Monday, December 31, 2007

Chinese language - Greenspan: China to determine world economic fate

?  ?

BIZCHINA / Biz Who

Greenspan: China to determine world economic fate

(chinadaily.com.cn)
Updated: 2007-09-18 10:52

Former Federal Reserve Chairman Alan Greenspan signs his book "The Age of
Turbulence: Adventures in a New World" in New York,?September 17, 2007.
[AP]

Former US Federal Reserve Chairman Alan Greenspan predicted in his memoir
that the world's economic fate depends on China and its market economic
development by the year of?2030.

"If China continues to press ahead toward free-market economy, it will
surely propel the world to new levels of prosperity," Greenspan wrote
in "The Age of Turbulence: Adventures in a New World."

"Much of how the world will look in 2030 rests on this outcome," said the
legendary US central bank chief.

Greenspan retired in January 2006 after more than 18 years as chairman of
the Fed, the US central bank, which regulates monetary policy.

He also praised China for creating "a huge change in the world economy"
after shifting toward market economy.

"It went into a seriously impressive disinflation, which brought all
interest rates down, made a huge boom in the economy, a huge increase in
assets," Greenspan said in a Fortune interview.

China's economy is enjoying its fifth straight year of double-digit
economic growth, with the growth for the first half of this year hit 11.5
percent, according to statistics from the National Bureau of Statistics.
The country has soared to be the fourth-largest economy in the world in
2005.

The former chairman emphasized the primacy of markets in his book. The
success of every nation -- big or small -- will depend on the extent to
which it allows free trade and open markets, Greenspan declared.

"Even as nations as mighty as the United States and China vie for
economic supremacy in that new world, they may find themselves partially
bending to a force more powerful still: full-blown market globalization,"
Greenspan wrote.

Besides China, he also mentioned the UK, France, Germany, Japan, Russia
and India, spending five pages in his final chapter on the outlook beyond
America.

Devoting most space to the UK, Greenspan praised the leaderships of Tony
Blair and Gordon Brown, predicting that Britain "should do well." "If
Britain continues its new openness (a highly reasonable expectation), it
should do well in the world of 2030," he wrote.

Russia needs to "fully restore the rule of law" to develop further, and
India has "great potential," he added. Japan's $4.5 trillion-economy may
find it hard to counter the loss of its ranking, given that it has an
"even less promising" demographic future than Europe's, Greenspan said.

(Bloomberg Contributed to the story)

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Chinese School - Risky?trade?beyond 5,300 points

?  ?

BIZCHINA / Center

Risky?trade?beyond 5,300 points

By Mao Lijun (China Daily)
Updated: 2007-09-17 09:45

When China's major stock index breached the 5,300-point psychological
barrier, triggering a correction last week, Chinese investors were left
wondering what would happen next.

Those with money on the line wonder if this upward trend could continue
and if crisis is impending.

Related readings:

?Major stock index passes 5,000 mark
?Bank shares lift Shanghai index to new high
?New rules to curb stock price fluctuation

Economists and stock analysts are divided about whether the Chinese
mainland's bull market can continue to charge ahead, but most of them
agree that yuan-denominated A-shares are overvalued.

Some analysts interviewed by China Business Weekly say the market
correction is normal, and it is just to help market move towards a
healthier growth path. They point out that the market's liquidity remains
plentiful, and the underlying fundamentals are still strong.

They also say that the corrections were mild, which indicates the Chinese
government is not prepared to take any significant measures to tighten
liquidity in the near future.

Analysts say strong corporate earnings in the first half of 2007,
plentiful liquidity and positive investor sentiment would drive the stock
market to a new high in the medium and long terms, and the trend will
continue.

"The high corporate earnings of large-cap stocks will continue in the
third quarter of the year, which is expected to push the market even
higher," says Chen Weiqing, chief analyst with CITIC Securities Co.

At least 70 percent of companies listed on the Shanghai and Shenzhen
stock markets says that they are expecting profit growth in the third
quarter.

"The booming market is sure to continue in the long term, because it
continues to absorb large amounts of capital, although in the short term,
it may climb slower or tumble because of the negative psychological
impact of the index's hike to more than 5300," says Qin Xiaobing, an
analyst with China Galaxy Securities Co.

"But the reduced investor exuberance after the index hike to more than
5,300 will allow for a healthier adjustment of markets and for the
broader economy to go forward."

And the soaring asset prices and negative deposit interest rates will
also continue to lure investors to the capital market, experts say.

The percentage of investment assets owned by each family in China is much
lower than in developed countries. China's equity investment accounts for
only 9 percent of a family's total assets in the country, compared with
22.7 percent in the United States.

A survey by the China Securities Association showed that 60 percent of
investors are optimistic about the stock market's performance in the
remaining months of the year.

(For more biz stories, please visit Industry Updates)

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Learn Chinese - Trade in machinery, electronic goods up 22%

?  ?

BIZCHINA / Center

Trade in machinery, electronic goods up 22%

(Xinhua)
Updated: 2007-09-14 11:02

China's trade volume of machinery and electronic products rose 22.8
percent year-on-year to US$743.54 billion in the first eight months of
this year, the Ministry of Commerce said on Thursday.

Trade volume of machinery and electronic products, the country's largest
foreign trade sector, represented 54.3 percent of the country's total
foreign trade in the same period.

The trade figure included US$431.5 billion in exports, up 28.2 percent
year on year, and US$312.04 billion in imports, up 16.1 percent, said the
ministry.

The imports of machinery and electronic products rose 15.4 percent in
July, which reversed the monthly declining trend recorded since the
beginning of the year.

The imports were expected to rise in the second half, as the country's
policies to balance the trade began to work, analysts said, forecasting
the import growth of machinery and electronic products at around 17
percent for the whole year.

The Ministry of Finance said on May 21 that it would impose extra export
tariffs while cutting import duties as of June 1 to narrow its widening
trade surplus.

China's trade surplus in machinery and electronic goods during the eight
months totaled US$119.46 billion, accounting for 73.8 percent of the
country's total, 3.2 percentage points lower than that of the first half.

The ministry said China also exported and imported US$391.33 billion of
high-tech products during the eight months, up 20.9 percent.

High-tech products account for 28.6 percent of the country's foreign
trade in the same period, with exports totaling US$211.45 billion, up
24.8 percent, and imports US$179.88 billion, up 16.7 percent.

In the first eight months, trade volume of the processing trade sector
hit US$612.84 billion, up 18.5 percent from a year earlier, which was 2.1
percentage points lower than the same period last year, the ministry said.

The Chinese government has moved to curb the development of the
processing trade to address its trade imbalance, pledging to annually
revise the list of "restrained" products in the processing trade sector.

The policy, becoming effective from August 23, will cover the processing
trade involving 1,853 kinds of products of plastics, furniture and
textiles and other labor-intensive industries.

However, the trade surplus of the processing trade sector still accounts
for 94 percent of China's total trade surplus for the first eight months,
which stood at US$161.75 billion.

(For more biz stories, please visit Industry Updates)

Related Stories ?

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===========================================================================
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===========================================================================

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Chinese Online Class - Money supply up 18% in August

?  ?

BIZCHINA / Center

Money supply up 18% in August

By Fei Ya (China Daily)
Updated: 2007-09-13 09:52

China's financial system remained stable in August, the central bank said
yesterday.

The annual growth in the broad measure of money supply, or M2, was 18.09
percent in August from the same period last year, according to the
People's Bank of China (PBOC).

The narrow measure of money supply, or M1, continued to grow in August at
22.77 percent year-on-year, the PBOC said.

In August, new bank loans increased 302.9 billion yuan as total bank
loans rose to 27.1 trillion yuan (US$3.59 trillion), an increase of 16.96
percent year-on-year.

Total bank deposits increased 646.2 billion yuan in August. But household
bank deposits continued to slide, falling 41.8 billion yuan from July.

Consumer price index increased 6.5 percent in August from a year earlier
mainly on food costs.

Jun Ma, chief economist at Deutsche Bank (Hong Kong), said he believes
the likely timing of next interest rate rise will be in the second half
of September.

PBOC raised the amount that commercial banks must hold in reserves to
12.5 percent last week, in order to strengthen liquidity management in
the banking system and curb the fast rise in loans.

Earlier in August, the central bank had raised interest rates for the
fourth time this year.

(For more biz stories, please visit Industry Updates)

Related Stories ?

