China's "low-trust" society - intermission post

Caveats before I write Part 2

Hi folks, last week’s Part 1 of “China’s low-trust society” series has been a resounding success, thanks to all of you.

It was also a bit controversial, and many of you have expressed disagreement with at least some of my points.

To be frank, trying to pinpoint a specific idea in the often subtle and grayish cultural context is always difficult and inherently over-simplistic. I can only try my best. But if there is one line that underlies my core thesis, it’s this one: regarding dealing with strangers, China has an “untrustworthy until proven otherwise” mode, rather than the “trustworthy until proven otherwise” mode prevalent in so-called “high-trust” societies.

The caveats

There are also several big caveats that I wish I had laid out in Part 1, which could have helped me minimize misunderstanding.

First, while Chinese people may not trust (unproven) strangers, we actually often exhibit an “over-trust” of the people we see to be close to us, such as parents, kids, and good old friends. I don’t have good data to back up this claim, but that’s at least how I feel. This over-trust of “old folks” come hand in hand with under-trust of new guys, like two sides of the same coin. How it comes to be, I am not so sure. But I just know it exists.

This simultaneous over-trust and under-trust is behind the reason why many of our private businesses are having succession issues, which I will touch on in the upcoming Part 2. It’s also behind the enduring longevity of scams in China. Many fraudsters are very good at building rapport with the victims and breaking the walls of “low-trust”, leading those victims to blindly trust away large sums of money. Many telecom scam schemes are built around some fake emergencies of the victims’ parents or kids, taking advantage of them losing their cool heads in such circumstances.

So, while China may be a “low-trust” society for strangers, it can be a super “high-trust” society for family and friends. This is a crucial fact I can’t fail to mention.

A second caveat, which I only briefly touched on, but I have to stress here: China has changed a lot.

In the comment section of Part 1, a subscriber named

Bill

perfectly summed up this arc of change in a comparison of China he saw back in 1986 and China of today. I was not even born in 1986, so I have to defer to Bill’s opinions on this. But from what I gather, what he said here was quite true. He wrote:

In 1986 in 汉中 Hanzhong in Shaanxi, police stopped me from “disorderly photography”. I was taking a picture of a tiny ramshackle dentist’s office with curtains instead of windows and a set of false teeth in a window sill.

In Goat Home Mountain nearby, three police in a new Beijing Jeep stopped me and denied me access to a morning market alongside a stretch of road. The day before I had purchased a small melon for a few pennies without haggling and people were talking about how rich I must be.

I had to stand at the gate of Work Unit 182 and enlist friends to buy items for me.

Laws were unwritten and so vague that any policeman could arrest any person at any time for something.

But today:

Big changes have occurred!

1. Today, officials in Hanzhong are not shamed by poverty

2. Today, buying a small melon from a street vendor without haggling over pennies is not showing off your wealth

3. Today, China’s laws are written down and published.

4. Today, the police would know I could hire a lawyer and challenge them in court

5. And today, Jeep in China is bankrupt

Another subscriber

J M Hatch

mentioned a story that outraged the nation back in 2011, when a toddler was run over by a car twice on a busy street in Dongguan. The whole episode was captured by CCTV camera. Mr. Hatch wrote (emphasis my own):

No one dared to help the child for the longest time, finally an old lady pulled the child to the side of the road and was about to run off in fear of being blamed when the parents finally showed up. Lucky for the old lady the parents were understanding and ashamed of their own failings. This whole episode exposed a trust problem that everyone who lived in China at that time knew festered in China.

This episode in 2011 was a great example of the “low-trust to strangers” nature I tried to describe, and was a more extreme version of the “grandma’s egg” story in Part 1 that some of you found hilarious. We know what is good or bad, for most of the time. But sometimes the fear of lack of trust towards others, and very importantly, the lack of trust that others will trust ourselves, prevent us from doing the right thing.

But still, my gut feelings tell me that had the same event happened in 2025, it’s very likely that it would have a better ending, as we as a people have also grown, and our societal trust level is visibly higher than before.

The cameras

Talking about the cameras, it’s also an important factor to consider here.

Some of you find it jarring that if China’s society has so little trust to strangers, how come there are endless tales of people leaving their phones on the tables for restrooms?

Both are true at the same time. I do that all the time.

Video surveillance is a key factor here. About 20 years ago, in the pre-camera age, I lost phones and bikes very regularly. It was very painful experience for a teenager.

Also, we have to recognize that it's one thing to leave stuff on the table trusting the surveillance cameras to protect you against strangers, but a whole another thing if you come into the same restaurant, asking total strangers to help you do something, like taking a survey, answering a question and asking for favor. Success rate is not high.

There was a funny video of Lei Jun, founder of Xiaomi, asking random pedestrians for surveys in 2013. He was not very famous back then, although he is the richest person in China right now. It was like a disaster. A scene of rejection after rejection.

The west

The last caveat is that in my characterization of China as “low-trust”, I set up the West as an example of “high trust”. But just as the society-wide trust level in China increases, it is possible that it is decreasing in the West, or at least I have heard anecdotal evidence of it.

I have not been living in the West for many years, and “the West” is a large concept and is made of many countries, so I will stop making generalizations here. But I vaguely sense that the political turmoil we are seeing in many of the western societies is at least partially related to the question of “trust”.

The interplay between trust and politics will be the focus of Part 3. But still, in terms of my core criteria of “untrustworthy until proven otherwise” mode vs “trustworthy until proven otherwise” mode, I believe there is still a clear distinction between China and the West.

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For those of you who are waiting for Part 2, I assure you that it is coming out soon! Hopefully, I can finish it over the weekend. But I just think it is necessary to mention the above-mentioned points before I go ahead.

Part 2, at least according to my plan, will be an all-encompassing review of how “low-trust” society shapes the business and investment landscape of China today. I will discuss why because of lack of trust, that:

• Many of China’s best companies tend to be vertically integrated

• Mergers and acquisitions are still not a thing

• There is a clear bias towards “hard” products instead of software

• Why P2P lending in China became a disaster.

• Why there is a prevalent “quick money” culture in China’s stock markets

But the real meat of Part 2 will be a discussion of what unique opportunities a low-trust society will present, that you would not be able to find anywhere else.

Stay tuned!