Sue P., Middleton, WI
The recall occurred based on findings that there were excessive levels of formaldehyde found in the clothing; concentrations of up to 900 times more than was legally allowed. Formaldehyde is flammable, and is also a known neurotoxin and carcinogen.
The investigation itself was prompted after two children had their pajamas catch on fire; these pajamas were also made in China.
That said, buying clothes made in the United States does not always guarantee safety either. At this time, there are no government regulations on the allowable use of formaldehyde when it comes to the production of baby clothes - or adult clothes for that matter.
So, while it's not easy to say for sure whether or not clothing coming from China is safe to wear, I prefer to err on the side of caution. That caution being, going organic.