There was a time encyclopaedia Britannica was a compulsory presence in any library and even in many homes that could afford it. The last print edition was in 2010 and that had 32 volumes and 32,640 pages and was obviously beyond the reach of the middle class. Those who visited Taiwan three decades ago found unauthorised copies of it in bookstores for a fraction of the price of the original and virtually indistinguishable from that. Taiwan had mastered the art of producing counterfeit goods much before China took over that business of intellectual property right violation. Now Taiwan has moved on to making cutting-edge chips and China has become the fake goods epicentre of the world with 88% of the rip-offs coming from that communist country. In the earlier years, these fakes were too “fake” to pass on as the real stuff but with time, technology and the demand for “real fakes”, the look has become more authentic and price no more shockingly low. As the number of millionaires and even billionaires grew in China, more of the real stuff of the very high value brands became visible in Chinese society. The upstarts that were trying to keep up with the Joneses, but were not able to catch on, created a huge demand for these “real fakes”. Yet, even now the domestic consumption in China is not very high and it is consumption of Chinese goods in the US and the EU that sustains the “factory of the world” that China has become.

Fake goods market size today is a trillion dollars every year. For comparison, the “huge” quantity of equipment that was left by the hastily departing US forces in Afghanistan was worth $80 billion, mere 8 per cent of one year’s counterfeits. The US Government Accountability Office, an arm of the US Congress looked into this issue and published a report in 2018. They purchased 47 items from online sellers in the US and of these 20 turned out to be counterfeit. This is in spite of the US Customs and Border Protection (CBP) working hard at more than 300 ports of entry. They seized 31560 shipments worth $1.3 billion in 2020. Even as lives were being lost to Covid-19 that was first noticed in China, Chinese companies were sending fake masks, test kits and Chloroquine tablets to the suffering world. The US seizures in 2020 included 12.7 million fake masks, 180,000 fake Covid-19 test kits and 38,000 fake chloroquine tablets. Some of the seized masks, though made in China had “Made in Taiwan” printed on them! Also included were fake and proven harmful personal care products like contact lenses, perfumes and skin cleansers and even fake US currency, car inspection stickers and college diplomas. In an extremely audacious attempt, the Chinese tried to send to the US fake badges of the Drug Enforcement Administration (DEA) and of Federal Bureau of Investigation (FBI) but these were intercepted by the CBP agents on August 17, 2021. The fake trade seems to have graduated to high-tech equipment. In July this year, a court in New Jersey indicted a person for importing $1 billion worth of fake networking equipment from China and Hong Kong and selling it in the US through 19 companies owned by him and through store fronts of Amazon and eBay among others. The devices came with real-looking counterfeit labels, stickers, packaging and documentation but there was nothing fake about the risks of hacking that came with these.

China is the ultimate surveillance state with 500 million cameras watching every move of its 1400 million citizens. Apps on citizens’ phone, made mandatory in the name of preventing Covid-19 spread, report on the citizens’ whereabouts at all times. A two million strong cyber army maintains the Great Firewall of China ensuring that forbidden words and phrases get detected and deleted in almost real time. The quality and quantity of counterfeits shows that it cannot be done in backyard tin sheds. The fakes are made in large factories with hundreds of employees, require sophisticated equipment, have multi-branched supply chains of raw materials and intermediate products. It is not possible without full complicity of the state apparatus. Even the giant Alibaba had complained in 2017 that of the 1910 counterfeiting cases that the company reported to the authorities, only 129 were prosecuted. Periodically, China announces a crackdown on fake goods and soon it is business as usual again.

All the fake goods exported to other countries result in enrichment of China and contribute to its economic heft and the hubris of its leaders though promoting such nefarious activities can recoil on China too. It was reported a month ago that at least 83 tons of gold representing over 4 per cent of gold reserves held by China might be fake though the true extant of the problem may never be revealed by the secretive state. Fake goods have resulted in industrial accidents and fires across the country. A term “Tofu buildings” is common in China referring to buildings constructed with sub-standard materials and these keep tumbling down. The term “gutter oil” refers to oil recovered from drains, decolourised and sold as edible oil. The incidence is so high that the term has even a Wikipedia entry. It is estimated that at least 10 per cent of all cooking oil sold in China is gutter oil. In 2012, even a Chinese pharmaceutical company was accused of using gutter oil for manufacturing antibiotics. As the scale of this industry is very large and it provides employment to a large number of Chinese, the state is not considering banning it but is promoting the idea of converting this dirty oil to biofuel. Yet, its sale as cooking oil continues because it gives more profits than biofuel. Most of the soaps, shampoos and other cosmetics coming from China are made using this filthy oil.

It is time the democratic nations of the world realise the futility of expecting China to follow the norms of the civilized world. There are rogue elements and criminals in every society but transparency in democracies ensures that the state does not become complicit in such activities. China, the erstwhile bamboo curtain and the present digital surveillance state with its Great Firewall of Internet will remain opaque as long as the communist party is in power. The democracies have to accept that including China in the WTO with the expectation that it will play by the rules of international trade has turned out to be a mistake. It is time to work towards a democratic World Trade Order to the exclusion of secretive, totalitarian states like China if we value our freedoms and our safety more than a few extra coins.    

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