In January, China’s environmental authorities barely averted the contamination of nearly 3 million people’s drinking water after a mining company dumped cadmium — a toxic heavy metal used in the manufacture of batteries, paint, solder and solar cells — into the Longjiang River.
Such threats to health and the environment are not uncommon in China. The water in as many as half of the country’s rivers and lakes is unfit for human consumption or contact.
China has also gained a reputation for food and drug contamination (not to mention lead paint in toys and poisonous toothpaste). For example, in 2008, the industrial chemical melamine was added to milk products in order to give falsely high readings of milk protein, causing the death of six infants and sickening 300,000 other people.
Similarly, Mengniu, China’s largest dairy company, announced in December last year that it had destroyed hazardous products at a plant in the Sichuan Province after government safety inspectors discovered the carcinogen aflatoxin in a batch of its milk.
In 2007, melamine was deliberately added to an ingredient in pet food to artificially enhance its protein levels, causing renal failure in hundreds of cats and dogs in North America, Europe, and Africa. Later that year, diethylene glycol was mislabeled as non-toxic glycerin, then mixed into cold medicine, killing at least 100 people in Panama, including many children.
The following year, crude precursors of the blood-thinning medication heparin were contaminated, causing hundreds of allergic reactions and 19 deaths in the US.
Internal criticism of the Chinese government’s management of health, safety and overall quality-of-life issues is growing. In July last year, following the highly publicized crash of a supposedly state-of-the-art high-speed train in eastern China, Qiu Qiming (邱啟明), a news anchor for the national broadcaster CCTV, turned the disaster into a metaphor.
“While satisfying our need for speed, we might be forsaking many things,” she said. “China, please slow down. If you’re too fast, you may leave the souls of your people behind.”
Given the pervasiveness of Chinese-made goods, China’s safety record concerns consumers worldwide. However, Chinese officials’ piecemeal efforts to restore confidence in the country’s exports — for example, establishing limits for trace amounts of melamine in dairy products and tightening quality control regulations for the dairy industry — are unlikely to reassure foreign consumers or importers.
Indeed, Chinese policymakers seem unable to grasp the importance of crafting appropriate incentives and disincentives. Rather than adopting the Western model of motivating every link in the supply chain to adhere to specified quality and safety standards, Beijing continues to rely on top-down policies.
However, the decentralized, dispersed nature of many industries, the absence of an effective regulatory infrastructure and the lack of firm-level inducements undermine the effectiveness of this approach.
Perverse incentives throughout the supply chain facilitate the widespread, systematic contamination of food and drugs. Both milk producers and heparin-precursor suppliers were motivated to add adulterants that would make their products appear to be of a higher quality than they actually were.
To be sure, Chinese authorities face a daunting task. Only a few decades ago, China was a poor, largely rural country with an agrarian economy and almost no middle class. Today, it boasts the world’s second-largest economy, a thriving manufacturing sector and a rapidly growing, prosperous middle class, while more than half of China’s 1.5 billion citizens now live in cities.