China's cheap goods have high cost

The Baltimore Sun

"Beware of cheap Chinese goods that can kill you." If that little Confucian warning doesn't appear in your next fortune cookie, it should.

China is suffering from an epidemic of cancerous, contaminated and defective products. You've no doubt heard about toothpaste laced with antifreeze, toy trains coated in lead paint, and exploding tires that can kill a family of four in an SUV faster than a drunken driver on a Saturday night. These tales are but the tip of a very deadly iceberg. Just about anything you buy today with the "Made in China" label poses an elevated health risk - from baby food and catfish to shampoo and counterfeit Zippo lighters.

Why are Chinese products so unsafe? Unfortunately, the answer is sufficiently complex that it defies any quick and simple solution. They include:

An exceedingly lax regulatory system. China's regulations per se are not the core problem. They don't look that much different from those in the West, after which China's regulatory system has been largely modeled. Rather, a major problem is woefully understaffed regulatory agencies that lack adequate resources to aggressively monitor China's free-market system.

Corruption that would make a Mafia don blush. Corruption is an extremely pervasive and corrosive force in modern Chinese society. At all layers of government, from lowly food inspectors to high-ranking officials, bureaucrats regularly line their pockets with graft from profiteers seeking to avoid regulatory scrutiny. As a stark symbol of how such corruption reaches up to the highest levels of government, the head of China's food and drug administration was recently executed for accepting bribes in exchange for approving drugs that killed people.

Provincial foxes guard the regulatory henhouse. Most Westerners confuse the totalitarian nature of China's central government with real power. For centuries, however, real power in China has resided in the local and provincial governments. At these levels, government officials, imbued with the responsibility to ultimately enforce China's regulatory laws, invariably put economic growth and profits (or bribes) ahead of environmental protection, worker health and safety, or the integrity of the food and drug supply. The problem is further compounded by the fact that some of the worst violations are committed by government-run local businesses immune to government crackdowns.

No effective tort system. While "ambulance-chasing" trial lawyers are often ridiculed and reviled in America, the fear of multimillion-dollar lawsuits undeniably leads to more socially responsible corporate behavior in the United States. In contrast, it is almost impossible for Chinese citizens or injured parties outside of China to effectively pursue compensation from Chinese companies making contaminated or defective products.

No effective consumer advocacy. In America, consumer watchdog groups provide important product information, and many consumer advocates are very adept at using the media to focus political heat and economic light on regulatory problems. In China, consumer advocates are far more likely to be beaten, bullied, tossed into jail or even killed.

A "poison for profit" culture. Two examples aptly illustrate what may be the most disturbing aspect of the tainted-products problem. In China's well-publicized pet food scandal, manufacturers knowingly doctored a key pet food ingredient with a dangerous chemical to provide false elevated readings of the protein content of the food - and thereby command a higher price. Farmers similarly have been caught stuffing hoses down the throats of pigs and pumping wastewater into their stomachs to artificially boost their weight.

Toxic pollution. China's soil and crops are under siege from industrial air pollution emissions and groundwater runoff that regularly deposit everything from cadmium, copper and lead to mercury and zinc into the food chain.

The picture that emerges from today's China is a grim one. A deadly combination of unbridled greed, rampant corruption and abject regulatory failure has turned the "Made in China" label into a red flag for consumers.

To know the many different sources of China's epidemic of dangerous products is to understand that this problem will not be solved for years. In the meantime, when it comes to China - caveat emptor.

Peter Navarro is a business professor at the University of California, Irvine and author of "The Coming China Wars." His e-mail is pn@peternavarro.com.

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