VZCZCXRO6607
RR RUEHCN RUEHGH RUEHVC
DE RUEHBJ #0359/01 0320011
ZNR UUUUU ZZH
R 010011Z FEB 08
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC 4746
INFO RUCPDOC/USDOC WASHDC
RUEAUSA/DEPT OF HHS WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RUEAWJA/DEPT OF JUSTICE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHDC
RHEHNSC/NSC WASHDC
RUEAEPA/HQ EPA WASHDC
RUEHOO/CHINA POSTS COLLECTIVE

UNCLAS SECTION 01 OF 03 BEIJING 000359 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
EAP/PD FOR NIDA EMMONS 
HHS FOR OGHA/STEIGER AND PASS TO FDA/LUMPKIN 
USDA FOR FSIS/RAYMOND 
USDA FOR FAS OA/YOST, OCRA/ALEXANDER, OSTA/BRANT AND SHNITZLER 
COMMERCE FOR ITA/HIJIKATA AND CINO 
STATE PASS TRANSPORTATION FOR NHTSA ABRAHAM/KRATZKE 
STATE PASS CONSUMER PRODUCTS SAFETY COMMISSION RICH O'BRIEN/INTL 
PROGRAMS 
STATE PASS USTR CHINA OFFICE/TIM WINELAND 
STATE PASS OMB/INT'L AFFAIRS 
STATE PASS HOMELAND SECURITY COUNCIL 
STATE PASS IMPORT SAFETY WORKING GROUP 
 
E.O. 12958: N/A 
TAGS: TBIO EAGR ECON HHS ETRD BEXP CH
SUBJECT: FOOD SAFETY CAMPAIGN WON, BUT THE REAL BATTLE IS JUST 
BEGINNING 
 
Ref: A. 07 Beijing 4561 
¶B. 07 Beijing 4808 
¶C. 07 Beijing 5255 
¶D. 07 Beijing 5271 
¶E. 07 Beijing 5899 
¶F. 07 Guangzhou 1270 
 
¶1. (SBU) Summary: Chinese officials claimed success January 16 at 
the official wrap-up meeting for the four-month food and product 
safety "rectification campaign" and announced plans for a long-term 
regulatory structure to continue monitoring production quality of 
the nation's industries. Despite shutting down hundreds of food and 
consumer product manufacturers, revoking export permits, and 
inspecting tens of thousands of factories, Vice Premier Wu Yi and 
AQSIQ Minister Li Changjiang emphasized at the event that much work 
remains to be done.  Regulatory agencies will now seek to solidify 
the campaign's achievements and develop a culture of quality and 
safety through more effective supervision and enforcement. An AQSIQ 
official told ECON Mincouns that his agency has recommended to the 
State Council that it preserve the Leading Group on Food Safety and 
Product Quality, however, a decision is not expected until February. 
 End Summary. 
 
¶2. (SBU) AQSIQ Policy and Legislation Director General Liu Zhaobin 
met January 18 with ECON Mincouns and econoff to discuss the results 
of the food and product safety campaign and pending Chinese 
legislation (septel), as well as the future of the Leading Group on 
Food Safety and Product Quality. 
 
Campaign's Key Achievement: 
Improving Food Safety 
--------------------------- 
 
¶3. (SBU) According to Liu, the food and product safety campaign 
yielded three primary achievements: it established a method for the 
implementation and enforcement of food safety measures; it provided 
a survey of China's food industry; and it achieved the "twelve 
one-hundred percent" goals for conformity with regulations.  In the 
campaign's aftermath, national regulators will continue to oversee 
large-scale food enterprises through certification systems, while 
local food safety authorities will be responsible for "Tracing and 
Filing Systems" that oversee small, local enterprises.  DG Liu said 
that AQSIQ now has a better grasp of the structure and development 
of China's food industry, particularly small-scale food enterprises 
with 10 or fewer employees, which comprise 79 percent of the 448,000 
food enterprises, according to the August 2007 White Paper on Food 
Quality and Safety. 
 
¶4. (SBU) Official Chinese statistics from the campaign suggest 
impressive strides were made; however, there is no comparable 
historical data to gauge what was actually achieved.  The official 
numbers include: of 98,000 food enterprises, 100 percent are now 
registered for production; of 120,000 small scale food workshops, 
100 percent signed quality safety commitments; 100 percent of 2.8 
million supermarkets and grocers established food supply 
verification practices; and 10 percent of 33,000 consumer product 
manufacturers have conduct quality record-keeping. (Begin Comment: 
This data suggests the campaign covered the larger food enterprises, 
i.e., thos 20 percent with more than 10 employees, and perhaps also 
represents the majority of those which might be exporting products. 
There are still 353,000 small food processors producing for the 
local, China market.  However, this "report card approach" is not 
really useful for gauging China's progress as food safety is clearly 
not a one-time event but rather a long-term, continuous process. 
Other kinds of data, such as a demonstrated lower incidence of 
substandard goods, would be more relevant indicators of improvement 
 
BEIJING 00000359  002 OF 003 
 
 
but would take longer than a four-month campaign to demonstrate 
success.  Increased registration and supervision, while steps in the 
right direction, are means to an end, not ends in themselves. 
Inquiries with AQSIQ to clarify campaign results and place them in a 
historical context, including confirmation of the number of food 
processing firms yet to be licensed, have not yet been answered. End 
Comment) 
 
¶5. (SBU) There is also some unfinished toy business to address. 
AQSIQ revoked toy manufacturer export certifications last fall and 
required new factory inspections before factories could be 
recertified. According to a Beijing-based exporter, while some of 
the larger and politically well-connected manufacturers have been 
inspected and recertified, smaller to medium-sized firms are still 
waiting for inspectors to show up.  In some instances, when 
inspections have taken place, firms have been waiting more than four 
weeks for their certificates to be issued. With exporters worried 
about their 2008 pricing strategy amidst importer demands for costly 
testing, delayed recertification only adds to their business 
uncertainty. 
 
