Chinese-style "traffic control" might be arguably described as population control. There seem to be no actual rules of the road, and who owns a particular piece of the lane has much less to do with who has some sort of legal right, than with who has a stronger desire for it.
It is a battle of wills here. You don't worry so much about what you're "supposed" to do, as about what you can do. Elbows are strong in China, and they get used.
Car horns here are a basic means of communication.
Let's say a taxi driver is approaching an intersection, and five people are trying to walk across the street in front of him, while two cab-drivers are trying to move into the street from his right. He can toot his horn, gently, to say "no, you wait: I really want to go now." Another cabbie might lay on his horn, to say "sorry, my passenger is in a hurry, so I'm going to go anyway." The first cabbie will either slow down and let the more-urgent driver get through, or lay harder on his own horn. It's a kind of nonverbal communication that a professor could write books about.
Of course we poor pedestrians don't have horns, but we have body language: if someone really has to get where they're going, they will step out in front of a speeding bus, and either it slows down to let them pass or it doesn't and they step back. You get really good at figuring out who is more determined.
It's been described by some other writers as a game of Frogger, that computer game from my childhood days. I think this comparison is only half-accurate. At least when you're trying to cross the street in China you are able to communicate by smiling and nodding at the drivers, or leaning forward, or leaning backward. It all seems somehow sophisticated.
The funny thing is, you know, it works. And as a friend of mine said, "don't fix it, cuz it ain't broken."
By the way, after living in China for a month and a half, I'm starting to wonder why we Americans even have horns our cars. We don't really use them to communicate with other drivers -- if you toot your horn, it's because you're crazy-mad at someone. So if you think about it, the horn on your car in America is like a raised middle finger: something you should never really use. Surely it's crazy for us to spend extra money to have it installed in our cars. Upon reflection, the Chinese system seems so much more polite to me.