� China's M2 growth underestimates inflation pressure
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===========================================================================
� 600b yuan of bonds sold to PBOC
===========================================================================

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Sunday, December 30, 2007

Chinese language - Better management of banks is the key

?  ?

BIZCHINA / Review & Analysis

Better management of banks is the key

By Guo Tianyong (China Daily)
Updated: 2007-09-11 16:08

Improved internal management is more important than executive stock
options for the future development of China's State-owned banks.

China Construction Bank (CCB), the nation's second-largest bank that is
due to sell shares in Shanghai soon posted a 47.5 percent increase in net
profit for the first half this year. Its net profit rose to 34.25 billion
yuan (US$4.51 billion), up 11.03 billion yuan compared to the same period
last year. Its assets at home and abroad exceed 6 trillion yuan.

CCB's good performance will benefit its smooth return to the A-share
market.

The stock incentive program set up by the CCB earlier this year is also
praise-worthy. The People's Bank of China, the central bank, announced
recently that the reform of State-owned commercial banks will go further
to enhance their competitiveness and urged commercial banks to launch
stock incentive programs.

The programs - staff shareholding and stock options for senior
management, is part of an effort to deepen the reform of human resources
management, with the aim to increase employees' sense of belonging to the
company and to attract and retain employees to serve the bank over the
long term.

The CCB is the only one of the Big Four State-owned commercial banks that
has set up a stock incentive plan to allow about 270,000 employees to
acquire 800 million of its shares starting on July 6.

In fact, CCB triggered constant criticism during the process. Some said
the CCB by raising payments to its staff would widen the society's income
gap. Some even said the program would lead to loss of State assets.

Such criticism is understandable. After all, the overall income level in
China is still low and the banking industry is among the high-income
sectors. To give stock incentives to employees may further widen the
social income gap.

But it should be observed that stock incentive programs are quite common
in listed companies in Western countries and it is an effective way of
helping companies to create more value. It fits with international
practice to launch similar programs in the banking industry.

Besides, the share-holding reform of State-owned banks aims to build the
banks into independent financial entities and therefore to set up an
incentive mechanism is natural.

What is more, competition between domestic and foreign banks is getting
fierce. The relatively low-income level and lack of incentive programs of
domestic banks are the reasons for the brain drain. The stock incentive
program will to a certain degree help change the situation.

Also, the stock incentive program aims to increase the managerial and
operational efficiency level of banks. In the long run, it will not lead
to loss of State assets but serve as a vehicle in the preservation and
appreciation of State assets.

In this sense, to launch stock incentive programs are reasonable and
realistic.

(For more biz stories, please visit Industry Updates)

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===========================================================================
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===========================================================================

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Chinese Online Class - Building of low-rent low-priced homes

?  ?

BIZCHINA / Opinion

Building of low-rent low-priced homes

By Ma Hongman (China Daily)
Updated: 2007-09-10 10:23

Market economy was first introduced to the Chinese property market in a
national conference held in June 1998. However, in the intervening years,
it was decided the market would no longer be the sole power in allocating
estates to different social groups.

In a working conference on housing held on August 24 and 25, the
government stressed its responsibility for providing people with proper
housing.

Special coverage:

 
Related readings:

?Affordable housing prices down in major cities
?Rules to provide affordable housing to needed families
?Complaints about housing, cars on rise
?Shanghai housing bureau issues controversial guidelines

The government plans to establish a system covering most of the urban
population. Families with the lowest income will be offered low-rent
houses, those better off financially will be allowed to purchase
low-priced houses and the middle-income will be allowed to buy homes in
common estates.

The low-rent and low-priced houses will be subsidized by the government.
The conference required all local governments to ensure that low-rent,
low-priced houses make up at least 70 percent of new estate projects.

This specific requirement will definitely boost public welfare by
guaranteeing proper shelter for people of relatively low income. It also
indicates a major change in the government's strategy of regulating the
property market.

The State has tried to cool the heated market in recent years. The major
moves it took range from imposing specific limits to the size of flats,
to controlling the financing sources of estate developers. But none of
these seemingly forceful policies has worked effectively, and property
prices have kept increasing in almost all cities of the country.

The failure of these measures lies in one simple fact: they did not
directly change the balance of supply and demand. As long as demand is
greater than supply, property prices will keep increasing.

When the State-sponsored estates, the low-rent, low-priced houses, come
on the market, they will change the demand/supply ratio. The government
will be able this time to achieve its policy goal directly with the use
of public funds. This could mean a sweeping change to the real estate
market.

Of course, this change will only come about with the full application of
the policy. The key element is money.

According to the central government's plan, the fund for building
low-rent, low-priced housing will be drawn from the land transference
income of local governments - 10 percent annually.

Hou Ximin, an official with the Ministry of Construction, estimated the
money would be more than 25 billion yuan ($2.9 billion) each year. He
believed this would be adequate for building homes for the low-income
groups.

So the issue boils down to one question: Will local governments offer 10
percent of their land transference income on time to build these houses?
Many are reluctant to give a definite answer.

(For more biz stories, please visit Industry Updates)

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Learn mandarin - CCB gets go-ahead for A-share listing

?  ?

BIZCHINA / Top Biz News

CCB gets go-ahead for A-share listing

(Xinhua)
Updated: 2007-09-08 10:52

?

A branch of China Construction Bank in Shanghai. Regulator approved
the?bank's A-share listing plan on September 7. [newsphoto]?

China Securities Regulatory Commission on Friday approved the
yuan-denominated A-share listing plan of the China Construction Bank
(CCB), one of the nation's four big State-owned commercial banks.

The approval will make CCB to lead the return of the giant red-chip
companies, including China Mobile, the world's largest handset operator
by the number of subscribers, and PetroChina, the nation's largest oil
producer, to the mainland stock exchanges.

Red chips are mainland firms incorporate outside the mainland and listed
in Hong Kong.

The bank, Chinese partner of Bank of America, said it plans to issue no
more than 9 billion shares, less than 3.85 percent of the expanded
capital after the initial public offering (IPO)?

CCB is expected to raise some 60 billion yuan (US$8 billion) if the IPO
is priced at the closing price of HK$6.84 per share in Hong Kong on
Friday. It said all the money will be used to boost its capital adequacy
ratio.

The size of CCB's IPO is set to overtake 46.6 billion yuan of the
Industrial and Commercial Bank of China (ICBC) in October last year to
become the biggest ever domestic share listing.

The bank may start trading of its A-shares on the Shanghai Stock Exchange
before October 1, a source with its research department said.

Earnings per share with CCB in the first half of 2007 was 0.15 yuan,
compared with 0.12 yuan of CBC and Bank of China.

Its non-performing loans ratio stood at 2.95 percent at the end of June,
lower than the 3.29 percent half a year ago.

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Learn Mandarin online - Preparations for stock-index futures near completion

?  ?

BIZCHINA / News

Preparations for stock-index futures near completion

(Xinhua)
Updated: 2007-09-06 15:21

Shang Fulin, head of China's securities market watchdog, said Thursday
that the preparations for setting up stock-index futures have been
basically finished.

Shang, chairman of the China Securities Regulatory Commission (CSRC),
said preparations in terms of technology and mechanism are near
completion, but investors still need to get prepared.

He did not give a specific date for putting the futures into operation,
only noting that it will debut "when the conditions are ripe."

"Stock-index futures is a big issue for China's capital market," he said,
noting that China still lacks the experience in derivative financial
products.

The stock-index futures is usually used as a tool against drastic
fluctuations in the stock market.

Shang was addressing a plenary session at the Inaugural Annual Meeting of
the New Champions hosted by the World Economic Forum in China's
northeastern coastal city of Dalian.

Media reports said qualified foreign institutional investors (QFII) would
be authorized to participate in stock-index futures trading in China, but
the CSRC declined to comment.

(For more biz stories, please visit Industry Updates)

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Saturday, December 29, 2007

Chinese School - NYSE approved to set up China office

?  ?

BIZCHINA / Center

NYSE approved to set up China office

By Zhang Ran (China Daily)
Updated: 2007-09-05 09:45

The China Securities Regulatory Commission (CSRC) yesterday said it
approved the New York Stock Exchange Group (NYSE), the world's largest
bourse, to set up a representative office in the country.

The NYSE thus became the first foreign stock exchange to get the
government's go-ahead to establish such a presence.

The move is seen as fulfillment of one of China's commitments in the
first round of the Sino-US Strategic Economic Dialog held in December,
when China promised to allow foreign exchanges to set up offices in the
country soon.

