Health and Safety Concerns Over U.S. Imports of Chinese Products: An Overview

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China is a major source of U.S. imports of consumer products (such as toys) and an increasingly
important supplier of various food products. Reports of unsafe seafood, pet food, toys, tires, and
other products imported from China over the past year or so have raised concern in the United
States over the health, safety, and quality of imported Chinese products. This report provides an
overview of this issue and implications for U.S.-China trade relations and will be updated as
events warrant.

Warnings, Recalls, and Detentions..................................................................................................1
U.S. Imports of Products of Concern from China...........................................................................2
China’s Poor Regulatory System.....................................................................................................3
Economic Implications....................................................................................................................6
Table 1. U.S. Imports of Selected Products from China in 2007.....................................................3
Author Contact Information............................................................................................................7

n 2007, China overtook Canada to become the largest source of U.S. imports (at $322
billion); accounting for about 17% of all U.S. imports. Over the past year or so, numerous
recalls and warnings have been issued by U.S. firms over various products imported from I

China, due to health and safety concerns. This has led many U.S. policymakers to question the
adequacy of China’s regulatory environment in ensuring that its exports to the United States meet
U.S. standards for health, safety, and quality; as well as the ability of U.S. government regulators,
importers, and retailers to identify and take action against unsafe imports (from all countries)
before they enter the U.S. market.

The Food and Drug Administration (FDA) in March 2007 issued warnings and announced
voluntary recalls on certain pet foods (and products used to manufacture pet food and animal
feed) from China believed to have caused the sickness and deaths of numerous pets in the United
States. In May 2007, the FDA issued warnings on certain toothpaste products (some of which
were found to be counterfeit) found to originate in China that contained poisonous chemicals. In
June 2007, the FDA announced import controls on all farm-raised catfish, bass, shrimp, dace
(related to carp), and eel from China after antimicrobial agents, which are not approved in the
United States for use in farm-raised aquatic animals, were found. Such shipments will be detained
until they are proven to be free of contaminants. On January 25, 2008, the FDA posted on its
website a notice by Baxter Healthcare Corporation that it had temporarily halted the manufacture
of its multiple-dose vials of heparin (a blood thinner) for injection because of recent reports of
serious adverse events (including an estimated 81 deaths and hundreds of complications)
associated with the use of this drug. On February 18, 2008, the New York Times reported that a
Chinese firm that produces an active ingredient used to produce heparin was not certified by the
Chinese government to make the drug and had not undergone FDA inspection; many have ¹
speculated that the Chinese plant is likely the source of the problem. On September 12, 2008, the
FDA issued a health information advisory on infant formula in response to reports of
contaminated milk-based infant formula manufactured and sold in China, and later issued a
warning on other products containing milk imported from China. On November 12, 2008, the
FDA issued a new alert stating that all products containing milk imported from China would be
detained unless proven to be free of melamine. On December 2, 2008, the Chinese government
reported that melamine-tainted formula had so far killed six children and sickened 294,000 others ²
(51,900 of whom had to be hospitalized and 154 were in serious condition).
The National Highway Traffic Safety Administration (NHTSA) in June 2007 was informed by
Foreign Tire Sales Inc., an importer of foreign tires, that it suspected that up to 450,000 tires (later
reduced to 255,000 tires) made in China may have a major safety defect (i.e., missing or
insufficient gum strip inside the tire). The company was ordered by the NHTSA to issue a recall.
The Chinese government and the manufacturer have maintained that the tires in question meet or
exceed U.S. standards.

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The Consumer Product Safety Commission (CPSC) issued alerts and announced voluntary
recalls by U.S. companies on numerous products made in China in 2007. From January-
December 2007, over four-fifths of CPSC recall notices involved Chinese products. Over this
period, roughly 17.6 million toy units were recalled because of excessive lead levels. Recalls
were also issued on 9.5 million Chinese-made toys (because of the danger of loose magnets), 4.2
million “Aqua Dots” toys (because beads contain a chemical that can turn toxic if ingested) and 1 ³
million toy ovens (due to potential finger entrapment and burn hazards). From January 1 to
December 2, 2008, around 2.5 million toy units from China were recalled due to lead.

Table 1 lists products imported from China in 2007 that have been the subject of recent U.S.
health and safety concerns, such as toys, seafood, tires, animal foods, organic chemicals and
pharmaceuticals, and toothpaste. It indicates that China was a major source of imports for many
of these products. For example, China was the largest supplier of imported toys (89% of total), ^nd
seafood products (15%), and tires (26%); the 2 largest foreign supplier of animal food products ^th^th
(24%); the 6 largest supplier of toothpaste (1%); and the 9 largest source of imported
pharmaceuticals and organic chemicals (3%). The table also indicates that, despite health and
safety concerns, U.S. imports of most of the products listed (with the exception of toothpaste)
increased in 2007 over 2006 levels. For example, toy imports from China grew by 33.4%.

