SHIJIAZHUANG, China — Barely a month ago, China’s staging of the Beijing
Olympics demonstrated how the Communist Party could mobilize its authoritarian
political system. But the international scandal now unfolding over China’s
contaminated dairy products is demonstrating, again, the weaknesses of that
In recent days, Prime Minister Wen Jiabao has apologized for a scandal that has
sickened 53,000 children, killed at least three and devastated China’s dairy
industry, which he has promised to reform.
But a year ago, Mr. Wen made a similar pledge to overhaul safety regulations
for food, drugs and other products in response to other safety scandals. His
government authorized $1.1 billion and sent 300,000 inspectors to examine food
and drug producers, but regulators could not prevent China’s biggest dairy
producers from selling baby formula laced with an industrial additive called melamine.
The dairy scandal raises the core question of whether the ruling Communist
Party is capable of creating a transparent, accountable regulatory structure
within a one-party system. Party leaders realize that effective regulation is
essential to convince the world that China’s products are safe and so maintain
the rapid economic growth that has helped to sustain the party’s power. But many
analysts say the party’s need to maintain control — of the economy and of
information — undermines the independence of any regulatory system.
Beijing’s political priority of holding a “harmonious” Olympics was also a
factor. Parents who tried to act as whistle-blowers were thwarted by an
unresponsive bureaucracy, while Chinese journalists were blocked by censorship
edicts banning coverage of politically touchy subjects during the prelude to the
Officials now acknowledge that China’s leading dairy companies — including
the Sanlu Group, the worst offender in the scandal — were exempted from
mandatory government inspections. In hindsight, inspections might not have
mattered: in May, the government’s top food quality agency rated dairy companies
among the safest producers in China’s food industry, reporting that 99 percent
of them passed safety inspections for their infant milk formula. Now, the
government says that 22 dairy companies, including export brands like Mengniu
and Yili, have produced powdered baby formula that contains traces of
“The system needs to be re-examined, top to bottom,” said Eliot R. Cutler, an
expert on regulation and energy policy at the Beijing office of Akin Gump, an
international law firm.
Much of the public outrage in China over the dairy scandal is focused on how
the problem remained hidden for months as parents bought bad formula without
realizing they were poisoning their babies. Beijing authorities say they learned
about the problem only this month. They have blamed greedy corporations and
local officials for wrongly hiding the crisis. But there were early warnings
that were muffled by censorship or lapses in Beijing.
Fu Jianfeng, an editor at one of China’s leading independent publications,
Southern Weekend, recently used a personal blog to describe how his newsweekly
discovered cases of sickened children in July — two months before the scandal
became public — but could not publish articles so close to the Games.
“As a news editor, I was deeply concerned,” Mr. Fu wrote on Sept. 14. “I had
realized that this was a large public health disaster, but I was not able to
send reporters to do reporting.”
Even earlier, on June 30, a mother in Hunan Province had written a detailed
letter pleading for help from the food quality agency, the General
Administration of Quality Supervision, Inspection and Quarantine. The letter,
posted on the agency’s Web site, described rising numbers of infants at a local
children’s hospital who were suffering from kidney stones after drinking
powdered formula made by Sanlu.
The mother said she had already complained in vain to Sanlu and local
“Urgent! Urgent! Urgent!” she wrote. She called on Beijing authorities to
order a product recall, release the news to the Chinese media and provide
medical exams for babies who had consumed Sanlu formula. “Please investigate
whether the formula does have problems,” she wrote, “or more babies will get
Hundreds of miles north, the health bureau in Gansu Province was also facing
an unusual outbreak of sick infants. The Gansu Health Bureau spokesman, Yang
Jingke, said his agency sent an urgent report in July to the Ministry of Health
in Beijing describing how local hospitals were reporting high numbers of babies
with kidney stones. Mr. Yang, speaking at a news conference this month, said all
the babies had taken the same brand of formula. He said the Ministry of Health
responded that it had attached “great importance” to the problem and would
investigate. But nothing happened.
Beijing typically tries to address scandals with high-profile firings and
arrests. After last year’s food and drug safety crisis, the head of China’s Food
and Drug Administration was put to death for corruption. His execution was
interpreted as the party’s way of sending a stern message warning lower
officials to toe the line.
The government also oversaw a four-month crackdown that resembled a
nationwide vice sweep: 1,187 criminal investigations opened, 300 drugmakers
shuttered, 192,400 unlicensed food shops closed and 1,400 substandard
slaughterhouses shut down.
The crackdown in response to the dairy scandal already echoes last year’s
campaign. The country’s top food quality official, Li Changjiang, resigned while
lower officials were fired or arrested.
But the essential relationship between regulators and industry seems
unchanged. Some dairy farmers interviewed this week in Hebei Province said it
was an open secret that milk was adulterated, although many claimed they did not
know that melamine was being used. Some dairies routinely watered down milk to
increase profits, then added other cheap ingredients so the milk could pass a
“Before melamine, the dealers added rice porridge or starch into the milk to
artificially boost the protein count, but that method was easily tested as fake,
so they switched to melamine,” said Zhao Huibin, a dairy farmer near
Mr. Zhao said quality testers at Sanlu took bribes from farmers and milk
dealers in exchange for looking the other way on milk adulterated with melamine.