Overseas exchanges will be allowed to promote their organizations and
conduct research through their offices, according to a rule launched by
the CSRC earlier in May.

The NYSE Group will first set up its representative office in Beijing.
Seven mainland companies have listed on its main board so far this year.

Rival NASDAQ said yesterday that it had submitted an application in June
to the securities regulator to set up a Beijing office.

Xu Guangxun, chief representative of NASDAQ in China, said the bourse
hopes to get the regulator's approval soon.

NASDAQ has attracted 14 mainland companies to list on the bourse since
the beginning of 2007; and the tech-heavy bourse recently launched a
NASDAQ Portal system, a fully Web-based platform for trading of 144A
issues, a type of securities traded in the private placement market.

(For more biz stories, please visit Industry Updates)

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===========================================================================
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===========================================================================

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Chinese Mandarin - Coal sector drives indices up to new high

?  ?

BIZCHINA / Index & Statistics

Coal sector drives indices up to new high

By Ding Qi (chinadaily.com.cn)
Updated: 2007-09-03 16:26

Inspiring performance in the coal sector and the absence of negative news
over the weekend drove major stock indexes well above the 5,300-point
level on Monday despite the bourse's warnings against excessive
speculations.

The benchmark Shanghai Composite Index opened at 5257.78 points, nearly
40 points higher than last weekend's close. It wasn't long before the
index conquered another landmark, 5,300 points, around 10 am. After
touching a new all-time high of 5,327.54 after the noon break, the index
lingered a bit lower absorbing huge encashment pressure after the surge.
It wrapped up Monday's trading at 5,321.06 points, 1.96 percent higher
than last Friday's close. Market turnover rose to 191 billion yuan
(US$25.3 billion).

?Shanghai Composite Index
Source: www.sina.com.cn

?

?Shenzhen Component Index
Source: www.sina.com.cn

?

The Shenzhen Component Index, covering major stocks listed in the smaller
Shenzhen market, gained 1.63 percent to close at 18,164.04 points with a
turnover of 107 billion yuan. It also claimed a record high in the middle
of trading.

Doubtlessly, the coal sector led today's gain admiring sound half-year
profit reports and enlarged productivity. As a convincing proof, China's
top economic planning agency announced yesterday the nation's coal
production jumped 11.7 percent year-on-year to 1.278 billion tons in the
first seven months of 2007. Almost all stocks in the sector attained
notable gains of over nine percent today, while share prices of Shanxi
Coking and Hengyuan Coal Industry and Electricity Power both reached the
upper limit of ten percent.

Shares of China Eastern Airlines, the nation's third largest carrier,
resumed trading today after announcing a deal to sell a combined 24
percent stake to Singapore Airlines and Temasek Holdings, the Singaporean
government's investment arm. Its share price decisively clinched the
upper limit of 10 percent for one day.

(For more biz stories, please visit Industry Updates)

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Chinese School - Beijing to focus on financial services

?  ?

BIZCHINA / News

Beijing to focus on financial services

By Liu Weifeng (China Daily)
Updated: 2007-08-31 09:18

The Beijing municipal government yesterday issued a report, which seeks
to promote the capital as a center for back office operations for the
financial sector.

The report contains a host of measures to lure financial institutions
from home and abroad to set up bases in Beijing and increase the city's
competitive edge in the field.

Back office operations refer to such things as data management,
clearing-house facilities, bank-card administration, research and
development, and emergency centers.

Related readings:

?China further boosts financial services in rural areas
?Regional financial stability improved
?Central bank: China's financial market sees brisk trade in first half
?Local authorities imposes fines on own financial gain - report

The new policies include discounts on registration payments, subsidized
housing, support services for senior managers and preferential land use
terms.

Four zones in Chaoyang, Haidian, Tongzhou and Xicheng districts have been
identified as the back office bases, the report said.

"The capital should have a stronger presence in financial services to
match its economic development and international status," vice-mayor Ji
Lin said.

Ji also announced the establishment of Beijing Financial Office to manage
and facilitate the development of the four areas with the help of leading
figures from the fields of human resources, land use, urban planning,
commerce, taxation and financial regulation.

Guo Hao, deputy director of the office, said the move would help improve
the industrial structure of the city.

"Despite a resource deficiency, Beijing has a unique advantage to get
up-close decision-making information," Gao said.

Bringing back office operations together in designated zones is a prelude
to the growth of key businesses in the financial, security and fund
sectors, he said.

Currently, three overseas companies are in talks with the office: Goldman
Sachs Gao Hua Securities, Swiss Bank and Deutsche Bank.

The office is also mulling a plan to use the new centers as a lure for
the nation's top financial talent.

"We must present a package of policies that will encourage our top people
to settle down here," Gao said.

In addition, three back office operations - the clearing center of the
People's Bank of China, database center of the Agricultural Bank of China
and the R&D center affiliated with China Life Insurance Company - signed
contracts yesterday to relocate to the financial zone in Haidian.

At the end of 2006, Beijing was home to 538 financial corporations
comprising 59 banking institutions, 226 security agencies and 199 trust
and fund companies.

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Learn Mandarin online - Smart moves on salaries

?  ?

BIZCHINA / Review & Analysis

Smart moves on salaries

(China Daily)
Updated: 2007-08-29 09:58

Keeping people's incomes growing in lock step with the country's
expanding GDP should be part of the government's work, says an article in
Guangzhou Daily. The following is an excerpt:

The government of East China's Shandong Province has just drawn up a
paper saying the growth of workers' average salaries will be a key
element in assessing the work of officials next year.

This would add a new perspective to work assessments, which are now
closely focused on economic growth, government income and taxes. In other
words, the Shandong government has made a choice to benefit the public.

Even as the country's economy has boomed, incomes have improved only
slowly. Things look even worse when the rising costs of day-to-day goods
are factored in.

Actually, salaries have for years accounted for about 15 percent of the
GDP. Salaries account for about half of the GDP of developed countries
such as the United States, Germany, Japan and Britain.

The low ratio of salary to GDP in China is also an important element
behind the determination of Shandong officials to ensure salaries
increase appropriately.

This decision is in line with a simple fact: economic development should
benefit everyone, otherwise it will not be sustainable.

Investment, exports and consumption are the three engines driving the
country's economic growth. Consumption has lagged behind the other two
for years. One of the most important reasons for this is the slow growth
in incomes.

Without a proper level of income, consumption will never be strong enough
to drive the economy, and people will also have difficulty improving
their lives, much less share in the fruits of economic prosperity.

When officials place the average salary of the work force high on their
agendas, they are actually promoting the public interest, which is their
due role. And the decision-makers in Shandong have done a good job in
reminding their peers of that fact.

(For more biz stories, please visit Industry Updates)

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� Facts behind salary growth
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Friday, December 28, 2007

Chinese Online Class - China Netcom profit down 5.4% in 1st half

?  ?

BIZCHINA / Center

China Netcom profit down 5.4% in 1st half

(Xinhua)
Updated: 2007-08-26 12:04

China Netcom, the country's second largest fixed-line operator, saw its
net profit fall 5.4 percent in the first half of 2007 under continued
pressure from mobile communication operators, the company said in a
statement.

The Hong Kong- and New York-listed company reported a net profit of 6.7
billion yuan (US$881.6 million) in the first six months of 2007, down
from 7.1 billion yuan (US$934.2 million) for the same period in 2006.

The company registered 40.7 billion yuan (US$5.4 billion) in revenue in
the six-month period, representing a slim 0.43 percent increase on last
year's same period.

Chairman Zhang Chunjiang said the slow revenue growth of fixed-line
operators was a result of increasing mobile substitution.

Although the fixed-line subscribers went up by 1.1 million from the end
of last year to 115 million at the end of June, revenue generated from
fixed-line telecommunication services continued to decline in the first
half.

The company has been active in exploring the mobile services market to
cope with the situation. Its interim report showed its broadband
subscribers grew by 32 percent year-on-year to more than 17 million in
the first half.

Zhang was optimistic about the company's performance, saying the company
"achieved remarkable results in its transformation towards a broadband
communications and multimedia services provider".

The company's revenue from broadband and Internet-related services rose
33.8 percent to 6.6 billion yuan (US$868.4 million), with its average
revenue per user of broadband services at 67.4 yuan (US$8.9), up 3.4
percent from the same period last year.

The country's dominant mobile communication operator - China Mobile said
earlier its first-half profit rose 25.7 percent to 37.9 billion yuan
(US$4.99 billion).

