Stoking Protectionism

Choosing cost-cutting over quality, Chinese firms are finally getting order recalls from some of the biggest US firms. Although China publicly denies quality control problems with exports, domestic markets have faced similar quality issues. However, despite recent high-profile execution of officials in charge of drug safety, China will find it hard to transform its political culture overnight. Fortunately for China, the West does not have many readily available alternatives to Chinese suppliers. However, the US government may not be able to endure the media’s campaign against substandard products for too long, resulting in bans of some Chinese imports and tit-for-tat Chinese restrictions of US exports. Without paying attention to media alerts now, China will not be able to move into the market of capital-intensive products in the longer term. Whether to engage in retaliatory protectionism or gear up the product quality, only China can make the crucial choice. – YaleGlobal