China+bans+foodstuffs,+farm+produce+imports+from+Japan

URL of original article: [] Article Title: N-Plant Radiation: China bans foodstuffs, farm produce imports from Japan Source: The Hindu Business Line Date of article: April 9, 2011

Summary: Due to the Japanese tsunami and earthquake, the Japanese nuclear power plant crippled. Due to the growing fears of radiation contamination, China as Japan's neighboring country announced starting April 8, it banned all the imports of foodstuff, farm produced products from 12 major areas in Japan and five Japanese counties being blacklisted on March 24. All food products from Japan and other neighboring countries will carry out radioactive tests to make sure it reaches the safety food standards from Chinese residents and there people.

Vocabulary: Market Failure: Inefficient distribution of resources in a free market economy. There are several types of market failure including externalities, merit goods and demerit goods, etc. When a market fails, governments would normally intervene to prevent it harming and interfering other distribution of resources. Negative externalities of production/ external costs: It is when a production of a good or service creates external costs that are damaging to third parties. (Alot of times its due to environmental problems) Negative externalities of consumption: When a good is being consumed by individuals or the consumers it will indirectly affect third parties. (example: such as smoking) Factors of Production: Allows economy to produce its output. (Land, labor, capital, entrepreneurship) Shortage: When quantity demanded is more than quantity supplied.

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Evaluation: China has always been one of Japan's biggest and fastest growing importers of the products its firm produces. But due to the environmental natural disaster that occured recently, it caused several problems to Japan's economy and it also affected on to China. Due to the tsunami, it led to earthquake, which then led to the crippling of the Japanese nuclear power plant. This leak led to the growing fear of the food safety coming from Japan. Therefore, China expanded its ban on imported food stuff and farm products. China and other neighboring countries, including Japan itself now decides to run radiation test for all products to make sure its safety. This demonstrates the negative externalities of production. Since Japan been influenced by the radiation problem that caused the environment to be polluted and creates the danger in its farm products and food stuff, it has created affects on the third party which is China. To deal with this problem, the Chinese government have already taken action by banning some products from specific areas in Japan. But not only so, the government could also issue tradable emission permits. Because the radiation already created a negative affect to the country itself, its environment and its food products, it is better to set a limit rather than still selling all the high radiation products. And it can also ensure firms to trade permits on the market again.

Not only so, due to the natural disaster, it created a change in factors of production to many firms in Japan. Many resources are no longer available at this time or that they are very limited. There will be less supply to fulfill the huge demand from Japanese residents who is in need of these to fulfill there basic needs. Not only so, products in the future may also risk over supply with little demand due to the fear of radiation and other problems caused by the natural disaster. Firms can use the radiation test to prove that there product is perfectly fine. And it can also adapt the promotional economies, where firms promote an advertise to raise there popularity or to clear out rumors. By doing so the demand will slowly rise again.

I think this is a bad situation. Because the crippling of the Japanese nuclear power plant will create a huge chain affect to the nature which then will affect on our health. The whole food chain will change and create bad side affects. I think China made the right situation to ban some of the imported food stuff and farm products from 12 areas in Japan because it decreases the possibilities for the factors of production in China to change negatively. Also Japan should set a limit to the amount of radiation it can have then it can make more money and still let the market run, decrease unemployment rate. It will also keep the quantity supplied enough for the people in Japan and outside of japan