(For more biz stories, please visit Industry Updates)

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===========================================================================

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Chinese Mandarin - Online reporters visit new countryside in Nanjing

CHINA / News

Online reporters visit new countryside in Nanjing
By Tao Li (Chinadaily.com.cn)
Updated: 2006-05-30 14:05

Journalists from major news websites across the country visited on Monday
the Penghu village of Jiangning District, which is hailed as a typical
model in building the socialist new countryside.

A sculpture in Penghu Village

The village, located on the border between Jiangsu and Anhui provinces,
used to be called "Siberia in Jiangning District" due to its remote
location and inconvenient transportation.

However, things have changed greatly in the village since the 1990s.
Clean concrete roads lined with green trees on both sides extend far
until the end of the village, with beautiful and elegant villas standing
amid the green fields.

A pavillion in Penghu Village

By the end of 2005, the village reported a net income of 5.28 million
yuan (US$660,000), with a per capita annual disposable income of 8,500
yuan (US$1,062), higher than the provincial level of 6,250 yuan (US$ 782).

According to the village's party secretary Sheng Congxi, who was awarded
the honor of National Model Worker because of his contributions to
building the village, 95% of the more than 1,000 villagers are covered
with medical insurance and pension.

Community library in Penghu Village

Enjoying the convenience of modern facilities, such as piped water and
gas, cable TV, and telephone, farmers living in the village say they are
living a better life than the urban residents.

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Chinesepod - M-Zone brand appeal extends beyond campus

?  ?

BIZCHINA / Center

M-Zone brand appeal extends beyond campus

By Peng Xuzhi (China Daily)
Updated: 2007-08-23 10:55

Of its three brands - GOTone, Easy-own and M-Zone - China Mobile has made
M-Zone the most distinctive.

The brand's distinctiveness has made it popular with college and
university students, but in secondary and third-tier cities with fewer
universities, the number of M-Zone users is trivial compared with the
other two brands.

Under the trend of lowering fee rates, M-Zone introduced a "music
package" for its users in February, an attempt to associate the brand
with youth culture. Its biggest selling point was the preferential fee
policy.

The campus promotion of M-Zone was indeed successful in building the
brand. Its promotion was once selected in the top 10 marketing cases of
2003.

But the fee rate that targets different groups of consumers was the real
factor affecting users' choices. And the introduction of M-Zone's music
package, breaking the brand-fee barrier, will help M-Zone gain a larger
market share, especially in the second- and third-tier cities.

As early as 2005, when M-Zone was still trying to expand, many of China
Mobile's local subsidiaries already realized the problem. Its promotion
strategy outside of campuses was ineffective in markets with
underdeveloped economies and few university students.

Compared with their foreign counterparts, China Mobile's three brands do
not have full coverage and a specific market division.

Take South Korea's mobile operator SK as an example. The operator set up
a TTLTING brand targeting middle-school students aged 13 to 18, a TTL
brand targeting university students aged 19 to 24, a UTO brand targeting
professional workers between 25 and 35, and a CARA brand targeting
married women.

Lacking brands

China Mobile lacks brands specifically targeted at teenagers and women.
Teenagers, in particular, are a coveted market, and it appears China
Mobile still does not have a brand strategy for that segment.

Therefore, the M-Zone brand should be extended to cover the new market.
The brand should also be used in a transitional role for M-Zone users to
GOTone users. It is impossible for students to change mobile phone
numbers immediately after they graduate.

M-Zone should therefore not limit itself to university campuses.

The M-Zone brand, on the one hand, has long been restricted as a campus
brand, and on the other hand, market development and change of fee
policies require the brand to extend its coverage.

It's a delicate balance. The solution lies in transforming the brand.

There are two key points for the transformation.

(For more biz stories, please visit Industry Updates)

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Learn Chinese online

Chinese language - Bayer anticipates high-speed growth after merger

?  ?

BIZCHINA / Overseas Investment

Bayer anticipates high-speed growth after merger

By Liu Baijia (China Daily)
Updated: 2007-08-21 11:25

Bayer Schering Pharmaceuticals China expects to maintain growth of over
30 percent in the market, as the merger of the healthcare units of Bayer
and Schering nears completion.

Liam Condon, managing director of Bayer Healthcare China and chief of
Bayer Schering Pharmaceuticals China, said Bayer Schering saw growth of
about 50 percent in 2005 and is targeting a further 30 to 50 percent this
year.

The company booked sales of 1.8 billion yuan last year, and is one of the
fastest growing foreign drug makers.

"Our business scale (this year) will be much larger than last year's for
sure," said Condon.

China's pharmaceutical market will grow by 14.4 percent this year on
2006, according to US healthcare industry research company IMS Health.

Bayer and Schering were both ranked about 10th among foreign
pharmaceutical firms in China in 2005. The merger took the company into
the top four.

Bayer took 88 percent of German drugmaker Schering last year to become
the seventh-biggest specialty drug maker in the world.

Condon said it had wrapped up registration of the new legal entities in
China earlier this month.

Bayer said earlier it would shed 6,100 jobs from its healthcare unit as a
result of the merger. But Condon said it would instead add 500 jobs to
the existing 2,000.

It has also spent 200 million yuan ($26 million) to double the capacity
of its Beijing factory, which should be ready by early 2008.

The Chinese pharmaceutical market is shifting focus from antibiotics to
treatment for cancers, cardiovascular and cerebrovascular diseases, and
diabetes. Bayer Schering also plans to introduce more of its blockbuster
medicines to the Chinese market.

It will introduce 20 products in five years, including Bayer's top three
blockbusters, which contributed 2.57 billion euros for the company last
year.

(For more biz stories, please visit Industry Updates)

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Thursday, December 27, 2007

Learn Chinese online - Full Text: White Paper on Food Quality and Safety

?  ?

BIZCHINA / Center

Full Text: White Paper on Food Quality and Safety

(Xinhua)
Updated: 2007-08-18 10:24

The State Council Information Office published on Friday a white paper
entitledThe Quality and Safety of Food in China. The document, composed
of five chapters, describes the Chinese government's efforts in enhancing
the level of food quality and improving the situation of food safety over
the past years. The full text of the white paper follows:

The Quality and Safety of Food in China

I. Food Production and Food Quality

II. Food Safety Regulatory System and Work

III. Supervision of Imported and Exported Food

IV. Law Regime and Technological Guarantee System for Food Safety

V. International Exchanges and Cooperation Regarding Food Safety

The quality and safety of food is a major benchmark of the economic
development and people's living conditions of a country. Adhering to the
people-oriented approach, the Chinese government has always attached
great importance to food quality and safety. Moreover, sticking to the
principle of nipping problems in the bud, it has built and improved a
supervisory system and mechanism for food safety, strengthened
legislation and the setting of relevant standards, exercised strict
quality control regarding food, actively promoted international exchanges
and cooperation in this respect, and has greatly raised public awareness
of food safety. Thanks to such efforts, the overall level of food quality
in China is being steadily enhanced, the situation of food safety is
continuously improving, and the order in food production and operation
have markedly turned for the better.

I. Food Production and Food Quality

1. The Quality and Safety Level of Processed Food Is Steadily Improving

(1) Rapid and Sound Development of the Food-processing Industry

In recent years, China's food industry has maintained fast and sound
growth, with a steady increase in economic benefits. Foodstuffs can be
classified by their raw materials and processing techniques into 525
kinds in 28 categories: processed grain products; edible oil, fat and fat
products; seasonings; meat products; dairy products; soft drinks;
convenient food; biscuits; canned food; iced drinks; fast-frozen food;
potato and dilated food; candies (including chocolate and chocolate
products); tea; alcoholic beverages; vegetable products; fruit products;
roasted seeds and nuts; egg products; cocoa and bakery coffee products;
sugar; processed aquatic products; starch and starch products; pastries;
bean products; bee products; special diet food, and others.?At present,
China has 448,000 enterprises engaged in foodstuff production and
processing. Among them, 26,000 enterprises of designated scale 1 occupy
72 percent of the market, taking the leading role in terms of output and
sales revenue; 69,000 are enterprises not up to the designated scale and
those with more than ten employees, taking up a market share of 18.7
percent; and 353,000 are small businesses or workshops with fewer than
ten employees, with a market share of 9.3 percent. (See Table 1)

1Refering to private industrial enterprises with annual revenue of two
million yuan or more and all state-owned industrial enterprises, as well
as private commercial enterprises with annual revenue of five million
yuan or more and all state-owned commercial enterprises.— Tr.

