I am not a trans-Pacific entrepreneur, so take this with a grain of salt.<p>From what I can tell, China&#x27;s most fundamental problem is that it&#x27;s taken an inherently protectionist stance on large businesses and investment, one which is completely incompatible with the sort of business done in Silicon Valley, which requires heavy international cooperation, recruiting, business mobility, and fluid investment, as well as the opportunity for frequent, unpunished failure without consequent shunning.<p>As it was explained to me... If you want to do business in China and you&#x27;re not a citizen, you damn-well need to find one to start a Chinese business which can transact with you formally.  If you want to scale your business and you don&#x27;t have a midlevel member of the Communist Party running your HR department, you damn-well need to find one who can drink baijiu with the right people.  If you want to scale your business to large enterprise levels and you don&#x27;t have enough bribes in the right pockets to be part of the Chinese economic planning process, you damn-well need to get there;  You might not be the first to do so, even if you try.<p>Don&#x27;t do these things, and the rug will be yanked out from under you every which way possible, from licenses to immigration to financing to every sort of red tape.  The Chinese Communist Party may have liberalized its way into a functioning domestic economy, but it&#x27;s not willing to take its central planning thumb off the scale or permit full capitalist investment without political influence.  The consequences of this mentality extend beyond tolerable levels - if the central plan is that this new startup BaoJao is the greatest thing ever, why would they permit your competitor to try and defeat it?  The default stance is doubt about you and your enterprise, particularly if you represent foreign involvement.<p>One of the enduring differences between Silicon Valley and the rest of US capitalism is the lack of noncompetes, which is a step forward relative to the rest of the country for thriving competitive enterprise, but China is not two steps back, it&#x27;s fifty steps back.