China's economics-obsessed leadership is well aware of the damage done to its economy and international reputation, and is proactively reforming its legal code, although not the system that keeps the laws from being enforced. Chinese trademark law has progressed impressively since the promulgation of its first patent law in 1985. The most recent revisions were enacted in October last year just prior to China's WTO ascension, and significantly extend both protections and liabilities. According to Winston Zhao, the new law is very close to the international standard of the Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS) and puts China a step ahead of Taiwan and Japan by criminalizing not only production of imitation goods but also their sale and even their purchase.

But rule of law has been a problem for China ever since Shang Yang introduced the first legal code in the fourth century B.C.E. and as thanks for his effort was torn to pieces by five horses running in different directions. An old saying points out, "Heaven is high, and the king is far away." Given its size, disorganized economy and opportunistic consumers, China is a place where anti-piracy efforts would be difficult to implement even under the best of circumstances. Authorities tend to focus more on appearances than substance, and it remains a land mired in symbolic gestures and short-lived campaigns. China watchers are fond of bemoaning the country's lack of a coherent legal system, but that is only half of the equation. The flip side is that Chinese law is relative, depending on whether you get caught and, more importantly, who you are (and who you know).

The shortcoming now is not in the law itself but in the enforcement, or lack thereof. Despite the advantages of central control, a uniform national legal system and few civil liberties, enforcement efforts are haphazard. One problem is the diffusion of responsibility for oversight and enforcement activities. The Public Security Bureau handles only major cases and those that involve safety concerns; the State Administration for Industry and Commerce (SAIC) juggles general problems of trademark violation; and another bureau handles complaints where shoddy pirated goods threaten a company's reputation. Both the Cultural Bureau and the National Copyright Administration deal with copyright piracy; the State Intellectual Property Organization handles patents and policy; and the State Drug Administration addresses pirated medicines.

As a result, the police are not primarily involved in or charged with the enforcement of anti-piracy law. "The police have too much to do, are too busy, and can't get involved in a case until after the judiciary has ruled it a criminal case," explains Zhao. However, a case cannot reach the courts without evidence of wrongdoing, so the impetus for tracking down violators falls on the aggrieved company. And even when the police are charged with enforcement activities, they cannot be expected to always recognize which goods are fake.

Also, authorities on the local level will often seek to protect pirate factories that are beneficial to the area's economy. Bribery and corruption exist, but are declining, and perhaps present less of a problem than self-interested and selective enforcement of piracy law.

Ultimately, the task of enforcement rests at the local level, but China's local leadership is at best inept and lacking in the resources it would take for a campaign of the requisite magnitude. County- and township-level cadres are among the last vestiges of the Iron Rice Bowl system, and as such are terrified of rocking the boat. Given the already fragile social and economic conditions of rural China, it is hard to blame the petty bureaucrats for their reluctance to crack down.

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