The recent uncovering of tainted Sanlu baby formula powder from China which has killed at least three infants and sickened tens of thousands more, is a tragic event but one that needs to be viewed with some perspective.
First, this faulty product is one of many and will not be the last. China provides many thousands of goods and services to the world, particularly to the United States and other Western nations. Tainted baby formula, toys lacquered with lead paint, ill prepared medicines and chemical supplies, and other products are the tip of an iceberg toward which we are all coasting.
It is somewhat consolatory that only a few products in one hundred thousand or more are unsafe and unfit to go to market. This is not to belittle the dangers even one unsafe product can pose to consumer health, or to excuse the corrupt business practices allowing these products to slip past China’s quality controls. Rather, observing this makes it easier to accept that governments and international institutions have no way yet to institute safety and quality control measures, not just in trade with China, but across global supply chains that could stop shipment of unsafe products in their ports of origin before they reach markets. The United States, for all our efficiency in quality control and health standards, is also guilty of shipping tainted beef to Korea.
It is impossible to control and clean every single export and import in the age of globalization. Trying to do so with our current technological capabilities would mean a significant and unacceptable slowdown in port activity and shipping. If countries plan to continue to deepen globalization and trade in increasingly complex supply chains in the future, then each must strengthen its own oversight, seek multilateral quality control regimes when possible, have confidence that the overwhelming majority of trade goods are safe, and above all trust our trade partners all the way along the chain to do the same.
Second, detecting and making public the existence of faulty products as early as possible is good for the health of Americans and Europeans who may own or consider purchasing the unsafe product. It is even better for Chinese people, though, who may have been suffering from the unsafe product for longer because of carelessness or corruption. Agricultural products, medicines, and other manufactured goods made in China are often consumed first in China. Chinese live with products put through the same – if not more lax – quality testing regimens to which export commodities are subjected. If a private business manager or his official allies are careless or corrupt, Chinese consumers might suffer more from tainted goods whose health risks are covered up or go unreported – as was the case with Sanlu milk. Increased global publicity of tainted goods thus acts as an important feedback mechanism for the Chinese state, even if that publicity to the state remains undesirable and potentially damaging to the economy.
Maintaining good trade relations and high quality standards is vital to China’s national interests because exporting manufactured products and services has been a primary means, if not the primary means, by which China has grown. Additionally, since the Communist Party of China (CPC) began to embrace capitalism and market forces in 1978, it has based its legitimacy to lead China in large part on the country’s economic success. Thus, the Chinese government, like any good business owner, takes seriously corroborated evidence from abroad that any of its non-weapon products pose serious health risks.
Yet, China has not succeeded in building effective systems for monitoring and enforcing ethical standards among its officials. The central government has and is continuing to implement reforms that make officials increasingly accountable, but they have little control if no one reports corrupt acts. Despite China’s economic development miracle, the role of the state still remains pervasive. The judiciary, law enforcement, and the military all answer to the party. Mass media is a means for disseminating propaganda not for transparency and free, fair reporting. The state owns over 60 percent of fixed assets, while state businesses are given over 70 percent of the country’s capital investments. The center relies on a massive bureaucracy of millions of local, provincial, and central officials to manage all aspects of the state, particularly the dispensation and use of land and collection of taxes. In their jurisdictions, these officials wield enormous power and on a whim can make business for private firms easy or impossible. Thus, it is absolutely essential to all private businesses in China to have close relations with officials whose duties overlap with the operational needs of the company.
Finally, increased global publicity concerning tainted Chinese goods acts as an important feedback mechanism for the state, even if it is not sought after, undesirable, and potentially damaging to China’s economy. Though the problem is massive, this government takes corruption very seriously and is working hard to develop and empower efficient accountability agencies, while restructuring its bureaucracy. For instance, the Hu Jintao Administration has made it their policy over the years to increase penalties for corruption cases, and nearly every instance fire or force the resignation, and possibly try for criminal charges, officials and business leaders guilty of corruption. In particularly egregious cases, indicted officials have been put to death or imprisoned for life. In the Sanlu case, Sanlu president Tian Huawen was fired, charged and detained along with 28 other employees, while Shijiazhuang’s mayor and vice mayor were forced to resign. Then, on September 22, the government forced Li Changjiang, the chief supervisor of quality standards to resign. President Hu strongly criticized local officials for careless practices and lax management. Premiere Wen pledged to the UN General Assembly “…this will never happen again.”
Reassurances are one thing, but China’s leadership for its part needs to consistently prove it can provide safe products if it wants to continue to be the factory of the world. The state is transitioning from a Maoist planned economy to a market economy, and the government is legislating important reforms that may one day lead to better business transparency, public accountability, and product safety oversight. But that day will not come soon and certainly not as long as local officials who remain so integral to the success or failure of private industry, do not play by the rules.
Patrick deGategno is associate director of the Asia Program at the Atlantic Council.