The internet being bad is done on purpose. They don't have to make it shit with the traffic analysis, since internal traffic has traffic analysis too. They do it to keep china's internet an internal, more easily controllable intranet.
I think it has more to do with lack of competition in the ISP market. In most places, there's only one fixed line broadband provider, so there's incentive to increase speeds (as people will pay to get better quality streaming video on multiple devices) but none to improve peering with overseas networks.
