Reining in poison food is a separate issue from China's trade surplus.  Lest you be lulled into the belief that the trade imbalance can be successfully managed by merely getting rid of, or improving, the bad stuff, the Chinese government reported a $26.9 billion trade surplus.  That fact occurred four months after the melamine wheat gluten scandal first broke in February.  The Associated Press reported the number.

Experts - those that are not paid by multinationals to spin - say that the natural China price advantage should not be great  Indeed the country has low hourly labor and regulatory costs.  But the amount of labor per unit of production is high (U.S. factories and farms produce high volumes with few man-hours), and the transportation costs for shipping thousands of miles overseas are high, canceling out most or all the labor/regulatory cost advantage.

Government intervention makes up the difference.  Currency manipulation, government ownership of most enterprises, and subsidies (through tax rebates upon export) provide the China price advantage. Some estimate the government intervention advantage at 57% across all product categories.

Intel has recently opened a plant in China, at a cost of $5 billion, with the Chinese government reportedly providing $3 billion in incentives to do so.  Free market?  Free trade?

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