That's the place.

We have been looking at this hardware more closely and even with the face plate clamped down all the way one can make the handlebars rock slightly in the clamp. This is apparently because the splined central part of the handlebars, which has a slightly larger diameter than the surrounding tube, is slightly barrel shaped instead of cylindrical, but the clamp around it seems to be cylindrical. So when one pushes down on one side of the handlebars more than the other, there is enough torque to rotate the splined part within the clamp slightly. This tiny motion acts kind of like a rasp on the inside of the aluminum faceplate and apparently over time removes enough material so that the handlebars come loose.

I don't think that will work here since the handlebars and the clamp do not seem to be the same geometry. If the aluminum face plate was ever splined it must have been over a very small area, as careful inspection didn't show any sign of it, and it these would have had to have completely worn off.

The stem is marked "Kalin", I could not find any identifying marks on the handlebars. I think in this case the problem is actually more with the handlebars than the stem, since the stem does seem to be a simple cylindrical geometry, but not the handlebars. There may be a stem that will hold this particular handlebar design well, but the one on this bike is not it.

I am beginning to share your views about the safety of cheap generic bicycle parts...