It’s not only toys. This year, a slew of oversight and manufacturing problems and shortcuts have turned the words “Made in China” into America’s new warning label.

The products read like a nightmarish Saturday morning shopping list: toothpaste containing poison, contaminated seafood, defective tires, baby bibs made with lead, pet food tainted with fillers that killed or sickened hundreds of cats and dogs, and the latest announcement that Mattel was recalling millions of toys.

While toy and pet food manufacturers have been quick with recalls when dangerous Chinese products are uncovered, the problems with the China label are likely to persist until Beijing changes the way it does business and cleans up its act, literally. Here are a few reasons how the problem got to this point:

Regulation – or the lack of it

China does not have a reputation for openness. Remember the summer of SARS – how slowly and reluctantly it admitted to the outbreak of Severe Acute Respiratory Disease? Official China put its own people at risk, along with the rest of the world’s, because it did not want to acknowledge a disease.

In addition, the country has a reputation for counterfeit goods and officials who look the other way. Last month, Zheng Xiaoyu, the former director of China’s Food and Drug Administration, was executed for taking almost $1 million in bribes for approving tainted medicines. There’s no doubt the execution was an internal warning and a bid by China to show the world it was getting serious about corruption. Still, if every corrupt official went straight today, the business of Beijing would still need major reform.

From a tainted environment

China is now the leading exporter of seafood to the United States. The fish are raised in water farms, and many of the lakes and rivers in China are heavily polluted from years of unrestrained industrial growth. To overcome disease, farmers feed the fish antibiotics and the water, already contaminated with carcinogens and pesticides from industry and agriculture, is treated with fungicide.

In the last year, the U.S. Food and Drug Administration found one of seven lots of farmed Chinese seafood contained unapproved drugs. On June 28, the FDA said Chinese exporters would have to prove that specific varieties of fish – farm-raised catfish, basa, shrimp, dace and eel – were safe.

Chinese media reported Tuesday that wastewater dumped by factories into a river in southwest China has poisoned and killed about 88,000 pounds of fish. Officials blamed the deaths on upstream factories dumping excessive levels of fluorine, phosphate and arsenium into the river. So for some farmers, it’s use antibiotics or go out of business.

THE PRICE OF A LOWER PRICE

After heavy government investment, China is now the world’s dominant producer of vitamin supplements and chemical food additives. So dominant that other countries and companies claim China is undercutting on price to gain market share.

Like any other manufactured product, China can undercut because of lower labor costs and less regulatory oversight. It also helps if there’s a willing official to bribe (see Zheng Xiaoyu above) when a lower price calls for using inferior ingredients.

The quest to reduce costs may also mean using not just an inferior ingredient but the wrong one. If glycerin syrup, a sweetener, is too expensive, an unscrupulous manufacturer may be tempted to use antifreeze instead. That’s what a Chinese toothpaste manufacturer was found doing a few months ago. The toothpaste was exported to South America and also made its way into some U.S. prisons.

In a case that sparked the recent concerns over Chinese exports, two producers added melamine as a cheap way to boost the protein content of wheat gluten that it sold to pet food companies. The problem was uncovered in April when cats died from eating the tainted food.

As with SARS, China denied there was a problem. It initially claimed that it had not exported wheat gluten, and one official said melamine wouldn’t hurt animals in any case.

Forced to acknowledge the problem by an international outcry, China banned melamine in food production and promised to cooperate with U.S. regulators. Two companies were found guilty of exporting melamine-contaminated vegetable protein to the United States in a later case.

WHAT THE LABEL DOESN’T SAY

Toys made in China are clearly labeled for consumers to check. Food labels may be less informative even when giving what seems to be more.

Take cake. The contents label on a supermarket treat may say it contains honey among dozens of other ingredients, but it probably doesn’t say where that honey came from. China is a good possibility – it’s the world’s largest producer.

Honey from China had problems five years ago when farmers used antibiotics to help bees fight off disease. China has since banned its use. U.S. producers had to go overseas to get honey because there isn’t enough available here.

Consumer groups have complained about this lack of information for years. In 2002, Congress passed a law requiring country-of-origin labeling for most food products by 2004. Some major players in the food industry pushed back, saying the rule would be too costly for them and confusing for consumers. Congress delayed again until the uproar over the melamine in Chinese wheat gluten prompted new calls for country of origin labels. With President Bush’s signature, the law will take effect next year.