Right now, the markets are focused on two stories: the continuing unwinding of the sub-prime mess and the increasing number of recalls of products made in China. At this point, the roiling of the financial markets is the bigger of these two stories. However, the drum beat of negative press about China may have equally significant consequences going forward. With stories such as "More Ripples From Chinese Product Troubles," (New York Times, August 15), and "Tainted Imports: Are You Next?" (BusinessWeek SmallBiz, Aug/Sept 2007), and even recent posts on the HuffingtonPost (gasp!), the chorus has been growing that China, in more ways than one, represents a threat to the United States. If it's not currency "manipulation" then it's unsafe products, from tires to pet food to toys. Already, there is legislation being prepared that would take a harder line against China and the twin effects of currency and the trade deficit. Whatever version of the bill actually gets passed is likely to be more muted than the rhetoric, but the very fact of it demonstrates the growing anti-Chinese sentiment that is almost certain to get worse before it gets better.
In many respects, the facts don't square with the rhetoric. China's currency has been appreciating steadily against the dollar, albeit not as rapidly as many in Congress wish. The trade deficit masks more complicated trends, such as subsidiaries or partners of U.S. companies exporting goods that are in fact made under the aegis of a U.S. corporation; the statistics also obscure the fact that China has been the fastest-growing export markets for goods made in the United States. But the rising sense that Chinese goods lack quality controls and are unsafe is one of the most misleading, relative to the sheer scope of production in China. The recall by toy maker Mattel of tainted children's toys because of lead paint contamination and dangerous magnets is only the latest to draw widespread attention.
Every day, companies recall products. Visit the website of the U.S. Consumer Product Safety Commission. In July alone, Baby Bling Things of Appleton, Wisconsin recalled 1000 pacifiers for presenting hazards to young children because the crystals embedded in the pacifiers were creating a choking risk; the Toro Company recalled 900,000 Toro Power Sweep Electric Blowers because when the blades broke there was a risk of flying shards of plastic injuring anyone in the vicinity; Coldwater Creek recalled 3500 Shawl Collar Sweaters because they didn't meet Federal flammability requirements, a.k.a. they could burst into flames if brought into contact with "an ignition source;" the Ester-Cox Corporation of Penrose, Colorado recalled 21,000 Sky Ranger Park Flyer Radio Control Airplanes (made in China) because of excessive risk that the planes could explode near the consumer's head; Black & Decker recalled 202,000 Grasshog Trimmer/Edgers (yes, made in China) because of dangerous projectiles; Pottery Barn Kids recalled nearly 31,000 crib bumpers (surprise, made in Portugal) because the decorative stitching, if loose, could pose an entanglement hazard to young children; and CVS recalled 84,000 Playskool "sippy cups" because it found that toddlers were chewing through the sippy mechanism and at risk for choking. That is only a partial list, and many of the other products were also children's toys.
None of the above, however, generated front-page press coverage, except for Mattel and its China-manufactured products. The fact is that products are routinely recalled for safety issues, and China is only one of many sources of production. What's more, the company selling the goods should bear ultimate responsibility. But because of the current climate of concern, issues that can be blamed on China attract disproportionate attention. That in turn fuels the rising sentiment that China represents a risk and a threat. In truth, China does challenge the United States, especially as a rapidly rising economy with an increasing global presence. But challenge and threat need not be identical and the recent focus on China as a safety issue overstates the size of the problem relative to the normal -- albeit troubling -- number of product recalls at any given time. China may have standards which are more lax than we are comfortable with. Those standards need to be improved. But product safety is everywhere a bedeviling problem, and bashing China will not resolve the issue. Instead, we should be focusing on how companies ensure product safety, regardless of where those products were made.