It's not about give a crap about scientific method and stuff. It's economics. Quality (read: non-counterfeit) western drugs cost $$$$$ which an average chinese person is not going to be able to afford (at least not at the current 6.4:1 RMB to USD exchange rates). Chinese medicines are out of the question (given the amount of counterfeit crap flooding the market, you are better off not taking anything). So that leaves TCM which is cheap, possibly effective, a lot of placebo effect, and you at least can sort of identify what the hell you are taking (I've seen those herbal packets and I've also taken them before so this is personal experience).
So yeah....my $0.02 as someone who has had up close and sometimes stomach-turning experience with TCM and who grew up in China.
I grew up in China too and have had a ton of first-hand experiences with the Chinese pharmaceutical industry. You know those legendary dinners where lobbyists and corrupted government officials talk about their mistresses, get wasted over $5k meals of sea cucumber and shark fins and bear claw, and sign wondrously profitable yet horribly wrong deals? I've been to more than my fair share of those. It's actually a real struggle to keep from throwing up in your mouth.
If you grew up in China, I'm sure you're more than familiar with the fact that Chinese people just do not give a crap about things like cheating, faking data, bribes etc. A lot of scientists are honest and try not to do that, but the general atmosphere rewards that kind of thing. I won't name specific universities, but giving PIs cash incentives for every paper published depending on the tier of the journal is just not a good way to ensure quality data, ESPECIALLY in TCM, where it's really unlikely that other people will care about replicability.
And it's not just because TCM in general is cheaper. If that were the case, we wouldn't have the 200 generations of hybrid medications for cold/flu that came out over the last 2 decades. You would expect, at least for simple illnesses, that people would stick with what they always used because it was cheap and it worked. But we don't do this. Remember in the 90s, when it was actually acceptable to give people acetaminophen--pu re xi tong? If a doctor tried to give a patient that now, the patient would bite his head off for "not trying hard enough", because of all the idiotic marketing for the brand-name drgs that cost like 50k yuan to develop but are marked up more than 20x to the patient.
It's not because Chinese people are poor. It's because pharma is profitable, everywhere, and far more profitable if you can get away with as little R&D as possible before your new awesome untested expensive drug can hit the market. And even poor people are great customers when they think their lives are on the line.
It makes me depressed as hell that the most important and relevant part of TCM--empirical pharmacology as a source for pharmaceutically active compounds--is being researched in Japan way more reliably and fruitfully than it is in China, but if we don't get our **** together and change the atmosphere of Chinese R&D, that's not going to change. I think it's great that our economy is expanding and when I go home, there aren't people dying in front of my house anymore, but it is just not sustainable to keep teaching our students that it's totally cool to cut corners in every aspect of life and bribe your way into getting whatever you want.
Oh lastly, on those herbal packets... I have relatives who make those and a lot of them are laced with crap like opiates. They basically use the same recipe as Tong Ren Tang (major TCM producer), with a little kick so that it makes you feel EXTRA good. And I have seen these in NYC... they have ying su shell as a major ingredient. I don't even buy Chinese medicine in America, because most of them are fake or have really interesting components... I buy them from family friends in pharma who know which ones are actually clinically tested (which are, by far, in the minority).
/rant before I miss dinner hour