China Challenges

Mixing Melamine into Animal Feed an "open secret" in China

AP reports:

The industrial chemical melamine is commonly added to animal feed in China to make it appear higher in protein, state media reported, in what appeared to be a tacit admission by the government that contamination is widespread in the country's food supply.

The practice of mixing melamine into animal feed is an "open secret" in the industry, the Nanfang Daily reported Thursday, describing a process of repackaging melamine scrap into an inexpensive product called "protein powder," which is then sold to feed suppliers.

The Web sites of the official Xinhua News Agency and the Communist Party mouthpiece People's Daily newspaper also carried the story, in a rare move publicizing information that reflects poorly on the country.

Four brands of Chinese eggs have been found to be contaminated with melamine this past week, and agriculture officials speculated that the cause was adulterated feed given to hens. No illnesses have been linked to melamine in eggs.

To read more:

http://ap.google.com/article/ALeqM5hud2xejzcnuymvyU35uIkpblGfSAD9454RG81

Walmart on Ethics in China

In the FT, Michael Skapinker writes:

The disappearance of corporate responsibility seems a plausible prediction – except that one company last week pledged to continue taking it seriously. And because that company is Wal-Mart, the world’s most powerful retailer, thousands of other companies will be forced to take it seriously, too.

Lee Scott, Wal-Mart’s chief executive, told a meeting of 1,000 Chinese suppliers in Beijing: “I firmly believe that a company that cheats on overtime and on the age of its labour, that dumps its scraps and its chemicals in our rivers, that does not pay its taxes or honour its contracts, will ultimately cheat on the quality of its products.”

Mr Scott accepted his timing might look odd. “Some may wonder, even inside Wal-Mart, with all that is going on in the global economy, should being a socially and environmentally responsible company still be a priority? You’re darn right sustainability should be a priority.”

Hearing Wal-Mart say this still produces splutters of disbelief.

To read more:

http://www.ft.com/cms/s/0/00f04688-a43f-11dd-8104-000077b07658.html

Zhejiang's Economic Success Story

At Businessweek, Yasheng Huang writes:

"All our indicators are better than those of Ningbo [in Zhejiang province], except per capita income," said Wang Mang, then-mayor of the city of Suzhou in China's Jiangsu province, in 2004. He was contrasting the performance of two well-known provinces in China, Jiangsu and Zhejiang. These two provinces, often lumped together in China and referred to as Jiang-Zhe in Chinese, on the surface look remarkably similar. Both are coastal: One is located north of Shanghai (Jiangsu) and the other south (Zhejiang). Both are rich: Zhejiang and Jiangsu rank as No. 1 and No. 3, respectively, in per capita gross domestic product in the country. (This calculation excludes Beijing, Shanghai, and Tianjin.) Both have grown very fast, averaging around 10% GDP growth annually in the past 30 years.

To read more:

http://www.businessweek.com/globalbiz/content/oct2008/gb20081020_124170.htm

China makes it easier to buy a home

Reuters reports:

China's Ministry of Finance on Wednesday announced a series of policy changes that will make it easier for people to buy their first homes, fleshing out a directive approved last week by the cabinet.

The measures come amid a government push to support the economy as growth slows, while providing more support for those on lower incomes in both the countryside and cities.

From November 1, the property deed tax will decline to 1 percent from 1.5 percent for people buying their first home if it is smaller than 90 sq m (970 sq ft), the ministry said in a statement on its website (www.mof.gov.cn).

For those buying their first home, regardless of the size, the downpayment requirement will be lowered to 20 percent from 30 percent, and banks will be allowed to charge as little as 70 percent of benchmark lending rates for such mortgages.

"(We need to) step up investment to safeguard people's living conditions and improve the lives of people with low incomes," the ministry said in its statement.

It also removed the 0.05 percent stamp tax and land value-added tax for home purchases.

To read more:

http://uk.news.yahoo.com/22/20081022/twl-uk-china-economy-property-9572dac.html

Xiao Bush and China Policy

James Fallows writes:

Bush’s main achievement is to remember, recognize, and constantly reemphasize that two contradictory-sounding points about China are both true, and that both are likely to remain true for a very long time. One is that China is a problem, for America and for the world. It locks up people arbitrarily, and was brazen enough to do so even while on display to the whole world during the Olympic Games. It tightly controls the national media. It crassly supports odious regimes that control crucial raw materials (America also has some experience in this field), and then blandly deflects criticism by saying that to try to stop evils in Darfur or Burma would be to violate its sacred principle of not interfering in others’ affairs.

China’s economic system has become much more integrated into America’s corporate structure than Japan’s ever was. Most of the exports that pour daily from Chinese companies are actually ordered and made by foreign-owned, largely American firms: Nike, Apple, Dell, Wal-Mart, and so on. From a strict economic-benefit standpoint, this interaction has helped many people in America: employees and owners of those brand-name companies, whose profits increase because of lower-priced Chinese products; consumers, especially those on tight budgets, who benefit as "the China price" holds retail prices down; and everyone in America who has taken advantage of China’s roughly $2 trillion subsidy of U.S. government debt. But the process has obviously hurt those who have lost factory jobs, and as China’s power expands, so could its harmful impacts on America. And this doesn’t even take us to food-safety problems, or possible conflict over Taiwan, or the future of Tibet.

But the second important truth is this: China is not going away. No one outside China can force or even entice the government to change practices outsiders don’t like.

To read more:

http://www.washingtonmonthly.com/features/2008/0808.fallows.html

The Chinese Countryside for Rent

Forbes reports:

A major initiative to marketize China's countryside is under way. Under rural reforms passed Sunday by the Communist Party, peasants may for the first time be allowed to trade or rent out their land tenancies. The new policy stops short, however, of granting private ownership of land or allowing farmers to sell the land they work, as leaders struggle to preserve one of the fundamental pillars of the country's communist system.

