There's a lot of recruiter hate going on here but it seems to miss the real problem. Having spent the last 6 years on the hiring side, it's very obvious that Jeff Atwood's FizzBuzz problem is too hard for 90% of the people applying for programming positions out there. When you end up with a situation like this, traditional hiring methods just don't work. Job board postings will get you hundreds of resumes in a single day but the quality is really crap and it is prohibitively expensive to do traditional interviews for every single resume received. HR recruiters, hated as they are, actually do provide higher quality candidates than posting on the job boards. However, it's something like an increase from 1% quality candidates to 5% quality. Still very poor.

We've ended up using a multi-prong approach to hiring ourselves. Besides using recruiters and posting to SIG boards, we've also optimized our candidate screening to handle the flood that comes in from job board postings. Since you can't tell much from resumes (some candidates lie, but an amazing number of good developers are also very bad at writing resumes), we try to call in all but the worst of the resumes received. Then we sit them through an automated testing system (we use Codility). Candidates that pass the equivalent of the FizzBuzz problem are then interviewed by technical interviewers that go over the code with them detail and attempt to thoroughly assess their true skill level. That automated testing step filters out the equivalent of 90% of our candidates, resulting in an almost 90% savings in our HR costs. It's very expensive to have good technical people spending hours interviewing after all, and they tend to hate it anyway.

It's not perfect. There are of course great people who get rejected or who even refuse to take an automated test. However, automated candidate testing means the difference between our top technical people spending 10% of their time interviewing or 100% of their time interviewing. With the scarcity of really good technical talent, we obviously chose to optimize our techie time.

No. That law was scrapped a while ago. There are now quite a few WOFE (Wholly Owned Foreign Enterprises) in China. They do have some minor restrictions (e.g. some paperwork stuff that requires that they work through intermediaries instead of doing things themselves) but for the most part are free to operate normally.

China is actually more welcoming to foreign enterprises than the US. I've worked in both countries.