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Table 1. U.S. Imports of Selected Products from China in 2007
^{Imports f}^rom^Percentage
^{Imports f}^rom^{China’s Rank as a}^{China as a %}^of^{Change in}
^Produ^ct^China^{Source o}^f^{Total U.S.}^{Imports in 2007}
^Description^{($ millions)}^{Imported Pro}^du^ct^{Imports (%)}^{over 2006 (%)}
^Dol^{ls, toys, and}^19,4^{60.5 1}^89.4^33.4
^games
^{Fish and other}^2,05^{4.3 1}^14.9^4.8
^{seafood products}
^{Tires 2,43}^6.4¹^26.0^28.5
^{Animal foods}^163.⁰²^24.0^19.3
^{Toothpaste 1.3}⁶^1.0^-59.6
^{Organic c}^hemicals^3,23^{5.3 9}^3.4^25.0
^{and pha}^rmace^utical
^products
^{Total imports from}^321,⁵⁰^{7.8 1}^16.5^11.7
^China
^Source:^{USITC DataWeb using}^{various classifications systems an}^{d digit leve}^ls.

Many analysts contend that China’s health and safety regime for manufactured goods and
agricultural products is fragmented and ineffective. Problems are seen as including weak
consumer protection laws and poorly enforced regulations, lack of inspections and ineffective
penalties for code violators, underfunded and understaffed regulatory agencies and poor
interagency cooperation, the proliferation of fake goods and ingredients, the existence of ⁵
numerous unlicensed producers, falsified export documents, extensive pollution, intense
competition that often induces firms to cut corners, the relative absence of consumer protection
advocacy groups, failure by Chinese firms to closely monitor the quality of their suppliers’ ⁶
products, restrictions on the media, and extensive government corruption and lack of
accountability, especially at the local level.
Chinese officials contend that most Chinese-made products are safe and note that U.S. recalls for
health and safety reasons have involved a number of countries (as well as U.S. products). They
also argue that some of the blame for recalled products belongs to U.S. importers or designers.
They further contend that some U.S. products imported into China have failed to meet Chinese ⁷
standards. However, they have acknowledged numerous product health and safety problems in

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China, as reflected in reports that have appeared in China’s state-controlled media. For example,
in June 2004, the Chinese People’s Daily reported that fake baby formula had killed 50 to 60
infants in China. In June 2006, the China Daily reported that 11 people had died from a tainted
injection used to treat gall bladders. In August 2006, Xinhua News Agency reported that a
defective antibiotic drug killed seven people and sickened many others.
China has announced a number of initiatives to improve and strengthen food and drug safety
supervision and standards, increase inspections, require safety certificates before some products
can be sold, and to crack down on government corruption:
• In May 2007, the Xinhua News Agency reported that former director of China’s
State Food and Drug Administration had been sentenced to death for taking
bribes (equivalent to $850,000) in return for approving untested and/or fake
medicines (he was executed on July 10, 2007). On the same day, the Xinhua
News Agency reported that the Chinese government had announced that it would,
by the end of 2007, complete regulations for setting up a national food recall
system would ban the sale of toys that failed to pass a national compulsory safety
certification.
• On June 27, 2007, the China Daily reported that a nationwide inspection of the
food production industry had found that a variety of dangerous industrial raw
materials had been used in the production of flour, candy, pickles, biscuits, black
fungus, melon seeds, bean curd, and seafood. As a result, the government
reportedly closed 180 food factories found to be producing unsafe products
and/or making fake commodities. It also reported that in 2006, the government
had conducted 10.4 million inspections, uncovering problems in 360,000 food
businesses, and had closed 152,000 unlicensed food businesses.
• On July 4, 2007, the China Daily reported that the government had finished
making amendments to all food safety standards and had established an
emergency response mechanism among several ministries to deal with major
problems regarding food safety.
• On August 9, 2007, China Daily reported that the government had pledged to
spend $1 billion by 2010 to improve drug and food safety.
• On August 15, 2007, a spokesperson from the Chinese embassy in Washington,
DC, said that China would require that every food shipment be inspected for
quality by the government by September 1, 2007.
• On August 20, 2007, the Chinese government announced that it had created a 19-
member cabinet-level panel to oversee product quality and food safety (headed
by Vice-Premier Wu Yi) and would start a four-month nationwide campaign to
improve the quality of goods and food.

