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    China Business
     Jun 14, 2007
Page 1 of 2
China's poisonous exports
By Drew Thompson

The April upsurge in the deaths of cats and dogs in the United States alerted authorities to an emerging health situation that was ultimately determined to have been caused by pet food contaminated by imported wheat and rice gluten intentionally spiked with chemicals from China.

Aside from causing the deaths of household pets, contaminated byproducts of the adulterated pet food entered the human food chain as animal feed, affecting 20 million chickens, 56,000 pigs

and unknown numbers of fish in North America. While there appears to be no risk to human health in this case, the incident exposes a nascent threat to health stemming from the increased trade in Chinese foodstuffs as well as the capabilities and limits of US monitoring capacity.

Food safety and defense are important elements of global health governance. China and the United States share a common interest in ensuring the safety and security of the global food chain. The US government has increased its commitment to "food defense", as established in the Bioterrorism Act of 2002, but recent incidents have established that increased monitoring capacity at home is necessary to prevent adulterated products from being imported and entering the food chain. Increasing domestic budgets and working closely with trading partners, particularly large volume partners like China, will help reduce future incidents.

Chinese and international media reports routinely expose the damage caused by counterfeit and adulterated foodstuffs. Since the transition to a market economy, Chinese farmers have increasingly used dangerous or illegal pesticides and fertilizers to increase yields, used improper antibiotics and hormones to improve livestock and fish growth and employed illegal preservatives to increase marketability of semi-processed products. In a highly publicized 2004 tragedy, 13 babies died in Fuyang, Anhui province, from fake milk powder that had virtually no nutritional value.

Hundreds in Panama have died from an additive, diethylene glycol, which was added to cough syrup. Toothpaste manufactured by a Chinese company and exported to Panama and Australia is suspected of containing the same ingredient and is currently being recalled. In addition to the discovery of adulterated pet food ingredients in the United States, US Customs officials have discovered and embargoed numerous shipments of foodstuffs from China that are filthy or contaminated with banned chemicals. From the production standpoint, these incidents reflect two things: poor manufacturing practices due to the producers' efforts to increase profits at the expense of safety and the Chinese government's inability to effectively regulate a decentralized production base.

Oversight of China's large and decentralized food processing and distribution industry is the responsibility of 10 government departments, particularly the State Food and Drug Agency (SFDA). Yet responsibility for food safety is shared by departments within the Ministry of Health, Ministry of Agriculture, local animal-husbandry departments, industry commerce bureaus, and the Administration of Quality Supervision, Inspection and Quarantine. Overlapping jurisdictions, weak legislation, a predominance of cottage-industry production with little or no documentation and growing access to international markets is combining to create a significant challenge for China's regulators and trading partners.

Improved rural communications in China coupled with the liberalization and growth of global trade means that smaller, rural producers in China now have greater direct or indirect access to overseas markets. There are an estimated 1 million food processing operations in China, with as many as 70% of them as family businesses with fewer than 10 employees.

Animal husbandry, in particular, is dominated by rural households. As globalization advances and China is increasingly integrated economically with the world, its government faces the progressively more complex task of enforcing international standards on a still relatively isolated rural production base. As these small, often rural producers' products increasingly gain access to the global market, their potentially poor manufacturing practices present a global health governance challenge to governments tasked with protecting the health of their citizens.

While counterfeit and contaminated foodstuffs are not new phenomena in China, the US government, non-governmental organizations (NGOs) and importers will be forced to address this relatively new and growing problem.

China's food-processing challenges
Chinese regulators tasked with overseeing food safety face numerous challenges ensuring that Chinese products are safe for consumption. Environmental, structural and political factors all contribute to these challenges.

Environmental pollution poses a significant problem for food processors and the regulators that oversee their output. Access to clean water is a particular concern. Even the famed Maotai brand liquor has been threatened as its water supply, the Chishui River, becomes increasingly polluted. Processors must take precautions to ensure their products are not inadvertently contaminated by heavy metals, bacteria, fertilizers and other chemicals from water used in processing.

While the Chinese government plays a dominant role in regulating food and pharmaceutical production, it has had limited success in establishing a culture of safety in the industry and ensuring that unlicensed and unqualified processors and their products do not enter the market. The government, in particular, is unprepared to address food safety proactively when many producers are little more than cottage processors. Small processors often lack appropriate documentation and rarely have the technical capacity to ensure compliance with regulations.

Worst of all, small producers often see government oversight as capricious and corrupt, and spend more energy trying to outwit officials than "buying in" and focusing on compliance and good manufacturing practices.

The government's task is made even tougher by the widespread corruption at multiple levels. Local officials often collude with local companies, stymieing attempts by higher-level authorities to enforce safety regulations. At the highest level, the SFDA in China has been racked by a corruption scandal involving its founding director, which has extended to more than 60 people as well as provincial food and drug administrations.

Unscrupulous food and drug producers were able to buy various licenses from the national agency and its provincial and local branches. The astonishing scope of the administration's inability to effectively monitor the industry was revealed when the government reported in 2005 that they had discovered 114,000 unlicensed drug manufacturers and demolished 461 offending factories.

Companies that had been issued Good Manufacturing Practice (GMP) certificates were later found to be shipping unsafe products. The Chinese government has promised to "clean house". Premier Wen Jiabao and other senior leaders have publicly vilified corrupt SFDA officials, and the Supreme People's Court recently sentenced the former director to death.

While government departments intone that they take food safety seriously, they have been unable to oversee the food and drug industry effectively and reduce incidents. They are further hampered by the lack of strong consumer-protection laws and independent courts that place consumer protection above local economic and political interests. Additionally, China lacks a robust civil society that collectively represents the interests of 

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