Saturday, July 28, 2007

International Herald Tribune Editorial - Loaded energy dice

China steps up defense of its products' safety
By David Barboza
Copyright by The International Herald Tribune
Published: July 27, 2007

SHANGHAI: After years of being accused by the West of making only token gestures to fight fake goods, and months of complaints about the safety of its exports, China is taking extraordinary steps to change its image.

This week alone, Beijing unveiled new controls aimed at fighting counterfeit drugs and substandard exports. High-ranking bureaucrats and government regulators vowed to strengthen China's food safety system, tighten controls over chemical use by large seafood and meat producers, and create a system that held producers more accountable for selling unsafe products.

The government also announced that it had broken up a series of criminal rings that operated huge manufacturing centers, producing everything from pirated Microsoft software and fake Viagra to imitation Crest and Colgate toothpaste.

And the authorities have even reached out to the international public relations consultancy Ogilvy to help the country refurbish its image.

"This is a very concerted effort to show they are doing something," Russell Leigh Moses, a longtime political analyst based in Beijing, said. "They are using work groups, issuing directives and closing factories. They are rolling out the artillery."

Spurred on by a sense of economic realpolitik, Beijing has grown particularly fearful that mounting international pressure could lead to sanctions or embargoes, and thereby dent China's booming economy. It is unclear whether promising to overhaul its regulatory regime and stepping up enforcement is enough to tame what some view as the Wild, Wild East of capitalism, analysts say, because some of the problems are so deeply rooted.

"There's no quick fix," Henk Bekedam, the World Health Organization's top representative in China, said. "China has perhaps been cutting some corners because the focus has been on growth. But they have 5,000 companies that produce medicine. That's far too many. The government has a limited ability to enforce things. They need to start with simple things: reduce the number of people you monitor."

Still, even critics have been impressed with the catalog of changes.

The latest bold actions, experts say, are partly aimed at dampening political pressure from the United States and the European Union, where regulators and politicians are pressing for assurances about the quality and safety of goods made here after a string of recalls involving everything from tainted pet food and toothpaste to defective tires and dangerous toys.

For example, in Washington, President George W. Bush established a panel of cabinet officials to make recommendations aimed at minimizing dangers from imported foods or other products. The announcement coincided with U.S. congressional hearings on food safety.

Those issues will be at the top of the agenda of Treasury Secretary Henry Paulson, Jr. as he arrives for talks with Chinese officials this weekend.

Europe is also concerned. Top European Union officials are planning to meet in Beijing next month to discuss food safety and other issues. During a government-sponsored tour of a testing lab and toy factory near the city of Nanjing on Wednesday, the European consumer protection commissioner, Meglena Kuneva, pressed Chinese regulators to improve their standards.

Kuneva said she was hopeful that China would make progress but that if its products continued to be a problem, the EU would block market access.

"Toys like this can be in the hands of children, so do a good job," Kuneva told a young inspector examining a doll in a government toy testing lab in the city of Yangzhou. "The good name of this country is in your hands."

Many experts, however, doubt whether China can follow through on its promises, some of which have been made before. They also say that Beijing needs a better legal system and more serious enforcement.

But the strong pronouncements from the highest levels of government in Beijing hint at a new sense of urgency to ease a lingering crisis of confidence in the "Made in China" label.

Indeed, just two weeks ago, in a bold and unusually swift and decisive action, China executed the former head of the State Food and Drug Administration for accepting bribes and failing to police the marketplace.

Now, Beijing is undertaking the more difficult task of policing a wild marketplace, where counterfeiting and cutting corners are endemic.

Chinese officials have not, however, conceded that all the problems are Chinese in origin. Regulators have repeatedly accused the international news media of exaggerating the number of problem goods from China.

And some Chinese business owners complain of China-bashing, saying that protectionists in the West are seizing upon isolated incidents to drum up support for trade sanctions at a time when China is amassing a huge trade surplus with the rest of the world.

n similar tones, China has also argued that its food exports are no worse than the shipments of U.S. food entering China. After the U.S. Food and Drug Administration said last month that it would block five types of Chinese seafood, including shrimp, eel and catfish, from entering the U.S. market, China responded this month by banning imports of frozen poultry and chicken from the United States, insisting they were tainted by antibiotic residues.

Some observers called it payback. Others said it was first battle in a long simmering trade war.

But many experts say that China has also become increasingly candid about the challenges facing the country.

The government recently acknowledged that 20 percent of consumer goods and 14 percent of large truck tires made in China failed to pass inspections. Regulators also said they had confirmed that two makers of pet food ingredients and some seafood companies were indeed using banned or illegal chemicals to bolster production and profit.

The admissions of serious problems in the nation's production system is a surprising about face for China, which initially denied shipping troubled pet food ingredients to the United States and also insisted that European traders and not Chinese chemical producers were responsible for tainted cough medicine that killed at least 100 people in Panama last year.

Analysts say that as the evidence and bad news began to mount this year, China was forced to respond in a less reactionary way, particularly because the country's booming economy is built on foreign investment and trade.

Recently, the government has even sought crisis management advice from Western consultants.

"They have not historically been advice takers," said Scott Kronick, president of Ogilvy Public Relations Worldwide China, part of the WPP Group. "But they are reaching out in a genuine way to seek advice. I think they recognize everything doesn't have to be rosy."

Since then, officials from a variety of regulatory agencies and ministries have held press conferences to announce new regulations or to brief the media on successful crackdowns.

The local government of Beijing even arrested a Chinese television journalist last week after he broadcast a story about how food vendors in Beijing were making steamed buns, or baozi, by using softened cardboard as filler.

The government said the reporter was detained and that other television officials were punished for what was a hoax.

But, in perhaps one indication of how little confidence the public has in China's ability to safeguard its food supply, Internet chat rooms were quickly bombarded by people insisting the story was probably not a hoax.

"The government really knows how to fool normal people," said a person called the magician, who posted on the web site

"Now the whole world knows about this news, but you can't fool people like this. We have the right to know what is the real truth. Don't do the same thing as 2003, when SARS came."


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