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• On December 5, 2007, the government stated that during the first 10 months of
the year, it had shut down 47,800 food factories without operating licenses.
• On January 15, 2008, China announced it had inspected over 3,000 export-
oriented toy manufacturers and had revoked licenses for 600 firms that failed to
meet quality standards.
Despite these efforts, reports of tainted products persist. For example, in January 2008, dozens of
people in Japan reportedly became ill from eating dumplings imported from China that contained
pesticide. In September 2008, the Chinese government reported that infant formula that was
tainted with melamine had killed four children and sickened 53,000 others (13,000 of whom had
to be hospitalized). The government announced on September 22, 2008, that China’s chief quality
supervisor had stepped down from his post over the incident. Other local and provincial officials
have reportedly been sacked for trying to cover up incident. At least 22 Chinese baby formula
companies have been found to have tainted products. Press reports indicate that other milk
products made in China may have been contaminated as well. On October 15, 2008, the
government ordered a blanket recall of all dairy products made before September 14, 2008.
Several countries have banned the sale of Chinese-made milk products.
The United States and China reached a number of agreements in 2007 to address health and
safety concerns:
• On September 11, 2007, the CPSC and its Chinese counterpart, the General
Administration of Quality Supervision, Inspection and Quarantine (AQSIQ),
signed a Joint Statement on enhancing consumer product safety. China pledged to
implement a comprehensive plan to intensify efforts (such as increased
inspections, efforts to educate Chinese manufacturers, bilateral technical
personnel exchanges and training, regular meetings to exchange information with
U.S. officials, and the development of a product tracking system) to prevent
exports of unsafe products to the United States, especially in regard to lead paint
and toys.
• On September 12, 2007, the NHTSA signed a Memorandum of Cooperation with
its Chinese counterpart on enhanced cooperation and communication on vehicles
and automotive equipment safety.
• On December 11, 2007, the U.S. Health and Human Services (HHS) announced
that it had signed two Memoranda of Agreement (MOA) with its Chinese
counterparts; the first covering specific food and feed items that have been of
concern to the United States, and the second covering drugs and medical devices.
Both MOAs would require Chinese firms that export such products to the United
States to register with the Chinese government and to obtain certification before
they can export. Such firms would also be subject to annual inspections to ensure
they meet U.S. standards. The MOAs also establish mechanisms for greater
information sharing, increase access of production facilities by U.S. officials, and
create working groups in order to boost cooperation. On March 13, 2008, the
FDA announced that it planned to place eight FDA staffers in China. Some
members of Congress have proposed placing a CPSC official at the U.S. embassy
in Beijing.

Many Members of Congress have called for tighter rules (such as increased inspections,
certification requirements, and mandatory standards for toys), and increased funding for U.S.
product safety agencies. On December 19, 2007, the House passed H.R. 4040 (Rush): the
Consumer Product Safety Modernization Act. On March 6, 2008, the Senate passed its version of
H.R. 4040 as a substitute amendment (S. 2263: the CPSC Reform Act). House and Senate
Conferees reached a compromise agreement on H.R. 4040 on July 28, 2008, and the bill was ⁸
signed into law (P.L. 110-314) on August 14.
Concerns over the health, safety, and quality of Chinese products could have a number of
important economic implications. Both the United States and China have accused each other of
using health and safety concerns as an excuse to impose protectionist measures and some
observers contend that this issue could lead to growing trade friction between the two sides.
International concerns over the safety of Chinese exports may diminish the attractiveness of
China as a destination for foreign investment in export-oriented manufacturing, as well as for
foreign firms that contract with Chinese firms to make and export products under their labels
(such as toys). Efforts by China to restore international confidence in the health and safety of its
exports through increased inspections, certification requirements, mandatory testing, etc., could
have a significant impact on the cost of doing business in China, which could slow the pace of
Chinese exports and hurt employment in the export sector. Moreover, international concerns over
the safety of Chinese products could prove to be a setback to the government’s efforts to develop
and promote internationally recognized Chinese brands (such as cars), which it views as
important to the country’s future economic development. Thus, it is very likely the Chinese
government will take this issue very seriously. However, it is unclear how long it will take for the
central government to effectively address the numerous challenges it faces (especially
government corruption and counterfeiting) to ensure that its exports comply with the health and
safety standards of the United States and other trading partners. Additionally, a sharp decrease in
purchases by U.S. consumers of Chinese products could negatively impact U.S. firms that import
and/or sell such products and may raise prices of some commodities as firms attempt to rectify
various safety problems.
The current crisis in China over melamine-tainted milk (which can cause kidney stones) and the
growing number of children who have reportedly have become ill have seriously challenged the
government’s assertions that most products made in China are safe and that an effective
regulatory regime has been established.

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