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China's Latest Game of Hardball

So China sends us a flood of contaminated, defective, and counterfeit products.  America responds by recalling, returning, or seizing the products.  And this is where the game gets really interesting.

 

Rather than acknowledge the many problems with its food and product safety system, China is adapting a very aggressive "tit for tat" strategy of retaliation.  For every bad product they are sending us, they're sending some of our good products back.

 

US food exports are at the front lines of this incipient trade war.  While China used to inspect as little as 5% of these exports, its inspectors are now looking at every single shipment of American poultry, pork, snack foods, and other products.  Thus far, Beijing has cracked down on both pork and chicken as well as seafood and soybeans.  On the product front, China has likewise slapped a "return to sender" label on US-made pacemakers.

 

America is not the only country suffering such retaliation.  Indonesia has had its seafood returned after Indonesia crackdown on Chinese defective products while Canada is suffering a similar problem.

 

This is a very regrettable response by the Chinese that shows a total lack of understanding of American standards for product safety and quality.

 

The worst effect may well be, however, on a huge US-China trade imbalance -- running at about $250 billion annually.  It is in the interests of both the US and China to reduce this imbalance.  If China starts putting protectionist barriers to US exports as part of its "tit for tat" strategy, this will be very counterproductive.