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1- and this is precisely my point. If they start enforcing it, it would kill the smaller businesses in the current situation - and probably put thousands (millions?) of people in the street.

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China is an interesting case. Where they are not enforcing it in a strict sense, but at the same time they are not completely leaving the regulation on the book. So the end result is a system that selectively enforcing its own regulations. In short, everyone is violating the regulations in some sense, but if the government doesn't come to your door, you are probably fine. But they would start campaigns now and then to check upon on you, and once they do, and you are not prepared, you probably will end up in trouble.

I too wonder how well such system works, but I guess China is in high growth mode for many many years, and we all know that growth can cover up problems. Once it slows down, it might be the beginning where things start to get interesting.

This is also known as rule by law, where laws are selectively enforced to rule the people, vs rule of law, where the goal is to enforce laws uniformly to protect the people.

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