The American Legion Magazine | 12.1.08
By Alan W. Dowd

As you go about your Christmas shopping this season, odds are you’ll find three little words on almost every package: “Made in China.”

For those of us who believe in free trade and free markets, there is nothing wrong, in and of itself, with the tidal wave of Chinese goods represented by that ubiquitous phrase—that is, unless Chinese imports are somehow causing harm or injury.

Regrettably, that’s exactly what has happened over the last few years, as China’s world-class economy and third-world quality standards have conspired to churn out products that endanger American lives.

Total Recall

The cases are numerous, ranging from poisoned pet food and contaminated hog feed, to toxic toothpaste and defective tires. But the best-known cases involve lead-tainted toys.

Some20 million toys manufactured in China were recalled in 2007, after it was discovered that they contained high levels of lead.[1] Mattel recalled 9 million toys, including Barbie dolls and merchandise from the animated movie Cars, when the company learned that the toys included lead paint and faulty magnets that were prone to fall off.

According to a Pittsburgh Tribune-Review report, 7.3 million Polly Pocket dolls were recalled due to shoddy construction; 250,000 Sponge Bob Square Pants address books due to high lead levels; 967,000 Fisher-Price toys due to high lead levels; 1.5 million Thomas and Friends Railway Toys, also due to unacceptable lead levels.[2]

Just how high is “unacceptable”? The Consumer Product Safety Commission (CPSC) sets the acceptable level of lead at 600 parts per million (ppm), but in 2007 scientists found lead levels between 2,700 ppm and 39,000 ppm in Halloween-related items made in China.[3] Investigators even discovered Halloween toys filled with kerosene.

Tainted toys are more than just an annoyance. Lead poisoning is a serious health issue, especially for children younger than three. Specifically, it can hinder development of the brain and nervous system, leading to higher rates of behavioral problems and lower intelligence levels, according to Dr. Dana Best of the AmericanAcademy of Pediatrics.[4]

Moreover, as the AP reports, since 2003, at least one child has died and 19 have undergone surgery after swallowing magnets shoddily attached to the Polly Pocket dolls. In another instance, this one involving toy building sets, one child died and four were badly injured after swallowing small magnets.[5]

Yet children’s toys are not the only dangerous import from China.

The Associated Pressreports that at least 81 deaths and 785 “severe allergic reactions” have been traced to contaminated heparin “made from ingredients imported from China.”[6] It appears that a Chinese plant was cutting corners to save money on the anti-clotting drug, using what The Baltimore Sun calls a “chemical modified to look like heparin’s main ingredient.”[7]

In the understated words of Robert Parkinson, president of drug manufacturer Baxter International, “The complexity of the global drug supply chain creates new and emerging risks that call for new ways of thinking about, identifying and addressing vulnerabilities.”[8]

Those vulnerabilities are growing. There are already 3,300 overseas pharmaceutical plants producing drugs for U.S. consumption. In 2007, the FDA received 500 applications to produce generic drugs from Chinese firms and just 150 from U.S.-based companies.[9]

And the list of deadly imports goes on:

• An estimated 6,000 hogs ingested contaminated feed from China in 2007—feed that included a chemical found in swimming-pool cleaner.[10]
• Some 60 million units of pet food were taken off the shelf when melamine was discovered in the products. As USAToday has reported, melamine is a highly poisonous chemical that was probably added to grain products to make them appear to be high in protein.[11] An unknown number of dogs and cats died as a result of the poisoning.
• Finally, 450,000 tires made in China have been recalled by the National Highway Traffic Safety Administration because their treads were separating at highway speeds. One fatality has been traced to the defective tires.

Rewards

There’s an old saying that admonishes, “It’s better to fix the problem than to fix the blame.” But sometimes fixing the problem requires us to identify who’s to blame.

There are arguably two causes of this problem: America’s insatiable appetite for ever-cheaper goods and China’s cold focus on revenues rather than consumers. 

Americans are quintessential consumers. Thanks to our wealth and high levels of productivity, we have the means to purchase goods. And thanks to Madison Avenue, we are continually pumped with the motivation to do so. But we want to get the most for our money. And that’s where those three little words—Made in China—come into play.

