It's not that they couldn't if they wanted to; they could. But the history of domestic demand has been for cheap pens --the BICs/Papermates of the world. Their history of consumer products has been very utilitarian from pens to the mao jackets and the "iron furnace in every yard"[1] program to bootstrap industrialization onto a country where it arrived late.

So, the opportunity arrived where they had plenty of available labor and mature foreign economies which were diverging away from labor intensive low value added industries and in need of cheaper labor elsewhere and China availed itself in order to grow away from subsistence farming.

So, in that context the rise of the ubiquitous plastic pen is no surprise. No reason to deride it (and all it represents, from Christmas kitsch to joss money); it's what's got them to where they are and allows them to raise the question.

Now, it seems, they too are nearing an inflection point where more value added industries, industries which manufacture more value added products are needed in order to grow the internal consumer market and economy. The new consumerists, as it were.

I think the officials very well know this but felt the need to embarrass the industries which got them to the position where they can ask this question.

But Kai just avoids this angle and instead focuses on the "gotcha" sensationalism the PRC officials lobbed the media.

[1]http://www.sjsu.edu/faculty/watkins/greatleap.htm