World Economic Forum and China's Milk Crisis

Posted by: Dexter Roberts on September 26, 2008

Opening day of the World Economic Forum meeting in China, this year held in the coastal city of Tianjin, one of China’s four centrally-administered cities (others include Beijing, Shanghai, and Chongqing) and a municipality with a rich history of connections to the rest of the world—Tianjin served as a foreign concession during the Qing Dynasty and Republican era and so was home to many people from around the world. Now the city is usually lost in the shadow of nearby Beijing and is known to be a tad provincial, something city promoters certainly hope the WEF will start to change.

So as business leaders, academics and journalists gather here from around the world, many of them eager to exchange views and take stock of the implications of the widening world financial crisis, I thought it would be interesting to also consider what is on the minds of many Chinese, the vast majority of which are not here for this high level confab, of course.

Not surprisingly, milk and dairy products are what many average Chinese are most concerned about these days. In particular, how dangerous are they to one’s health. And of equal importance: what went wrong with China’s monitoring system, supposedly boosted in strength and capability after earlier safety and quality crises a year or so ago. And who knew what, when—to what degree did Chinese officials know earlier that a crisis was brewing and why didn’t they do something about it more promptly. (Of course, the milk scandal is also an issue for the WEF participants. In one panel that examined China’s need for more transparency in its financial system, the milk scandal was brought up as an example of how local Chinese media is still often limited in what it can report on—whether that is a top company’s finances—or the safety of the milk supply. And not surprisingly, Niu Gengsheng, the head of Mengniu, one of the top milk companies implicated in the scandal, was a no-show at the WEF.)

So what are some Chinese talking about on the Internet, when it comes to the milk scandal? One event that has sparked much online debate has been the Chinese official response to the crisis and already heads are rolling: Earlier this week, Li Changjiang, the head of China’s quality watchdog—the General Administration of Quality Supervision, Inspection and Quarantine—resigned to take responsibility for the widening bad milk scandal. It was clear in his job as top supervisor of food and product quality he bore responsibility. But less remarked on was the possible effect that some of his poorly chosen comments may have had on his ultimate resignation.

In an apparent effort to reassure foreigners who enjoyed the recent Beijing Olympics and Paralympics, Li had the following to say on Wednesday September 17 as reported in the official Chinese press: Because of “special management measures…all the food supply, including dairy, for the Olympics and Paralympics were safe,” Li said less than one week before his resignation. “We took special quality management measures aimed at food supply for the Games,” said Li. (The desire to have a successful Olympics too may have stifled an earlier reporting on the milk crisis.)

That not surprisingly immediately raised some angry questions and comments in the Chinese blogosphere—in particular, why similar measures weren’t taken to protect the Chinese people. Here’s one representative comment from a blogger on Hongxiu.com from September 20th just two days before Li’s resignation: “Why couldn’t such kind of measures be used when producing food for the Chinese masses???… Is face more important than Chinese lives? Is the health of foreigners more important than the lives of Chinese infants?”

Now bloggers are beginning to wonder whether China’s political elite may have taken extra precautions to shield themselves and their families from dangerous food. Raised in this discussion, has been a secretive organization called the State Council Central Government Offices Special Food Supply Center, and its role in protecting the food supply for China’s most powerful leaders. There was an interesting article in the Associated Press earlier this week that discussed this. Here’s what AP said:

“While China grapples with its latest tainted food crisis, the political elite are served the choicest, safest delicacies. They get hormone-free beef from the grasslands of Inner Mongolia, organic tea from the foothills of Tibet and rice watered by melted mountain snow. And it’s all supplied by a special government outfit that provides all-organic goods from farms working under the strictest guidelines.”

“That secure food supply stands in stark contrast to the frustrations of ordinary citizens who have faced recurring food scandals — vegetables with harmful pesticide residue, fish tainted with a cancer-causing chemical, eggs colored with industrial dye, fake liquor causing blindness or death, holiday pastries with bacteria-laden filling.”

The Associated Press then went on to quote the center’s director; from a speech he made earlier this year, that was posted on his organization’s website: “We all know that average production facilities use large quantities of chemical fertilizers and pesticides. Antibiotics and hormones are commonly used in raising livestock and poultry. Farmed aquatic products are contaminated by various kinds of water pollution,” the center’s director Zhu Yonglan said. “It goes without saying that these are harmful when consumed by humans,” he added.

And here is what one commenter on China’s top online forum site Tianya.com had to say on this issue (in response to another blogger’s question about whether Chinese president Hu Jintao might have drunk bad milk): “That is such a childish question. Have you heard about ‘Special Supply’? The [food of] the leaders of the Party and the nation is from this ‘Special Supply.’ Even the rice they are consuming is different from that we eat. Don’t you worry about them,” the commenter concluded, apparently sarcastically.

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Bloomberg Businessweek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies.

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