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'Chinese products are not safe'

China's economy is growing much faster than its regulatory structure. For all practical purposes, it has no regulatory structure.

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In an interview to DNA, Dr Peter Navarro, professor at the Paul Merage School of Business at the University of California, Irvine, and author of The Coming China Wars, explains that consumers around the world are paying a high price for cheap Chinese-made goods. Excerpts:

On the horror stories relating to China's poisonous exports.
China's economy is growing much faster than its regulatory structure. For all practical purposes, it has no regulatory structure. And the few regulations it has often get co-opted by the behaviour of corrupt officials. China recently sentenced to death the former head of the food and drug administration: sure, the punishment was harsh, but the probability of getting caught is so low that many government officials take the risk…

China has problems at several levels: first, there's lax regulation. Then, there's lax enforcement because of corruption among top officials. Thirdly, many Chinese enterprises are run by the government or by former officials, so it's difficult to crack down on them. The fourth problem is that when it comes to choosing between the economy and pollution or the economy and intellectual property rights, economic growth always wins. Fifth, in Communist China, there is no mechanism to teach ethics and morals, and so profit motive trumps everything else. Which is why you see all manner of despicable acts.

On the life-threatening nature of China's counterfeit industry.
Unfortunately, many people think that Chinese piracy is limited to Louis Vuitton purses and Hollywood movies, which seem harmless. But in fact it's an A-to-Z phenomenon: it goes all the way from auto parts, batteries, condoms… to refrigerators, semi-conductors and, finally, Zippo lighters.

Counterfeiting and piracy, of course, provide huge cost advantages to China, which
is unfair to people who compete with the Chinese. But it gets more serious than that. Take auto parts, for instance: if a vehicle's brake pads fail at a critical time, people can die. Condoms that break can lead to HIV/AIDS infections.

Consumers around the world - including India - are paying a high price for 'cheap' Chinese goods.

On how the world has responded to hazardous Chinese exports.
Some individuals argue that China is experiencing 'growth pains' and that when it 'grows up' all its problems - environmental pollution, contaminated products - will somehow go away. That point of view lacks an understanding of the underlying structural and institutional nature of the problem: in China, the government sanctions these activities because it wants economic growth.

In the US, for example, the more American multinationals offshore to China, the less concerned they become over China's misdealings.

On China's response to the recent international outcry over contaminated goods.
China has responded petulantly by banning some US imports. That's absurd.

On the merits of a consumer boycott of Chinese-made goods.
Boycotts never work. There's just too many people who are ignorant or who prefer cheap products. A boycott call may make a good sound-byte or a nice headline, but it helps only at the margins. You have to deal with these things at the government level.

On whether he will gift his baby nephew a Thomas train today.
No. Chinese products are not safe. There's no way that you can look at them and determine that they're safe because they might contain toxins you are unaware of.
Something needs to be done: I don't think China is going to regulate itself.

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