German Der Spiegel's extensive and well researched article on China is spot on:
The Germans' high-tech expertise is often "fed" into Chinese companies, which have copied the patents so that trains, cars and machine tools and the original products are often as identical as two peas in a pod. Recently, the Chinese company FAW reportedly recreated an entire VW transmission in Changchun in northern China. This practice can turn partners into dangerous competitors, and it also creates bad blood.
China's dumping activities are an equally serious problem for Western companies. The government subsidizes individual, future-oriented industries with so much cash and loans that they are able to displace their competitors in the world market by charging rock-bottom prices.
When the members of the Beijing Sports Car Club, founded in 2009, meet once a week in their own, exclusive lounge near the city's football stadium, they like to show off their toys, the Lamborghinis and Ferraris parked on a well-guarded parking lot. Zhang Kuan, 32, the chairman of the club, is eager to show off his dark-gray McLaren MP4-12C, a car worth hundreds of thousands of dollars, which he picked up in person at the Tianjin customs port in May. The club's 700 members also travel on luxury trips together, to places like Las Vegas and London. It's an insular group, and when they race at night, it's usually against each other. During the day, members are often spotted in the company of fashion models.
Ferrari Becomes a Red Rag for the Party
The provocative display of wealth troubled almost no one until recently, and certainly few government officials. But the word "Ferrari" recently became a red rag for many politicians, and it's even blocked on the Chinese Internet. Things aren't going well for the Communist Party and with preparations for its party congress. After the murder and corruption affair of former Chongqing party chief Bo Xilai and his wife, a new scandal surrounding an Italian sports car, its driver and an accident he had threatens to cast a shadow on the carefully planned political show.
Early one morning, seven months ago, a man driving a Ferrari in Beijing lost control over the car, possibly while engaged in sexual activity. The driver, who was allegedly naked, was killed immediately, while his female companions reportedly survived, but were seriously injured. The police covered up the circumstances of the accident. But soon the Internet was filled with rumors that the driver could have been the son of a prominent individual.
In early September, it was apparently no longer possible to conceal the details, or someone deliberately leaked them to the public. The dead driver of the Ferrari, Ling Gu, 23, was the son of a top official and a graduate of Peking University. His father is the long-standing secretary of party leader and President Hu Jintao. After the incident, he lost his influential job as head of the main office of the Central Committee and was demoted to an insignificant position. He was replaced by Li Zhanshu, a close associate of the new "emperor" designate. Was the scandal misused as a tool in the power struggle in Beijing?
Corruption in China has reached proportions that will in the end lead to a disintegration of the current authoritarian regime. Those in the West who refuse to recognize this, are doing a disservice both to their own countries and to the Chinese people, who would deserve something better than the present corrupted band of deeply corrupted communist leaders.
The New York Times also has published an excellent article on corruption among China's ruling elite. Here is a sample:
The mother of China’s prime minister was a schoolteacher in northern China. His father was ordered to tend pigs in one of Mao’s political campaigns. And during childhood, “my family was extremely poor,” the prime minister, Wen Jiabao, said in a speech last year.
But now 90, the prime minister’s mother, Yang Zhiyun, not only left poverty behind, she became outright rich, at least on paper, according to corporate and regulatory records. Just one investment in her name, in a large Chinese financial services company, had a value of $120 million five years ago, the records show.
The details of how Ms. Yang, a widow, accumulated such wealth are not known, or even if she was aware of the holdings in her name. But it happened after her son was elevated to China’s ruling elite, first in 1998 as vice prime minister and then five years later as prime minister.
Many relatives of Wen Jiabao, including his son, daughter, younger brother and brother-in-law, have become extraordinarily wealthy during his leadership, an investigation by The New York Times shows. A review of corporate and regulatory records indicates that the prime minister’s relatives — some of whom, including his wife, have a knack for aggressive deal making — have controlled assets worth at least $2.7 billion.