?

Statistics show that, in 2006, industrial food enterprises of designated
scale generated 2,158.695 billion yuan of output value (excluding
tobacco), accounting for 6.8 percent of the national industrial output
value, and up 23.5 percent year on year. The average annual industrial
added value and profit of processing enterprises of grain, oil, meat and
dairy products all exceeded 20 percent. The output of major foodstuffs in
2006 were: wheat flour, 51.93 million tons; edible vegetable oil, 19.855
million tons; fresh frozen meat, 11.125 million tons; dairy products,
14.596 million tons; beer, 35.152 million kl; and soft drinks, 42.198
million tons. These figures show rises of 28.2 percent, 17.5 percent,
24.0 percent, 23.5 percent, 14.7 percent and 21.5 percent year on year,
respectively. In the first six months of 2007, the accumulated output
value of the food industry amounted to 1,281.62 billion yuan, up 29.9
percent as compared with the corresponding period last year. The output
of beer, edible oil, soft drinks and gourmet powder led the world.

At present, the development of China's food industry displays the
following features:

One, the processing techniques and equipment of some food enterprises
reach or approach the advanced international level. Large meat, dairy
product, beverage and beer producers all have world first-class
production and testing facilities, which guarantees the quality of their
products. The development and application of such key processing
techniques as membrane-separation technology, physical property
modification, cold-aseptic filling, concentration and cold processing has
narrowed China's gap with the world advanced level in terms of processing
technology and equipment.

Two, quality control of the enterprises has become more scientific and
standard. So far, 107,000 food producers have obtained market access
permits regarding quality and safety, and 2,675 have been granted hazard
analysis and critical control point (HACCP) certificates.

Three, the structure of products is being improved to cater to the
increasingly diverse demands of consumers. The proportion of intensively
or deeply processed foodstuffs to the total output of foodstuffs keeps
increasing. For instance, liquid dairies now account for more than 85
percent of the total output of dairy products; colas no longer dominate
the market, as a result of the mushrooming of packed drinking water and
fruit, vegetable and tea drinks; special flour above second grade
accounts for 65 percent of the total output of wheat flour; standard rice
above first grade accounts for 88 percent of the total output of rice,
and special rice for 33.9 percent of the total output of rice; and Grades
I and II oil (salad oil and quality culinary oil according to previous
national standards) accounts for 58.5 percent of the total output of
edible vegetable oil.

(2) Continuous Improvement of Food Quality

One, the acceptance rate of foodstuffs on the whole is steadily rising.
The rate was 77.9 percent in the 2006 national foodstuffs sample survey,
and it rose to 85.1 percent in a similar survey in the first half of
2007. The level of food quality and safety remains stable, with a gradual
upturn. (See Table 2)

Table 2?Acceptance rate of foodstuffs in sample surveys from 2005 to June
2007

Two, the quality of food produced nationwide is improving. In the first
half of 2007, the 31 provinces, autonomous regions and municipalities
directly under the Central Government on the mainland of China reported
an average 89.2-percent acceptance rate of foodstuffs, and the figure in
14 of them surpassed 90 percent.

Three, the quality of food in key sectors is fairly high. Thanks to the
country's endeavors to improve the work of food producers and processors,
the quality of 525 kinds of foodstuffs in 28 categories has been enhanced
to various degrees, with remarkable progress in the quality of food with
a large daily consumption. According to statistics, the ten foodstuffs
with the largest consumption are edible oil, fat and fat products;
alcoholic beverages; aquatic products; processed grain products; soft
drinks; meat products; dairy products; seasonings; starch and starch
products; and sugar. In the first half of 2007, sample surveys showed a
90-percent or higher acceptance rate of all the above ten foodstuffs
except aquatic products, whose acceptance rate was 85 percent. That of
meat products was 97.6 percent. (See Table 3)

Table 3 Acceptance rate of the ten most-consumed foodstuffs in the first
half of 2007

(3) Quality Food Dominating the Market

Along with the development of the food industry, the scale of food
producers keeps growing, production is becoming more concentrated, and
the quality of foodstuffs of large and medium-sized producers is sound.
In 2006, the top 100 revenue earners held 24.9 percent of the total sales
of the food industry; the top ten dairy producers generated 54.7 percent
of the total revenue of the dairy industry; the top ten soft-drink
producers generated 39.5 percent of the total output of that industry;
the top ten sugar makers produced 43.6 percent of the total output of the
sugar industry; the top 50 meat producers accounted for 70 percent of
that industry in terms of production capacity and sales; the eight beer
brewery groups, each with a production capacity of over one million kl,
produced 57 percent of the national beer output; the ten largest wineries
produced 62.1 percent of the national output; and the three largest
instant noodle producers occupied 76 percent of the Chinese market.
??
2. The Quality and Safety of Agricultural Products Is Steadily Improving

(1) Fast Growth of High-quality and Safe Brands

Quality agricultural products are steadily expanding their market.
Agricultural standardization has been notably enhanced, which increases
farmers' income and changes their farming patterns. Hazard-free, green
and organic products make up 90 percent of all agricultural-product
exports. Over the past five years, the export of green food has shot up
40 percent annually, and has been accepted by over 40 of China's trading
partners. So far, China has developed 28,600 kinds of hazard-free
agricultural products, and set up 24,600 hazard-free production bases
with a total area of 21.07 million hectares. Five thousand three hundred
and fifteen Chinese enterprises use the green food logo on their 14,339
kinds of products totaling 72 million tons and grown on 10 million
hectares of land. In addition, 600 producers use the organic food logo on
their 2,647 kinds of products totaling 19.56 million tons and grown on
3.11 million hectares of land. Altogether, there are 539 state-level
agricultural demonstration zones, 100 demonstration counties (farms) and
nearly 3,500 provincial-level demonstration zones, with a combined
growing area exceeding 33.33 million hectares.

(2) Acceptance Rate of Agricultural Products Rising Continuously

Inspections in the first half of 2007 showed that the average acceptance
rate regarding pesticide residues in vegetables was 93.6 percent; those
regarding clenbuterol hydrochloride contamination and sulfa drug residues
in livestock products was 98.8 percent and 99.0 percent respectively; and
that regarding chloromycetin in aquatic products was 99.6 percent, of
nitrofuran 91.4 percent, and of pesticide residue over 95 percent in
sample surveys done at production bases.

3. The Quality of Imported and Exported Foodstuffs Stays High

China is a large importer and exporter of foodstuffs, with the amount of
each growing steadily in recent years. The import and export volume in
2006 totaled US$40.448 billion-worth (excluding wheat, corn and soybean,
same below), up 21.45 percent year on year. (See Table 4)

Table 4? China's food import and export volumes in 2005 and 2006

(1) Safety of Export Food Guaranteed

In 2006, China exported 24.173 million tons of food, worth US$26.659
billion, up 13.29 percent and 16.0 percent year on year, respectively.
The top ten varieties in terms of export value were aquatic products,
processed aquatic products, vegetables, canned food, juices and drinks,
processed grain products, seasonings, poultry products, alcoholic
beverages, and livestock meat and chopped entrails. (See Table 5)

Table 5? Top ten food varieties in terms of export value in 2006 as
compared with 2005

Foodstuffs of the mainland of China have been exported to more than 200
countries and regions, of which the top ten in terms of trade volume are
Japan, the US, the ROK, Hong Kong, Russia, Germany, Malaysia, Holland,
Indonesia and the UK. (See Table 6)

Table 6? Top ten countries and region in terms of China's export value of
food in 2006 as compared with 2005

For many years, over 99 percent of China's exported foodstuffs have been
up to standard. In 2006 and the first half of 2007, China exported to the
US some 94,000 batches and 55,000 batches of foodstuffs, respectively,
and 752 batches and 477 batches of each were found by the US to be
substandard, making the acceptance rate 99.2 percent and 99.1 percent,
respectively. In the case of the EU, the figures were 91,000 batches and
62,000 batches, with 91 batches and 135 batches found by the EU to be
substandard, making the acceptance rate 99.9 percent and 99.8 percent,
respectively. On July 20, 2007, the Ministry of Health, Labor and Welfare
of Japan, the largest importer of Chinese food, released an examination
report on food imported from China in 2006, which showed that Japan
conducted more sample surveys on Chinese food (15.7 percent) than on food
from anywhere else, but Chinese food had the highest acceptance rate
(99.42 percent), followed by that imported from the EU (99.38 percent)
and the US (98.69 percent). The mainland of China is a major supplier of
food for the Hong Kong Special Administrative Region. Two large food
sample surveys conducted by Hong Kong's Food and Environmental Hygiene
Department in the first half of 2007 showed that the acceptance rate
stood at 99.2 percent and 99.6 percent, respectively.
??
(2) Quality of Imported Food Stable

