sees product safety as just one aspect of Beijing's inability to enforce much-needed regulation in everything from manufacturing and the environment to intellectual property and the capital markets. BusinessWeek says:

China doesn't lack the finances to fix its shortcomings, and it has the legal structure for regulating the environment, health care, and worker safety. What Beijing does lack is the will to overhaul a political structure that gives party officials down to even the smallest villages huge influence over many facets of economic life.

Of course, Chinese officials have taken steps to try to rein in this lawless image of China that causes so much concern in the west.

Regulators this year have shut more than 180 illegal food producers. A directive ordering government agencies to use legitimate software has helped cut the share of pirated programs to 82% from 92% in 2001. Beijing is trying to tame the runaway stock market, and passing stringent environmental rules. And in 2006 alone, nearly 30,000 officials were prosecuted for corruption.

The former head of China's drug regulation agency was executed this week for taking bribes and the government has done an about-turn and banned toothpaste manufacturers from using diethylene glycol as a cheaper substitute for glycerin — previously it insisted that toothpaste with up to 15% diethylene glycol in toothpaste was safe.

The adulterated toothpaste has been widely distributed in the west with some of it falsely labelled as Colgate, thus forcing Palmolive-Colgate to undertake a major PR effort to limit the damage.

The list of shortcomings in China's economic model is long and well-known, and apologists often argue that it is only to be expected because this is exactly the way capitalism developed in the west. The Wild West eventually was tamed, they argue, and China will also learn to rein in the most flagrant excesses of rampant capitalism by giving more power to shareholders, consumers and employees.

But will that happen any time soon? BusinessWeek thinks it will not and argues that the necessary “revolutionary change” that will allow modern financial, legal and administrative systems to function may still be a decade away.

None of the aforementioned is a reason for western companies not to do business with China, of course. But hey, let's be careful out there.

UPDATE: The cardboard-filled baozi turned out to be a hoax, dreamed up by a worker on a Beijing TV station looking for scoop, according to Xinhua. The other scares about food safety are very real, however.

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