Preparing for the Long Term 
---------------------------- 
 
¶6. (SBU) According to Liu, the next phase of China's food and 
product safety regulation will encompass "two chains, two systems, 
and one network." The first "chain" is Product Whole Process 
Supervision covering product design, material procurement, 
manufacturing, sales, and service.  The other "chain" is Food Whole 
Process Supervision, covering farming, processing, distribution, 
retailing and consumption.  The "two systems" are a food safety 
Quality Traceability System and a Responsibility Accountability 
System.  The "network" refers to a national Product Quality and 
Safety Supervision Network.  The goal with this concept is to create 
a more comprehensive and systematic approach to the regulation of 
food and product safety at all levels of government and within 
business supply chains. While details are not yet available, Liu 
said that this regulatory framework reflects the nature of China's 
system where government regulates a process, unlike the U.S. system 
which assigns regulation of products to particular federal agencies. 
 (Comment: These "chains" perhaps represent a similar approach to 
that elaborated by the U.S. Import Safety Working Group in their 
November 2007 Import Safety Action Plan, where a major 
recommendation is to focus on risks over the entire life cycle of a 
given product to assure quality.) 
 
¶7. (SBU) Vice Premier Wu Yi and AQSIQ Minister Li Changjiang in 
their remarks at the January 16 campaign wrap-up meeting 
acknowledged the challenge of implementing new safety rules.  The 
2007 campaign was a one-off program to resolve critical problems in 
specific areas and industries, they noted, but future campaigns will 
follow. The goal now is to prevent any backsliding and address areas 
that fell outside the scope of this recent campaign, such as 
agricultural goods and wholesale food markets.  While 120,000 small 
food shops may have signed "food safety pledges" during the 
campaign, for example, Wu Yi noted that many seasonal shops are 
still not certified and illegal advertisements still proliferate. 
Furthermore, while food and toy recall regulations were released 
August 2007, there is still no mechanism for implementing them or 
deciding which agency under what circumstances takes charge of 
recalls. 
 
Whither the Leading Group? 
-------------------------- 
 
¶8. (SBU) AQSIQ has recommended to the State Council that it preserve 
 
BEIJING 00000359  003 OF 003 
 
 
the Leading Group on Food Safety and Product Quality chaired by Vice 
Premier Wu Yi.  If the State Council in February approves the 
continuation, DG Liu said, Wu Yi's replacement as the Chair of this 
leading group could then be announced.  Liu said that AQSIQ was an 
important player in the Leading Group, but not important enough to 
offer up a Chair.  AQSIQ, in his opinion, would not become part of a 
"super ministry" for food and product quality in the same way that 
energy, transportation, and environment-construction ministries 
might be restructured, as some observers expect. 
 
Comment: The Future of 
Food and Product Safety 
----------------------- 
 
¶9. (SBU) The key achievement of China's food and product safety 
campaign is that it elevated the issue of food and product safety to 
the national stage and committed political and economic resources to 
addressing the system's shortcomings.  (In this sense, it is very 
similar to the various IPR campaigns that China has launched and 
"won.")  The notion of "safety" is now an accepted topic in public 
debate, as evidenced by the government's lead in using mass media to 
drive home its message.  Broad, official statements even indicate 
that regulators want help exposing problems in the future and want 
government to communicate more with the public.  The August 2007 
White Paper on Food Quality and Safety acknowledges a role for media 
(albeit undefined) in reporting violations, while the new food 
safety law (septel) includes whistleblower clauses and requires 
agencies to notify consumers about food safety risks (although it 
does not specify how nor in what timeframe).  Somewhat surprisingly, 
the campaign itself did not contribute to the drafting or tweaking 
of China's new food safety law. 
 
¶10. (SBU) While AQSIQ and other government agencies have yet to 
define all of the elements of a beefed up regulatory system, United 
States engagement and foreign media attention on the issue has 
helped accelerate the process of reform and supervision.  As a 
Beijing CIQ official remarked to Econoff, United States pressure 
following the 2007 food and toy safety problems pushed China to take 
remedial measures it would not have taken voluntarily.  Although 
this safety crisis was sparked by substandard Chinese exports, the 
reforms that China now wants to put into place will target quality 
of both exported and domestically consumed goods; Chinese consumers 
will benefit. However, from the perspective of the U.S. manager of a 
major food processing firm in China, food safety is a "continuous 
process, not a one-time hit."  Ensuring safety will depend on how 
well Chinese regulators implement reforms as well as on an 
attitudinal shift by producers and manufacturers about the value of 
product safety to their business success, rather than on the 
political success of a campaign.  Post will continue to stay engaged 
with key Chinese agencies as they move forward on their regulatory 
reforms. 
 
RANDT