In 2006, China imported 20.273 million tons of food, worth US$13.396
billion, up 37.94 percent and 25.11 percent year on year, respectively.
The top ten varieties in terms of import value were vegetable oil,
aquatic products, cereals, sugar, dairy products, alcoholic beverages,
tobacco and associated products, poultry and chopped entrails, oil crops,
and processed grain products. (See Table 7)

Table 7? Top ten food varieties in terms of import value in 2006 as
compared with 2005

China imports foodstuffs from 143 countries and regions, and the top ten
in terms of trade value are Malaysia, Russia, the US, Indonesia,
Argentina, Thailand, Australia, New Zealand, Brazil and France. (See
Table 8)

Table 8? Top ten countries in terms of China's import value of food in
2006 as compared with 2005

For many years, the quality of food China imports has been fairly stable,
and no serious hazard has been caused by imported food. During the period
from 2004 to the first half of 2007, the acceptance rate of imported
food, according to statistics released by the ports of entry, were 99.29
percent (2004), 99.46 percent (2005), 99.11 percent (2006) and 99.29
percent (first half of 2007), respectively.

II. Food Safety Regulatory System and Work

To ensure food safety, the Chinese government adheres to the principle of
giving priority to prevention and control at its root by monitoring and
controlling the whole process, and has formed a regulatory format in
which the local governments take the responsibility, related departments
provide guidance and conduct coordination, and different sectors make
concerted efforts under the unified national leadership. In response to
the circumstances in China, the State Council issued the Decision on
Further Strengthening Food Safety Supervision in 2004, according to which
one monitoring link is supervised by one department; sectional
supervision is adopted as the main means while supervision of different
varieties as the supplementary means, making clearer the functions and
responsibilities of the food safety supervisory departments. The Decision
divided food safety supervision into four links, managed by the
departments of agriculture, quality supervision and inspection, industry
and commerce, and health, respectively. The production of primary
agricultural products is supervised by the agriculture department, the
quality and daily hygiene supervision of food processing is overseen by
the quality supervision and inspection department, supervision of food
circulation and distribution is done by the department of industry and
commerce, and that of the catering industry and canteens is taken care of
by the health department. The integrated food-safety supervision and
coordination, and investigation of and penalties imposed for major
incidents in this regard are the responsibility of the department of food
and drug administration, while imported and exported agricultural
products and other foodstuffs are supervised by the quality supervision
and inspection department. In this way, there is a strict, complete
regulatory system for food safety supervision in which the departments
concerned work in close cooperation, with clearly defined functions and
responsibilities.

As it is a prolonged and arduous task to strengthen food safety control,
a regulatory system and a lasting efficiency mechanism should be
established and improved, and planned with consideration given to both
present and future needs to deal with both the symptoms and root causes
of food safety problems, especially the latter.

The Chinese government stresses food safety from the source, improvement
of the related basic regulatory systems, and strengthening of food safety
supervision.

1. Intensifying Supervision on the Quality and Safety of Agricultural
Products

In 2001, China started to implement the Hazard-free Food Action Plan,
focusing on the control of residue of high-toxic pesticides in vegetables
and clenbuterol hydrochloride contamination in livestock products, to
address the most concerned problems of illegal use of high-toxic
pesticide and veterinary medicines, as well as violations of residue
standards. The Plan stipulates a complete supervisory process from
farmland to market by emphasizing the three key aspects of materials used
in farming, production and market excess. By carrying out regular
monitoring and inspection, the Plan aims at enhancing people's awareness
of food quality and safety, ensuring management responsibility, and
improving the levels of management and quality and safety of agricultural
products by means of standardization. Today, the system for securing the
quality and safety of agricultural products is improving, with steadily
strengthened supervisory capacity and notable progress in agricultural
standardization, leading to the formation of a work mechanism integrating
service, management, supervision, penalty and emergency response, to
ensure the quality and safety of agricultural products.

2. Establishing and Strictly Implementing Market Access Systems for Food
Quality and Safety

The food quality and safety market access systems established by the
Chinese government in 2001 comprise three major ones. One, the production
license system, which requires that food-processing enterprises cannot
produce and market their products without having the capability to
control the source materials' quality, and the adequate conditions to
ensure food quality and safety in terms of production equipment,
technological flow, product standardization, testing equipment and
capability, environment, quality control, storage and transportation,
packaging and labeling, and production staff. Enterprises can produce and
sell food only after obtaining a food production license. Two, the
compulsory inspection system, which means that enterprises have the legal
obligation to ensure that their food products pass quality inspection
before entering the market. Three, the market access labeling system,
i.e., enterprises are required to put on food products the QS label,
guaranteeing their quality and safety. Following the principle of phased
implementation, by the end of June 2007, some 107,000 food production
licenses had been issued to enterprises, which took up over 90 percent of
the market of their trades. Meanwhile, supervision has been strengthened
over enterprises with food production licenses. By the end of June 2007,
1,276 food production licenses had been withdrawn, cancelled, revoked or
nullified for substandard food products. In pace with the growing number
of enterprises obtaining the license, the General Administration of
Quality Supervision, Inspection and Quarantine has released lists of such
enterprises, making clear that producers without the license and products
without the QS label must not enter the market, and warning consumers not
to use such products.

3. Intensifying State Supervision by Sample Survey for Food Quality

The Chinese government carries out a food supervision and inspection
system mainly by means of sample survey. Since it was set up in 1985, the
system has been strengthened and become more focused to enhance its
efficiency. In recent years, daily-consumption food items, such as dairy
products, meat products, tea, beverages, grain and edible oil, have
become the major targets of sample surveys, especially those produced in
workshops and enterprises located in concentrated food-producing areas.
Special attention has been given to the hygienic indices of
microorganisms, additives and heavy metals in food, and to follow-up
inspections of small enterprises with unstable product quality. By
increasing sample survey frequency and coverage, the goal of rectifying
producers of the same type of food by means of sample survey has been by
and large met. The state supervisory sample surveys were carried out on
11,104 batches of foodstuffs produced by 7,880 enterprises from 2006 to
June 2007. Meanwhile, greater efforts have been made to rectify and
punish enterprises turning out substandard products, and to set things
straight by means of the following: First, strictly implementing the
public announcement system. Three hundred and fifty-five batches of food
with serious quality problems produced by 355 enterprises were found in
sample surveys and publicly announced. At the same time, publicity is
given to good enterprises, quality products and sound brands. Two hundred
and forty products winning the title of "Famous Chinese Brand" and 548
freed-from-inspection products have become popular among consumers.
Second, strictly carrying out the rectification system. Enterprises with
substandard products are urged to rectify themselves strictly, to be
examined again in due course. If problems persist, they will be ordered
to stop production for an overhaul. If they still cannot pass the
inspection after the overhaul, their business licenses will be revoked.
Third, strictly implementing the penalty system. Producers who mix
impurities or imitations with their products, or pass fake or defective
products off as genuine ones will be ordered to stop production, and
their products be confiscated. Legal liabilities will be imposed in
serious cases by the judicial organs.

4. Intensifying Rectification of Food Workshops

Regional differences and disparities between urban and rural areas in
China make the supervision of food workshops a prolonged and arduous
task. At present, food workshops with fewer than ten employees are the
ones that pose the most difficult problem for ensuring food quality and
safety. For workshops engaged in traditional, low-risk food processing,
the government sticks to the principle of supervision and standardization
while giving guidance to such workshops for consumers' convenience. On
the one hand, the government has tried to upgrade them to the
market-access requirements by means of shutdown, stoppage of production,
merging or changing line of business; on the other, more stringent
supervisory measures have been taken to prevent food safety accidents. In
recent years, supervision of workshops and small enterprises has been
conducted mainly in four aspects: One, transformation of basic work
conditions. Workshops cannot start production without meeting the
requirements. Two, restrictions on market scope. Food products processed
by such small workshops are not allowed to sell outside the
administrative areas of townships or towns in which they are located, not
allowed to enter shopping centers and supermarkets. Three, restrictions
on food packaging. Before obtaining a market access permit, food products
from the workshops are not allowed to have marketing package, so that
they cannot enter the market disguised as licensed goods. Four, public
undertaking. Food workshops must undertake to the public that they do not
use any non-food materials, misuse additives, use recycled food, send
their products to shopping centers or supermarkets, or market their
products beyond the approved region, and guarantee that their food
products meet the basic safety and hygienic standards. After such
rectifications, the average acceptance rate in sample surveys of food
workshops rose to 70.4 percent in 2006. By the end of June 2007, 5,631
workshops had been closed down, 8,814 had been made to suspend
production, and 5,385 had reached the requirements after rectification.

