Tit for Tat: China-U.S. Food Fight Escalates

July 30, 2007

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The Chinese yuan and counterfeit products are losing out in international attention to the ongoing spat over food quality trade disputes between the U.S. and China. Shortly after China's unwelcome publicity over charges of tainted food and other products, the country retaliated earlier this month by suspending the import of poultry and pork products from several major American producers.

Last week Chinese Premier Wen Jiabao told a cabinet meeting that full attention had to be paid to food safety and product quality. Substandard Chinese products have been found in a number of countries, and, of late, Beijing has been having to defend Chinese-manufactured exports.

Over the past few weeks, the United States has banned imports of some Chinese exports, and with product and food safety issues so much in the international spotlight, Beijing has been taking steps to remedy problems. A five-year plan was announced in April to address shortcomings in the supervisory structure, legal regime, quality of personnel and more general quality assessment. Immediate measures adopted have included the following:

Establishing a China Food Safety Web site; The reporting of supervisory activities through regular media releases; The preparation of a product recall system; The banning of chemicals and additives that fall below international standards; The blacklisting of companies that flout the law; and A crackdown on rogue factories.

At the highest level, Forbes' Oxford Analytica notes, "the leadership has demonstrated its determination to tackle the problem with the recent execution of the former head of the State Food & Drug Administration for taking bribes when licensing drugs."

The country is also responding with a tit-for-tat crackdown on U.S. companies, with the Chinese government vowing to begin publicizing the names of offenders regularly.

Shortly after China's unwelcome publicity over charges of tainted pet food, toothpaste and other products, the country retaliated earlier this month by suspending the import of poultry and pork products from the world's largest meat processor, Tyson Foods, as well as several major American producers including Sanderson Farms, charging that they were tainted with bacteria or residues of drugs and pesticides, according to The New York Times.

Forbes reports:

It singled out a range of animal parts in China, including frozen chicken feet, frozen pork ears, pork intestines, pork ribs and frozen shrimp. According to a notice posted on the Web site of the General Administration of Quality supervision, Inspection and Quarantine, the meat products contained unacceptable levels of salmonella, anti-parasite drugs and additives.

Cargill Meat Solutions has 45 days of review of the problem, as does Van Luin Foods USA, Inc., whose imports of frozen pig ears also were found to contain the leanness-enhancing feed additive ractopamine, China's Administration of Quality, Supervision Inspection and Quarantine (AQSIQ) said. The other companies' imports were suspended, although the AQSIQ did not say for how long.

Moreover, in the past month, substandard orange pulp, dried apricots, raisins and health supplements from the U.S. were banned due to high levels of bacteria.

The Agriculture Department is in the process of inspecting the affected food plants to try to assure the Chinese of their safety.

The Chinese government has thoroughly investigated each case of its own substandard products, said Li Yuanping, director of the AQSIQ's import and export bureau, the state-run Xinhua News Agency reported earlier this month (via Forbes).

The top minister of the food safety watchdog said in an interview with Xinhua News that the approval rates on food exports to the U.S. ran as high as 99 percent in 2005 and 2006, and compared the food safety issue to the risk of flying in an airplane that would "sometimes fall from the sky despite its high safety standards."

Meanwhile, the U.S. trade deficit with China continues to grow; in May, it was $20 billion, up nearly 17 percent from the first five months of 2006.

And last week, a joint investigation between Chinese and U.S. law enforcement authorities resulted in the arrest of 25 people in China and the seizure of more than $500 million worth of counterfeit Microsoft and Symantec software that was being made there and distributed worldwide, as reported by International Herald Tribune.

Despite these concerns, the Chinese economy continues to look upbeat, as a host of influential economists predicts China will likely surpass Japan in the coming decade to become the world's second-largest economy.

Experts say the economic outlook is conditional on whether the country could swiftly adjust itself to ever-evolving domestic and global circumstances. The members of the Beijing-based China Economist 50 Forum gathered to debate the country's "big development topics of strategic importance" in the coming 10 years, ahead of the 17th Congress of the Communist Party of China, scheduled for autumn.

There, some experts said they believed that China faced obstacles, including environmental problems and resource constraints, rising labor costs, imbalanced foreign trade, economic restructuring and an incomplete social security network.

Despite the challenges, one prediction is that China is on the way to becoming a world-class economic power, after only the U.S. by about 2018. At that time, China's per capita GDP (gross domestic product) is expected to surge from the current US$1,870 to about US$6,000, a benchmark between middle- and upper-developed countries, reports China Daily. If growth is sustained, China will outpace Japan as the world's second-biggest economy.

Despite the fast growth, the economists reached the consensus that China should step up its efforts to continue its "balanced approaches" to tackle "unprecedented challenges" while becoming globalized.

Fred White contributed to this post.

Earlier: China Food Crackdown Shuts 180 Factories

Resources China-U.S. Talks Continue, Amid Legal Volleys by Steven R. Weisman The New York Times, July 30, 2007

China Fights Back, Goes After U.S. Meat by Anita Chang The Associated Press, July 14, 2007

Beijing Scurries To Improve Food Safety Forbes - Oxford Analytica, July 30, 2007

U.S. Census Bureau: Trade in Goods (Imports, Exports and Trade Balance) with China

China Escalates Food Fight With U.S. by Shu-Ching Jean Chen Forbes, July 16, 2007

U.S. Treasury Secretary Paulson arrives in China by Wang Yan The People's Daily, July 29, 2007

Forum paints rosy economic picture by An Lu China Daily, July 30, 2007

Friction over trade tests U.S. - China ties by Steven R. Weisman International Herald Tribune, July 30, 2007

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