Shanghai has just opened a free trade zone to much fanfare, loosening some controls on investments in China. But like so many Chinese developments it is a double-edged sword. In this article published today in RealClearPolicy, I discuss the trade advantages and health risks that come from a free-for-all in the market for bulk chemicals – many of which come from China, but whose exact provenance is not known. These chemicals go into medicines and can make them very cheap, but with poor quality control, such medicines can prove lethal instead of life-saving.
China is home to some of the cheapest products on the planet, but the country also produces many fake ones. My colleague Nick Slepko interviewed numerous folks in China and Hong Kong about the fake trade in China, and here he and I discuss the problems related to baby milk formula. Over the past decade there have been numerous instances of contaminated, adulterated and outright fake milk formula being sold across China. This resulted in at least six dead babies and hundreds of thousands of sick babies.
It also led to a political backlash, where the Chinese response was to ban worried parents from importing milk formula from overseas. A $50,000 fine and two years in jail awaited parents who just wanted to make sure their child wasn’t contaminated with fake milk.
Hopefully the Shanghai free trade zone will have better controls over product safety than the one in Shenzhen, where much of the fake milk formula is allegedly made.