5. Promoting the Responsibility System for Regional Food Safety Control

The responsibility system for regional food safety control mainly
comprises the following aspects. First, to have specified persons
responsible for specified regions and enterprises. The system requires
that food safety inspectors of the quality supervision and inspection
department go to the townships to supervise the food-processing
enterprises; township government coordinators assist the inspectors in
supervising food quality and safety; and local reporters bring to
attention anything illegal regarding food quality and safety. The nu mber
of inspectors, coordinators and local reporters must be fixed, their
duties defined, and their working areas and inspecting enterprises
designated. Second, the system requires "three enters" and "four graphs."
The former refers to entering villages, households and enterprises to
find out their working conditions and set up files of food producers and
processors; the latter refers to drawing up a graph showing dynamic
changes in enterprises, a graph showing the distribution of food
producers and processors, a graph showing the implementation of
supervisory duties, and a graph giving food safety precautions, so as to
carry out proactive monitoring and control. Third, the system requires
local governments to sign documents of responsibility, enterprises to
sign letters of undertaking, and quality supervision and inspection
departments to submit regular food safety reports.

By the end of June 2007, a total of 16,030 food-safety supervision
regions had been set up, 25,346 full-time food-safety inspectors had been
put to work, 72,474 local government coordinators had been appointed, and
106,573 food-safety reporters had been recruited in 31 provinces,
autonomous regions and municipalities directly under the Central
Government. In 2006, the quality supervision and inspection departments
at various levels made 900,000 inspections of food producing and
processing enterprises.

6. Stepping up Supervision of the Food Circulation Sector

The "Three Green Projects" have been vigorously promoted in China,
advocating "green consumption, green markets and green channels." The
government encourages modern modes of organization and management for
circulation, positively supports the development of chain management and
logistics provision; urges marketing enterprises to examine materials
before accepting them, check business licenses, require invoices for
purchases, keep accounts of transactions and honor their undertakings for
food quality, as well as promotes market managers' food quality
responsibility system; implements market inspection system in an
all-around way; improves the food quality monitoring system, and strictly
implements the system that substandard food must be withdrawn from the
market and destroyed and made known to the public; strengthens
administration over butchering of livestock and fowls, breaks down
regional barriers and encourages the nationwide circulation of
high-quality foodstuffs with good credit standing and prestigious brand
names; improves food processing, circulation and service systems in
communities; strengthens the management of the use of genuine food safety
labels and standard packaging, and concentrates efforts to crack down on
printing of fake packaging, labels and trademarks.

7. Intensifying Supervision of Food Safety in Catering Industry

Hygiene in the catering industry is vital for food safety. In this
regard, the Chinese government has primarily done the following: One, it
has intensified supervision on hygiene in the catering industry,
promulgated and put into effect the Hygienic Standards for the Catering
Industry and Group Food Service Providers, adopted a quantified and
classified supervisory system for food hygiene management, and
strengthened supervision on each link of the catering industry. Two, it
has urged the catering industry and canteens to implement the quantified
and classified supervisory system for food hygiene management in an
all-around way, improved and strengthened monitoring of food
contamination and building of a monitoring system on diseases caused by
contaminated food. Three, it has intensified crackdown on activities in
violation of food safety law, investigated and dealt with serious cases
and timely made them known to the public. In 2006, the health departments
inspected 2.04 million catering entities of various types and school
canteens, dealt with 45,000 cases of illegal food processing and sale and
closed down 25,000 food processors and sellers that had been operating
without hygiene permits. Four, it has strengthened efforts on hygienic
work in schools, directed and carried out special inspections on food and
drinking water hygiene, and prevention and treatment of contagious
diseases in schools all over the country, as well as prevention of food
poisoning and the spread of communicable intestinal diseases. Five, it
has conducted food-related jeopardy assessment and issued early warnings
for food safety problems on a scientific basis and provided food
assessment information.

8. Carrying out Rectification in Respect of Food Quality and Safety in an
All-around Way

In order to crack down on the spread of counterfeit and shoddy foodstuffs
in certain regions, special comprehensive rectification campaigns were
launched in these regions for food quality and safety. The Chinese
government has conducted a special project involving hundreds of regions,
thousands of townships and tens of thousands of food producers and
processors. Targeting key regions, food processing venues and households
and their products, the project has resolved the regional problem of
producing and selling fake and inferior goods by establishing a food
safety monitoring network, stepping up efforts in building up the
technological forces such as standardization and monitoring technology,
improving technical services for enterprises, promoting the setting up of
food industry associations, and intensifying law enforcement and making
more stringent efforts to crack down on the production and sale of
counterfeit and faulty food. Meanwhile, the departments of industry and
commerce as well as quality supervision and inspection keep intensifying
law enforcement and, with focus on food quality and safety, direct and
conduct special law enforcement actions against activities in producing
and processing counterfeit food-related items at the source, strictly
crack down on illegal activities such as production of food with non-food
materials and misuse of additives in food, as well as food producers with
neither a business license nor food-processing permit. In 2006, the
quality supervision and inspection departments handled 49,000 illegal
operations in this field, confiscating counterfeit and shoddy foodstuffs
worth 450 million yuan. In the same year, the departments of industry and
commerce sent 5.6 million person/times for law enforcement and inspected
16,000 key food markets and 10.4 million food operating business/times,
closed down 151,800 unlicensed businesses, revoked 4,629 business
licenses, investigated and dealt with 68,000 cases of production and sale
of counterfeit and shoddy food, of which 48 cases were referred to the
relevant judicial organs, and ordered 15,500 tons of substandard
foodstuffs off the market.
??
9. Beefing up the Construction of a Risk-warning and Emergency-response
System

The Chinese government has established a nationwide quick risk warning
and responding system in respect of food safety, actively conducted risk
monitoring and control in food production, processing, circulation and
consumption, and preliminarily realized the early discovery, early
warning, early control and early treatment of food-safety problems
through efficient collection and analysis of information on food safety.
It has also established a rapid and efficient response mechanism covering
the collection and analysis of risk-related information, issuing warnings
and rapid responses so that it is possible to provide prompt reports,
take swift action, make accurate judgment and mete out appropriate
measures.?
??
10. Establishing and Improving a Food Recall System

This system comprises two aspects: active recall and instructed recall.
The system stipulates that it is the responsibility of food producing and
processing enterprises to recall their products if necessary, requires
that food producers should instantly put a halt to the production and
selling of their products if they suspect any safety risk in their food
products, and take the initiative to recall such food products. Producers
who purposely conceal food hazards or do not perform their recall
obligations, or whose faulty production has extended such hazards or made
them recur, will be instructed to recall their products. In recent years,
in conducting food sample surveys and law enforcement, the General
Administration of Quality Supervision, Inspection and Quarantine has
become more stringent in demanding food recall when major food-safety
hazards, such as pathogenic bacteria, chemical pollutant or non-food
materials, are found in food products. Toward those food producing
enterprises causing serious consequences, the Administration has revoked
their licenses, thus reducing hazards that might be caused by unsafe food
and safeguarding the health and safety of consumers.?

11. Improving the Food Safety Credit System

The Chinese government pays great attention to the construction of the
credit system for food safety, and has set up the preliminary credit
records for food-producing enterprises, as well as a system to publicize
the honor rolls and blacklists of food producers and processors.
Meanwhile, the functions of chambers of commerce and trade associations
have been brought into full play to promote self-discipline in the food
industry. By giving backing to excellent and competent enterprises, the
government supports and helps good and strong enterprises by legislative,
administrative and economic means to create an honest environment for
food safety, and to enhance people's awareness of honesty in this regard.
It has made great efforts in gradual improvement of this mechanism for
food safety, and given full scope to its role in regulating, guiding and
supervising food safety. It has built up files of credit records of food
safety and promoted classified credit monitoring in the food industry.
Emphasis is laid on the establishment of a registration and information
system and a classified database of credit records of food producers and
sellers, which collects information on food producers' and sellers'
market access, food-safety control, and consumers' complaints and
reports, to ensure an effective control based on adequate information. In
recent years, the latest network technology has been used for this
purpose, so that consumers may timely, easily, quickly and effectively
distinguish counterfeits from genuine ones, which greatly helps safeguard
consumers' interests, discourages the production and sale of fake
foodstuffs and promotes honesty among enterprises in this industry.