“In this business, bribery keeps everyone silent,” he said.
A company spokesman at Sanlu, after receiving a faxed list of questions, said
the company would have no comment on this or any other aspect of the scandal.
Analysts say the lack of a truly independent regulatory system means that
high-profile gestures, like executing or firing officials, have limited impact,
especially because local industries are so often intertwined with local
“These after-the-fact administrative measures miss the point,” wrote Arthur
Kroeber, managing director of the Beijing-based consultancy, Dragonomics, in a
recent note to clients. He said the problem was rooted in the Communist Party’s
continued involvement in pricing control, company management and the flow of
“The party views control of all three as necessary to its rule,” he added.
“Further major scandals are thus inevitable.”
The structure of the Sanlu Group, which keeps its headquarters in this gritty
industrial city, is a case in point. The Hebei Province Communist Party
appointed the company’s chairwoman, who was also a party official. Meanwhile,
city officials in Shijiazhuang are now accused of helping cover up the problem
rather than trying to warn the public.
For Sanlu, a pivotal moment came on Aug. 2 when company officials informed
the board about the melamine problem. Sanlu is a joint venture with the New
Zealand dairy giant Fonterra. Fonterra owns a 43 percent share and has three
members on the board. Fonterra’s executives say their representatives
immediately pushed for a public recall at the board meeting, only to be
overruled by the rest of the board.
Sanlu had first received complaints about its powdered baby formula last
December, according to state media. By March, the company had hired private
companies to test its milk powder for contaminants. Yet Sanlu never issued any
public warnings and never stopped promoting its products. On May 18, days after
the devastating earthquake in Sichuan Province, the company made a
much-publicized donation of $1.25 million worth of baby formula for infants
orphaned or displaced by the catastrophe.
But problems were surfacing. On May 21, a father named Wang Yuanping posted a
notice on a popular Internet message board, Tianya, in which he detailed months
of frustrating interaction with the company. His infant daughter had been
sickened after drinking the powdered formula. “Her urine was viscous and yellow,
with granule,” Mr. Wang wrote. “This stopped when she stopped drinking and
resumed when she started drinking.”
He had first alerted Sanlu in February because he feared someone might be
counterfeiting the company’s products. Sanlu asked him to send a sample for
testing and later company officials confirmed that the sample was their product.
But they told Mr. Wang that the results were a “business secret” and refused to
divulge them. By late March, Mr. Wang also complained to local officials in his
hometown in Zhejiang Province but they said he needed to pay for expensive
testing to prove the formula was bad.
By midsummer, some Chinese journalists were learning that sick babies were
arriving at hospitals.
Mr. Fu, the editor at Southern Weekend, wrote in his blog that Sanlu applied
pressure to block reporting and used its political connections to prevent some
other newspapers from publishing articles about the problem. But with only weeks
before the Olympics’ opening ceremony, the timing made media coverage nearly
impossible. “We couldn’t do any investigation on an issue like this, at that
time, in order to be harmonious,” Mr. Fu wrote.
For two years, the Central Propaganda Department had been issuing broad
reporting guidelines that were distributed in Internal Digest, a classified
bimonthly Communist Party bulletin. The emphasis was on promoting good news
about the Olympics. But the scandals in 2007 over the safety of Chinese food and
drug exports complicated this agenda. A huge pet-food recall in the United
States was traced to Chinese animal feed adulterated with melamine. At home,
Chinese consumers were alarmed over a bad-pork scare.
Propaganda officials responded by issuing rules that required domestic
publications to obtain permission before publishing any articles about food
safety and other politically delicate subjects.
On July 24, a television station in Hunan Province reported that infants who
had consumed the same powdered formula were suffering kidney problems. The
station showed packages of Sanlu formula, but was careful not to name the
Yet the problem remained largely concealed. “I felt very guilty and
frustrated then,” Mr. Fu wrote. “The only thing I could do was to call every
friend I knew to tell them not to feed their children with Sanlu milk
The problem was finally exposed in September when the New Zealand government,
after discussions with Fonterra executives, contacted authorities in Beijing.
Beijing officials say they knew nothing about the scandal until September,
though a Fonterra company spokesman said the company believed the central
government knew in August.
Chinese leaders have since responded forcefully, even as they have distanced
themselves from responsibility for the scandal. The aggressive initial tone of
media coverage shifted this week, as state media outlets like Xinhua, the
country’s official news agency, emphasized how much the public appreciated the
government’s response. And censors were filtering the Internet and removing
certain postings, including the blog item by Mr. Fu.
Reached by telephone on Friday, Mr. Fu said he could not answer any questions
about his blog.
This week, China Central Television, the government network, has been
offering reassurances that the dairy products still on the shelves are safe.