The toilet paper theory of Chinese international development

In January 2012, Guo Shuqing, then head of the China Securities Regulatory Commission, employed an unusual segue to discuss the internationalization of China’s securities. Guo’s powerful organization, roughly similar to the U.S. Securities and Exchange Commission, regulates China’s stock and bond market. And yet "the CSRC building’s toilets don’t even have toilet paper," Guo said, in remarks that appear to have been first published in early April. "What’s the fear in providing toilet paper? Worried someone’s going to take it?" He continued: "Every day we talk about internationalization, but first the CSRC has to internationalize. We don’t even have toilet paper in our bathrooms, and we’re still talking about internationalization?"

Ever since Beijing began preparing to host the 2008 Summer Olympics, a debate has raged over China’s readiness to join the international system. On the one hand, China’s economy boasts a series of superlatives — the most recent being the February announcement that China has eclipsed the United States as the world’s biggest trading nation. On the other hand, as Chinese officials love to remind foreigners seeking explanations for why China is not pulling its weight on the international stage, China remains a "developing country." As a result, it "is faced with several difficulties and long-term efforts are needed to overcome them," China’s President Xi Jinping said in April to an audience of Chinese and foreign guests at the annual Boao Forum.

That the securities regulator of the world’s second-biggest economy still lacks toilet paper in the bathroom graphically demonstrates the organization’s unreadiness to take the international stage. 

Guo, who had a reputation as a reformer, "launched a campaign against rampant insider trading, poor information disclosure and weak corporate governance," Reuters reported in March, but he may have moved too far.  He was appointed governor of Shandong province in March — a lateral move at best — "partly because his market reform drive has upset vested interests," wrote Reuters in the same article.

"Earthy" metaphors are not that uncommon in Communist Chinese politics, especially in the party’s early days. "You must not fart! Instead have a look at the world turning upside down," Mao Zedong wrote in a 1976 poem often interpreted as a political allegory.

While Chinese, especially in smaller cities, tend to carry toilet paper with them when they go to the toilet, its absence is indeed an issue in buildings across the country. If memory serves, of the roughly dozen hospitals I had the misfortune to visit on trips to China from 2001 to 2011, all but the bathrooms in the exclusive "Foreign Guest Wing" of a hospital in central Beijing lacked both toilet paper and soap. Anecdotally, I’ve heard this explained by the fear that those two items, if provided for free, would be stolen.

The difficulties China faces — weak institutions, lack of rule of law, and corruption, for example — are reflected in seemingly small and simple problems, like no toilet paper in an office building. Does China’s Ministry of Health lack the clout to mandate soap and toilet paper in hospitals, or, if mandated, do hospitals feel like they can ignore the regulations? Was the modest amount of money meant to be spent on toilet paper at the CSRC embezzled? Small problems, yes, but with implications for the strength of China’s institutions. 

In a local Shandong newspaper’s hagiography of Guo, where the remarks appear, the journalist praises Guo’s straightforward style and ability to get things done, and quotes a media insider saying that he had a distinctive style of speech that was "not even a little bit vague." Whether that’s true or not, his remarks appear to have had at least one of the desired effects: While everyone in the audience "was taken aback" by Guo’s comments, the paper notes, "they eventually understood; and the CSRC building’s toilets never again lacked in toilet paper." 

h/t Nicholas Consonery