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Chinese policymakers seem unable to grasp the importance of crafting appropriate incentives and disincentives. Rather than adopting the Western model of motivating every link in the supply chain to adhere to specified quality and safety standards, the government continues to rely on top-down policies. But the decentralized, dispersed nature of many industries, the absence of an effective regulatory infrastructure, and the lack of firm-level inducements undermine the effectiveness of this approach.