business news in context, analysis with attitude

The New York Times this morning reports that Li Changjiang, the chief of China’s food and product quality agency, has resigned in the wake of revelations that the country’s tainted milk supply has sickened more than 50,000 infants and killed at least three children.

According to the Times, “His resignation was announced Monday evening, as the government widened its investigation into how an industrial chemical contaminated powdered baby formula and milk products made by some of the country’s biggest dairy companies.

“It is one of the nation’s worst food safety scandals in memory, exceeding the troubles of a year ago when China was found to have exported tainted pet food ingredients, toothpaste, seafood and dangerous lead-contaminated toys.”

Nineteen people already have been arrested by the Chinese government, which suspects them of intentionally spiking the milk with melamine, a poisonous industrial chemical that can artificially inflate the protein levels of products to which it is added.

The Times reports that “millions of gallons of dairy products have been recalled in Hong Kong, elsewhere in China, and in Taiwan, Singapore and other countries, devastating China’s fast-growing $18 billion dairy industry. The government fired the head of one large dairy company, and on Monday, fired the Communist Party chief in the city of Shijiazhuang, home of one of the dairy companies at the center of the scandal. China’s dairy products are not approved for export to the United States.”

KC's View:
The question that needs to be answered is whether this is systemic or an aberration based on individual greed.

The more it happens, the more it looks systemic. And raises a lot of issues about all Chinese exports.