The hope is that China, severely strapped for arable land, will use land more efficiently under this semi-marketized system and will reduce its agricultural deficit with the United States. The policy may be a boon for agribusiness, affording a cash stream to farmers, whose mounting riots in recent years have been a headache for the ruling party as it strives to maintain legitimacy. Some worry, though, that the policies could destabilize the country's delicate social fabric.

To read more:

http://www.forbes.com/markets/2008/10/13/china-land-reforms-markets-econ-cx_tw_1013markets04.html

China recalls all dairy products over one month old

AFP reports:

China has urgently ordered all dairy products more than a month old to be pulled from shop shelves nationwide in its latest step to end a scandal over contaminated milk, state press reported Wednesday.

All dairy products made before September 14 will have to be tested for the industrial chemical melamine that has been responsible for killing four babies and leaving more than 53,000 others sick, Xinhua news agency said.

It was citing an "urgent notice" jointly issued by six central government departments, although there was no explanation as to why the dairy products were not immediately recalled when the scandal broke in September.

The notice was published on the websites of those government departments, which included the health ministry, on Wednesday.

To read more:

http://www.channelnewsasia.com/stories/afp_asiapacific/view/382894/1/.html

EU Trade Minister Has Kidney Stone After Drinking Chinese Milk

The Shanghaiist reports:

UK Business Secretary Peter Mandelson drinks Chinese milk, then gets diagnosed with kidney stone 9 days later

On Sept 26, in Tianjin at the World Economic Forum, EU Trade Commissioner Peter Mandelson drank a glass of milk (click to see video) in front of the media to show his support for the Chinese dairy industry and said:

To read more:

http://shanghaiist.com/2008/10/11/eu_trade_commissioner_peter_mandels.php

The New American in Shanghai

Esquire says:

Today, the problem is lead.

Barrett Comiskey sits on a couch in a factory behind a brick wall and a sign that reads SHANGHAI HONG HUI PLASTICS COMPANY. He's a thirty-two-year-old New Yorker with an open, friendly face and his shirtsleeves rolled up, sipping from a bottle of water. Across from him sits Mr. Sun, the factory's Taiwanese owner, dressed in shorts and a T-shirt and still sweating, having just supervised the loading of yet another truck. His is one of the hundreds of factories here in Minhang, the manufacturing district southwest of downtown Shanghai. Minhang is the birthplace of much of America's stuff.

Mr. Sun is a tough old bastard who hits his palm with his fist when he talks. Comiskey has come to sit with him on behalf of an American client who has ordered thousands of plastic rulers with MADE IN CHINA stamped on them. Comiskey and Mr. Sun have done business before, producing parts for another of Comiskey's American clients, a vending-machine company on the East Coast. Those parts are being churned out on the factory floor this afternoon, as they almost always are, spun from bags of melted pellets by rows of injection molds and Chinese migrant workers, recent transplants from the valleys and farms.

But making plastic rulers requires an extruder, which Mr. Sun does not have in his factory. So Mr. Sun subcontracted the job to another factory, and the rulers have since tested positive for lead. Although there are no regulations in China or America restricting the lead content of rulers--lots of plastic products, from lawn chairs to picture frames, have traces of lead in them, because lead is used as a stabilizing agent in liquid plastics--Comiskey's client is demanding a new, lead-free batch. His client is not interested in the letter of the law. Unlike lawn chairs or picture frames, rulers sometimes end up in people's mouths.

To read more:

http://www.esquire.com/print-this/new-american-1008

Chinese Manufacturers are Preparing for a Global Slowdown

Businessweek reports:

Hundreds of millions of Chinese look forward all year to the "Golden Week" holiday marking the country's Oct. 1 National Day. After the weeklong vacation ends next week, the mood will be decidedly downbeat. As the rest of the world struggles with the financial crisis, China has its fair share of depressing news (BusinessWeek.com, 9/17/08): The property market is tanking, the stock market is off nearly 60%, and there is mounting evidence that China's economic juggernaut is faltering.

The latest sign of a slowdown came with the Oct. 2 release of September figures on the health of China's manufacturing sector. The data, the CLSA China Manufacturers Purchasing Managers Index (PMI), showed the steepest fall in volumes of new orders since the monthly survey began in June 2004; registering 47.7, it was well below the 50 boom/bust cutoff. "This is a tsunami that starts in America, blowing across the globe and arriving at our doorstep," says Alex Fong, CEO of the Hong Kong General Chamber of Commerce. "Manufacturers [whose operations are all in China] have to be prepared for the worst."

To read more:

http://www.businessweek.com/globalbiz/content/oct2008/gb2008102_592608.htm?chan=globalbiz_asia+index+page_top+stories

The China Milk (Ad) Wars

At Businessweek, Frederik Balfour writes:

It sounds like China desperately needs a truth in advertising law. Some Chinese milk producers implicated in the melamine contamination are attempting damage control by running ads that simply ignore the facts. Check out Jeremy Goldkorn’s highly popular Danwei.org blog site and scroll down to the story “May the Milk Wars commence!” written by Bruce Humes, who finds newspaper ads run by Yili and Bright Dairy proclaiming the reliability, safety and quality of their milk. Never mind that companies have been forced to recall their products. Here’s what Yili’s color ad had to say “Yili Baby Formula has remained totally untainted, so expectant mothers can purchase it with confidence,” and “guaranteed that not one drop of problem milk enters the factory.”

Source:

http://www.businessweek.com/globalbiz/blog/eyeonasia/archives/2008/09/tainted_chinese.html