Factories in China can churn out goods for Americans more cheaply than American factories, which helps explain why the U.S. imported $321 billion in Chinese goods in 2007, why 80 percent of the toys Americans buy are imported from China and why the U.S. trade deficit with China has swelled from a $49 billion to $256 billion over the past decade.[12]

We Americans helped create this global marketplace, and we have greatly benefited from it. The increasingly interconnected economies of the U.S. and China are lowering labor costs, saving us money and making both sides of the Pacific richer. For instance, with exports to the U.S. growing by some 1,600 percent since the early 1990s, China’s economy has expanded by almost 10 percent annually for a quarter-century, enabling the People’s Republic to move 300 million of its subjects from poverty.[13]

Likewise, “American economists estimate that the U.S. is as much as $70 billion richer each year because of its relationship with China,” according to the Discovery Channel miniseries People’s Republic of Capitalism. As an example, the report points to Apple’s iPod, which is designed in the U.S. and assembled in China. At $299 per unit, each iPod nets Apple an $80 profit—and the Chinese assembly plant a $4 profit.[14]

Risks

But as we are learning, this high-volume, high-speed, high-profit economic relationship also presents a range of challenges and risks.

Congressional documents indicate that U.S. imports have quadrupled since the CPSC was created in 1974, even as the CPSC’s staff shrunk to 400, “fewer than half the number of staff when the agency was established.”[15]

Likewise, the number of full-time FDA employees conducting inspections on food imports actually decreased from 2003 to 2007, even though imported food now accounts for a hefty 13 percent of the average American’s diet.[16] In fact, Americans are importing $65 billion in food products each year—nearly double the value of food imports in 1994.[17]

Of course, blaming America’s screening and inspection systems for defective and even deadly imports is akin to blaming the security guard for a bank robbery. The factories producing these goods bear the primary responsibility, and they are located in China.

But as Sen. Bill Nelson (D-Fla.) observes, “we were letting the Chinese industry police itself, and it wasn’t doing it, and the government of China wasn’t doing the inspecting.”[18]

In other words, a system focused solely on production and profit and unconcerned about safety and standards has to be policed by someone, which means it’s necessary to hire more “security guards.”

Toward that end, the Bush administration has proposed basing inspectors overseas[19]—a practice that would parallel the successful Container Security Initiative, which deploys U.S. Customs officials in the world’s busiest ports to screen containers before they are loaded onto U.S.-bound vessels.[20]

In addition, Congress is beefing up the CPSC and other government watchdogs. For example, the Consumer Product Safety Modernization Act, which became law this summer, increases the number of CPSC employees by 500, adds dozens of additional “overseas production facility inspectors” and boosts the agency’s budget by 27 percent. As the Congressional Research Service reports, the new law also:

• Requires third-party testing and certification of products used by children;
• “Treats any children's product designed or intended for use by, or care of, a child seven or younger that contains lead over a specified level as a banned hazardous substance;”
• “Lowers the lead threshold at which paint becomes a banned hazardous product;”
• Establishes a database of violations of consumer product safety rules; and
• “Bans importation of toys manufactured by companies that have shown a persistent pattern of substantial product hazards or that present a risk of injury to the public.”[21]

In an interview with The Wall Street Journal, Nancy Nord, acting chair of the CPSC, described implementation of the new law as “challenging.” It pays to recall that the CPSC is responsible for some 15,000 products.[22]

For her part, Janet Woodcock, head of the FDA’s Center for Drug Evaluation, has called for $225 million in new funding to bring foreign drug inspection facilities up to the level of U.S.-based facilities. That would be 20 times more than current funding for foreign drug inspection.[23]

In addition, U.S. companies are taking steps to ensure safer imports. Mattel has promised to start testing Chinese-made toys in its own laboratories or in Mattel-certified labs.[24] As The Wall Street Journal reports, Toys R Us is requiring its suppliers to “meet stricter lead standards” and date-code items before shipping.[25]

But even as U.S. agencies and companies strengthen the screening process, we should not absolve Beijing of responsibility. MinxinPei, director of the China Program at the Carnegie Endowment for International Peace, observes that there exists in China “an incestuous relationship between the state and major industries.”[26]

In other words, Beijing should not be allowed to feign ignorance or claim it is powerless to enforce safety standards on exports.

Bending to U.S. pressure, the Chinese government did promise in 2007 to prohibit manufacturers from using lead in U.S.-bound toys. Chinese authorities also shut down companies that had been using lead-based paint in Mattel’s toys and exporting tainted pet-food ingredients.[27]

Perhaps these efforts—by government and industry, at home and abroad—are having an impact. After all, there hasn’t been a rash of “Made in China” recalls in 2008—at least not in the U.S. In fact, one of the larger toy recalls involved a German company.

