Food Fight With China

It seems that China has decided on the "No, you suck!" defense in response to increasing concerns about tainted and poisonous food stocks and consumer products. The emerging giant is chafing at its newly earned reputation as a shipper of bad stuff, after Chinese "protein" providers admitted to lacing feed stock with petrochemical byproducts that were blamed for killing many U.S. pets ,and raised concerns about human-grade meat from animals raised on Chinese feed meal. As if that weren't bad enough, word came out that some Chinese toothpaste and health products contain the same chemical as antifreeze.

China's first response? What's the big deal? Its latest response? Dissing American raisins and health supplements.

Economic reforms aside, this is par for the course for totalitarian governments accustomed to telling people what they should think; they tend to view truth as a commodity to be traded according to this week's policy goals. I have no idea about the relative merit of China's complaints about our killer raisins, and whether or not they contain too much sulfur dioxide (a preservative) or bacteria (ubiquitous), but it sure looks like the usual saber-rattling that occurs between countries when trust in trade products breaks down.

Of course, poison protein meal isn't the only hot-button issue troubling U.S. consumers and legislators about China. There's a persistent cry that China "manipulates" its currency to the detriment of U.S. business. This also sounds like sour-grapes pandering from elected officials looking for a scapegoat for outsourcing and the decimation of American manufacturing and R&D facilities. Meanwhile, giants as varied as Google (Nasdaq: GOOG  ) , Home Depot (NYSE: HD  ) , Microsoft (Nasdaq: MSFT  ) , IBM (NYSE: IBM  ) , Intel (Nasdaq: INTC  ) , GM (NYSE: GM  ) , and Ford (NYSE: F  ) race to set up operations around the world.

The problem is that this isn't just an issue of cheap. It's an issue of culture and opportunity. Corporate giants aren't just chasing cheaper costs -- they're chasing brainpower, expanding markets, and local cultural expertise that can help them compete in foreign locales.

Global trade is not a zero-sum game, despite what politicians on either side of hot-button issues would like constituents to believe. There's a lot more to be gained by playing nice together than there is by lobbing darts. Let's hope the grown-ups prevail in this latest spat.

At the time of publication, Seth Jayson owned shares of Intel, Home Depot, and Microsoft, which are all Motley Fool Inside Value recommendations. See Seth's latest blog commentary here. View his stock holdings and Fool profile here. Fool rules are here.


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