Milk Powder Scandal Exposes China’s Worsening Administrative Malaise

Publication: China Brief Volume: 8 Issue: 19

China’s formidable state machinery was able to stage the largest Olympics in history and to have a “Taikonaut” perform a 20-minute “spacewalk” last week. Yet the world-scale scandal emanating from contaminated milk products has exposed the worsening malaise in the country’s political and administrative structure. As of early October, four children died and more than 60,000 children were sickened after having consumed milk powder tainted with melamine, an illegal chemical used by farmers to fake the protein content of their milk. Not only rich countries such as the United States and Britain but also Asian and African nations ranging from Singapore and Vietnam to Gabon and Ghana have banned Chinese-made dairy goods and a wide range of biscuits and candies made with Chinese ingredients. More than a dozen big-name manufacturers within China’s $20 billion dairy industry—as well as the country’s food safety regulatory system—have been found guilty of either conniving at the use of the deadly chemical or failing to spot the malpractice (Reuters, September 27; Washington Post, September 28).

The milk powder scandal has dealt a severe blow to the “made in China” brand even as the growth of China’s exports—the most important driver of the Chinese economy —has been slowed by economic downturn in its major markets. More significantly, China’s export of tainted milk products—which has come on the heels of contaminated cosmetics, pet food as well as dangerous toys and furniture—has severely damaged the goodwill and “soft power” that the Chinese Communist Party (CCP) has tried to gain through multi-billion dollar “prestige-engineering projects” such as the 2008 Beijing Olympics and the 2010 Shanghai World Expo. In an emotional meeting with the parents of children who had fallen sick after imbibing tainted milk, Premier Wen Jiabao said he felt “very guilty” about the poisoned milk, adding “I sincerely apologize to all of you.” While appearing at the United Nations General Assembly as well as the World Economic Forum (WEF), Wen assured the international community of Beijing’s ability to fix the problem. Referring to the milk disaster, Wen said at the WEF last weekend: “This issue is not over yet, but please be assured that we will soon unveil plans to boost the food industry. My government and I will lead our people through this hard journey” (Reuters, September 27; Time [Asia], September 23).

While Wen has a well-deserved reputation as a “premier who puts people first,” his words may not sound that convincing. Only weeks after the Beijing Olympics China has witnessed man-made disasters of gargantuan proportions. More than 250 residents in Xiangfen County, Shanxi Province, perished in a mudslide in early September. The accident was triggered by the collapse of the retaining wall of an illegal mining dump containing tons of liquid iron ore waste. In nearby Henan Province, 37 miners were killed in an accident in Dengfeng County. The cause of the disaster was again lax regulations and poor inspection. Then came the fire in Wu Wang Nightclub, an illegal, unlicensed outfit in Shenzhen, the boomtown just across the border from Hong Kong. Forty-three revelers, including five day-trippers from Hong Kong, perished in the disaster (Xinhua News Agency, September 22; South China Morning Post, September 21).

Even assuming that party and government authorities are really serious this time, they face an uphill battle in eradicating unscrupulous and malfeasant manufacturers and businessmen in China. A key reason behind the recent spate of scandals is that particularly in the provinces and cities, entrepreneurs and regional cadets enjoy cozy relationships. And this is not solely because large corporations are major tax contributors. San Lu Dairy Co., the epicenter of the milk scandal, contributed 330 million yuan of taxes to the municipal government of Shijiazhuang, Hebei Province, last year (Ming Pao [Hong Kong], September 15; International Herald Tribune, September 18). Many companies invite local officials to become “silent partners” in their corporations—in return for “protection” rendered by the powers-that-be. Former San Lu chairman Tian Wenhua, for example, is said to be on “comradely terms” with Shijiazhuang officials. It is perhaps for this reason that Tian was given the honorary position of deputy to the provincial people’s congress. Similarly, the Wu Wang Nightclub in Shenzhen has been operating without a license for more than a year. This could only have been possible due to what Chinese call a “protective umbrella” proffered by well-placed officials in the city (Xinhua News Agency, September 17; China Daily, September 26).

Despite the “serve the people” credo of the Hu-Wen administration, supervision over food and industrial safety remains lax and ridden with loopholes. Last year, former Director of the State Food and Drug Administration Zheng Xiaoyu was executed for taking bribes from pharmaceutical firms whose shady products were responsible for the deaths of at least ten consumers (Associated Press, July 10, 2007). The issue of fake or tainted milk powder is not new. In 2004, at least 12 infants died after taking in baby formula with no nutritional value. The General Administration of Quality Supervision, Inspection and Quarantine (GAQSIQ), which is responsible for checking milk and related merchandises, has been aware of the illegal use of melamine for a long time. Just last year, Chinese-made pet food was banned in the United States because they contained high dosages of melamine. Inexplicably, the GAQSIQ have in the past couple of years awarded dairy giants San Lu, Meng Niu, and Yili—whose products were found to be tainted with the chemical—the coveted “famous brand” designation. This status meant their products were exempted from routine inspection by quality-control watchdogs (Ming Pao, September 25; CBS News, April 26, 2007).