Of course, in September 2008, hundreds of Chinese infants were sickened and some died after ingesting tainted milk powder produced in China.

The Other Problem
Of course, even if every Chinese import is free from poisonous materials and defective parts, another, more insidious problem remains.

No discussion on Chinese imports into the U.S. can overlook the fact that an unknown percentage of Chinese goods are produced in laogai labor camps. These sprawling prisons double as factories, churning out everything from Christmas lights and Christmas trees to rosaries and cheap electronics. To add further irony and insult to the injury, many laogai prisoners are sentenced because of their religious views.

The notion that some of the stuff we purchase might be painted or assembled by a person imprisoned for his religious beliefs should give us all pause, especially at Christmas time.

The Laogai Research Foundation (LRF) identified 1,100 labor camps in its 2005/06 report, concluding that there are “11 prisons that produce toys for domestic and international markets.” According to LRF founder Harry Wu, himself a laogai survivor, “It is very likely that some of the toys are entering the United States.”[28]

Pointing to Beijing’s record, Wu asks a haunting question: “Is it really any wonder that low-quality, harmful toys are being exported to the U.S. and into the hands of our children?”[29]

Two Sides

In short, the “Made in China” syndrome can claim successes—and victims—on both sides of the Pacific.

The solution is not protectionism in the traditional sense of the word, but protection of American citizens and their health in the fullest sense of the word; not an end to trade, but an awareness of all the side-effects—good and bad, pleasant and ugly—of America’s appetite and China’s willingness to feed it at any cost; not shaming Beijing, but rather challenging it to act like what it claims to be—a modern, civilized economy and a trustworthy trading partner.

[1] HR 803 Nov 6, 2007.

[2] Chris Togneri, “U.S. flag? Made in China,” Pittsburgh Tribune Review, August 25, 2007.

[3] Sen. Sherrod Brown, “In light of recent product recalls, Brown calls for study of Halloween items,” October 3, 2007.

[4] Testimony before the Energy and Commerce Subcommittee on Commerce, Trade and Protection, September 20, 2007.

[5] AP, “Mattel issues new massive China toy recall,” August 14, 2007.

[6] Randolph Schmid, “Families of contaminated Heparin victims tell stories of deaths,” Washington Post, April 29, 2008.

[7] Rockoff.

[8] Schmid.

[9] Jonathan Rockoff, “FDA calls for more money and power to keep imported drugs safe,” Baltimore Sun, April 30, 2008.

[10] “U.S. hogs ate contaminated pet food from China,” Boston Globe, April 25, 2007; Calum MacLeod, “China admits tainted food link,” USAToday, April 26, 2007.

[11] MacLeod.

[12] U.S. Census Bureau, Foreign Trade Statistics, www.census.gov/foreign-trade/balance/c5700.html#2007. 

[13] See Fareed Zakaria, “Does the future belong to China?” Newsweek, May 9, 2005.

[14]Discovery Channel, The People's Republic of Capitalism, 2008

[15] HR 803, November 6, 2007

[16] Richard Durbin, S.1776, July 12, 2007.

[17] HR 926, January 16, 2008.

[18] Bill Nelson, March 4, 2008 floor speech, http://billnelson.senate.gov/news/details.cfm?id=294243&.

[19] Rockoff.

[20] Container Security Initiative Ports, www.dhs.gov/xprevprot/programs/gc_1165872287564.shtm.

[21] CRS, CRS Summary of H.R.4040

[22] Melanie Trottman, “Consumer products agency faces looming deadlines on rules,” Wall Street Journal, August 29,2008.

[23] Rockoff.

[24] AP/CBS, “Mattel pledges quick warnings on toys,” September 12, 2007.

[25] Trottman.

[26]MinxinPei, “The dark side of China’s rise,” Foreign Policy, March/April 2006.

[27]AP/CBS; AP, “Mattel issues new massive China toy recall,” August 14, 2007; MacLeod.

[28] Harry Wu, Remarks before Senate Commerce Subcommittee on Interstate Commerce and Trade, October 25, 2007.

[29] Harry Wu, Remarks before Senate Commerce Subcommittee on Interstate Commerce and Trade, October 25, 2007.