From what I read, it appears that buyers are putting tremendous price pressures on Chinese manufacturers. Like all manufacturers, there's only a certain amount that they can improve their processes and productivity. After that, they do whatever they have to. In this case, using cheaper lead based paint.
One article said that this Chinese company has been a long term supplier to Mattel. I'll bet Mattel put pressure on the company to cut cost, and the Chinese executives put pressure on their factory managers to cut cost. The factory manager is already driving the workers as hard as possble and can't get any more out of them. Someone offers him cheaper paint and he jumps on it. So he becomes a hero until Mattel discovers the substitution.
This is the same thing that happens in companies in the US - you get what you ask for (one way or another).
Go into the world and do well. But more importantly, go into the world and do good.