Chapter 2

Chinese Walls Are Falling Down

The term Chinese walls became popular in the West following the crash of the stock market in 1929. The U.S. government legislated the implementation of Chinese wall policies and procedures, which became a protocol that still exists in financial institutions to insulate analysts from dealmakers in the same organization. Chinese walls are an instrument—physical barriers, rules, procedural measures, and the like—to manage conflicts that may arise between the parties involved. For example, the invisible walls are enacted to prevent confidential information from leaking to the public or between divisions sometimes serving the same client.

In China, physical Chinese walls—from the Great Wall to walls that enclose organizational premises or residential compounds—do exist to define clear boundaries among organizations, communities, and social groups. Caution and modesty about what to say are traditional virtues in China. Therefore, for thousands of years information flow was confined within Chinese walls; information hardly traveled across boundaries. If the backward household-based agricultural economy and high illiteracy among its citizens across a vast geography prevented free information flow in China before the establishment of the People's Republic in 1949, the tight political regime of the Communist Party of China (CPC) should be blamed for another 30 years of an information desert in China. This explains why millions of Chinese died of famine ...

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