The muddleheaded nature of the Chinese bureaucracy is also evident from rescue operations mounted by the State Council or cabinet in the wake of major disasters. The modus operandi of choice is setting up a multi-departmental “emergency leading group” to find out the causes of the mishaps and to recommend remedial measures. Thus soon after the milk powder fiasco broke in early September, Beijing established a leading group consisting of cadres from seven state units—the Health Ministry, the GAQSIQ, State Administration of Industry and Commerce, Ministry of Agriculture, Ministry of Public Security, the State Food and Drug Administration, and the provincial government of Hebei (China News Service, September 16; Apple Daily [Hong Kong], September 24). This so-called interdepartmental approach to problem-solving has also been used by the Wen cabinet to tackle illegal land-zoning practices, real-estate speculation and other malpractices in the regions. For example, the State Council in early September sent a work group consisting of cadres from several ministries to check on illegal education charges levied by different provinces. These units included the National Development and Reform Commission, the Education Ministry, the Ministry of Supervision, the Ministry of Finance, the National Audit Administration and the National Press and Publication Administration (China News Service, September 15). The simultaneous involvement of several departments reflects the fact that the line of responsibility is not clear; no one single ministry seems to be in charge of matters ranging from food safety and education to housing and land use.

Quite a number of observers believe that the root of bureaucratic malaise lies in an outdated, non-transparent political structure. Hu Xingdou, a reformist professor at the Beijing Institute of Technology, thinks that Beijing must take bold steps to overhaul governance. “Every time there is an incident, the relevant department takes medicine to cure the headache. That only fixes the problem, not the system,” he indicated. “Now is the time to transform the way of thinking, to repair the system” (Time [Asia], September 23). The basic structural shortcoming is excessive concentration of power in the party. Thanks to the CCP’s near-monopoly of most political and economic resources, there are no meaningful checks and balances within the system. Institutions that could provide some oversight over party and government authorities—for example, the legislature, the courts or the media—are tightly controlled by CCP apparatchiks.

Compounding this endemic malaise is the long-standing tradition—subscribed to by leaders from Chairman Mao to President Hu—of putting “upright rulers” above sound systems. For generations, the CCP has been trying to nurture “virtuous and competent” cadres for leadership posts rather than designing systems with built-in checks and balances. The imperative about propagating saintly fumuguan (“parents-like officials”) harks back to the Confucian ideal of a benevolent mandarin. Mao wanted all cadres to emulate the legendary Lei Feng, the incorruptible, ultra-altruistic model proletariat. Speaking on the recent spate of horrendous industrial and food-safety incidents, Hu said late last month that this was due to the fact that “some cadres lack a consciousness about their [proper] goals, knowledge about the overall political requirements, a [proper] estimation of future dangers, and a sense of responsibility.” The party chief urged senior officials nationwide to “resolutely uphold [the ideal] that the CCP is based on public service, that administration is for the sake of the people… and that cadres must always bear in mind the safety and well-being of the masses” (China News Service, September 19; People’s Daily, September 20).

An important achievement in personnel reform under the Hu-Wen leadership is the concept of “cadre responsibility,” whereby senior officials have to take political responsibility for serious “mass incidents.” Thus, a number of cadres either resigned or were fired in the wake of the milk powder scandal. They included the GAQSIQ Director Li Changjiang and the Party Secretary and Mayor of Shijiazhuang, respectively Wu Xianguo and Ji Chuntang. In mid-September, Shanxi Governor Meng Xuenong and Vice-Governor Zhang Jianmin were sacked due to the mudslide incident. In Henan, Party Secretary of Dengfeng County Zhang Xuejun received a severe reprimand while Mayor Wu Fumin was forced to step down (Xinhua News Agency, September 22; Henan Daily, September 23).

However, the fate of these disgraced cadres has raised a number of questions about whether the CCP leadership has followed fair and judicious principles in meting out punishment. If the governor of Shanxi was sacked for the sorry state of his provinces’ mines, why has Hebei Governor Hu Chunhua escaped censure for the milk power scandal? There is also the question of whether the party chief—or the governor or major—of a province or city should shoulder responsibility for lapses. The fall of both the party chiefs and mayors of Shijiazhuang and Dengfeng seem to indicate that senior members of both the party and government should take the rap. However, in the case of Shanxi, only the governor and the vice-governor—but not the more senior-ranked party secretary of the province, Zhang Baoshun—took the fall (South China Morning Post, September 15). One explanation is that Hubei’s Hu, 45, and Shanxi’s Zhang, 58, have been spared because of their closeness to President Hu. In particular, Hu Chunhua, who, like the president, is a former head of the Communist Youth League, is regarded as a possible “core” of China’s Sixth-Generation leadership. The Hu-Wen leadership’s apparent failure to come up with a laudable cadre responsibility regime is one more illustration of deep-seated woes in the political structure.