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Chinese Regulator "Blinks" in Hummer Deal

The Chinese Ministry of Commerce downplayed its earlier opposition to Sichuan Heavy Industry's acquisition of GM's Hummer. We had opined in an earlier post that the two were on a collision course in that matter. This represents something of a loss of face for the ministry.

We had guessed correctly, that Sichuan would not be so bold in its public statements, unless it had influence at the very highest levels of Chinese government. In this case, it was sufficient to overrule ordinary government proceedings. This kind of influence is called "guanxi" (relationships) in China. A more graphic translation might be "godfather."

China, unlike most western countries, remains under the rule of men, rather than the rule of law. In that country, the right connections will get government regulations overruled.