Over the years, the continuous growth of the food industry in terms of
variety and quantity as well as the improvement of quality have helped
satisfy the people's ever-increasing consumption demands, raised their
living standard and promoted national economic development. However, the
Chinese government is well aware that there are still problems with food
safety, owing to the country's limited socio-economic development. In the
days to come, penalties will be focused on those who produce shoddy
products or products containing inferior materials or impurities, palm
off counterfeits as genuine ones, process foodstuff with non-food or
moldy materials, produce foodstuff in disregard of required standards and
misuse additives in foodstuff, so as to continuously guarantee food
safety and quality.

III. Supervision of Imported and Exported Food

1. Supervision of Imported Food

Exploration and practice over the years have enabled China to set up a
complete framework of food quality and safety supervisory system and
guarantee measures to ensure the safety of imported food.

-- Scientific risk management system. According to the WTO Agreement on
the Application of Sanitary and Phytosanitary Measures (SPS) and common
international practice, the Chinese government adopts an inspection and
quarantine entry system based on risk management for high-risk imported
food, such as meat and vegetable, which includes: making a risk analysis
on the high-risk food that the exporting country applies to export to
China; signing an inspection and quarantine agreement with the exporting
country on food involving acceptable risks; carrying out hygiene
registration for foreign food enterprises; and quarantining, examining
and approving the imported food of animal and plant origin. If epidemic
animal or plant diseases or severe food safety problems occur in the
exporting country, China shall take timely risk management measures,
including suspending food imports from that country.

-- Strict inspection and quarantine system. When imported food arrives at
the port of entry, the entry-exit inspection and quarantine authorities
carry out inspection and quarantine in accordance with law, and approve
the foodstuffs to be imported only if they meet the required standards;
and the customs house clears the imported food upon the strength of the
Customs Clearance List of Inward/Outward Goods as issued by the
entry-exit inspection and quarantine authorities. Only then can the food
be sold in the Chinese market. If safety or hygienic problems are found
in the food when inspected and quarantined, corresponding measures are
immediately taken. In 2006, Chinese entry-exit inspection and quarantine
authorities altogether found 2,458 batches of foodstuffs not meeting the
standards at ports of entry. In the first half of 2007, some 896 were
found, which were returned, destroyed or used in other ways according to
law. Thus is the safety of food imported for the Chinese market assured.

-- Complete quality and safety supervisory system. While carrying out
inspection and quarantine in accordance with law, the entry-exit
inspection and quarantine authorities pay special attention to
higher-risk food and problematic foodstuffs as found in the inspection
and quarantine at the ports of entry. The authorities promptly issue
early warnings of risks when finding imported food with serious problems
or the same type of imported food with repeated problems, and take such
measures as increasing the proportion of sample survey, adding more items
for inspection, and suspending import.

-- Strict system against illegal import. The General Administration of
Quality Supervision, Inspection and Quarantine and the General
Administration of Customs have set up a cooperation mechanism to jointly
fight illegal food imports. In 2006, China signed with the European Union
Commission the Arrangement for Cooperation on Joint Prevention of Illegal
Actions in the Import and Export of Food, making it clear that the two
sides will crack down on such illegal activities as deception, undeclared
carrying, illegal transit and smuggling through exchanges of information,
technological cooperation, mutual visits of experts and special joint
actions. In 2006 and the first half of 2007, 12,292 tons of illegally
imported meat were seized.

2. Supervision of Exported Food

Following the principle of "prevention first, supervision at the source,
and control throughout the process," the Chinese government has set up
and improved an export-food safety management framework composed of "one
pattern and ten systems."

"One pattern" refers to the managerial pattern for the production of
export food -- "enterprise + base + standardization." This pattern
conforms to China's reality and the actual situation in the field of
export food, and thus is an important guarantee for the quality of such
food. Besides, it is the only way for enterprises to aim for scale and
intensive development in the international market. With unremitting
efforts over many years, China has basically put this pattern in place
for major export food items, especially high-risk foodstuffs such as
meat, aquatic products and vegetable.

The "ten systems" are: three for supervision at the source -- the
archiving management system for the inspection and quarantine of planting
and breeding bases, the epidemic disease monitoring system, and the
supervisory system for pesticide and veterinary medicine residue; three
for factory supervision -- the hygiene registration system, the
classified management system for enterprises, and the resident quarantine
official system for large enterprises producing high-risk food for
export; three for product supervision -- the legal inspection and
quarantine system for export food, the system of quality tracing and
substandard products recalling, and the early risk warning and quick
response system; and one for credit building -- a red list and a
blacklist for food export enterprises.

-- Strengthening supervision of planting and breeding at the source. To
effectively control the risks of animal epidemics, plant diseases and
pesticide and veterinary medicine residue, and guarantee food quality and
safety and traceability at the source, the entry-exit inspection and
quarantine authorities adopt the archiving management system for the
inspection and quarantine of export food material bases with such risks.
Only the raw materials of planting and breeding bases with archiving
approval can be used in processed export food, and all the raw material
bases with archiving approval are publicized on the website of the
General Administration of Quality Supervision, Inspection and Quarantine.
So far, 6,031 breeding farms and 380,000 hectares of planting bases have
obtained such approval. For these bases, the relevant agencies strengthen
supervision, prevention and control of epidemic diseases, exercise tight
management of agricultural input materials, and enforce a strict
supervision system over pesticide and veterinary medicine residue, so
that these problems are brought under effective control. In recent years,
bird flu has been found in many places around the world, but none at the
bases under archiving management in China.

-- Strengthening supervision of food producing enterprises. China has
adopted a hygiene registration system for all enterprises producing
export food, and an enterprise has to be granted such registration before
engaging in the production of export food. So far, 12,714 enterprises
have been registered, among which 3,698 have passed the HACCP
certification of the entry-exit inspection and quarantine authorities.
The local entry-exit inspection and quarantine authorities carry out
routine supervision and administration of the registered food producing
and processing enterprises in a unified way to ensure that the raw
materials come from archived planting and breeding bases, and that the
production and processing meet the required standards. As regards large
enterprises producing or processing high-risk export food such as meat,
the entry-exit inspection and quarantine authorities send resident
officials to supervise them when needed. The packaging of export food
should be labeled with traceable signs according to requirements, so as
to ensure the traceability of the products and recall of substandard
products.

-- Strengthening inspection and quarantine before the food is exported.
As prescribed by Chinese laws, all food should meet the standards set by
the inspection and quarantine authorities before being exported, and the
customs houses at the ports of exit should clear the export food upon the
strength of the Customs Clearance List of Outward Goods issued by the
entry-exit inspection and quarantine authorities. If it is demanded by
the importing country, the relevant entry-exit inspection and quarantine
authorities should issue a hygiene certificate to prove that the food
meets the required standards, and enter on the certificate the name,
address, number of hygiene registration of the producing enterprise, date
of production, date of export, loading port and destination port. When
the goods arrive at the port of exit, the inspection and quarantine
authorities at the port should examine the goods again, making sure they
are intact and conform to the information on the certificate. All these
measures guarantee the traceability of the food.

-- Strengthening the construction of the export enterprise credit system.
An export enterprise quality undertaking system and a red list and
blacklist system for export enterprises are implemented in a
comprehensive way, and efforts are being made to increase the awareness
of the persons primarily responsible for product quality and help
enterprises to form a mechanism of self-management, self-discipline and
consciousness of operation in good faith. Included on the List of Sound
Enterprises are those with a complete and effective control system, good
faith, effective control over safety risks, and a good reputation in the
importing countries. Such enterprises are granted favorable policy
treatment. Enterprises with serious quality problems as reported by the
importing countries or regions, or which have avoided inspection and
quarantine or cheated the inspection and quarantine authorities are
punished in accordance with the law and included in the List of Unlawful
Enterprises and publicized on the Internet so as to enhance the
self-disciplinary awareness of enterprises producing export food. So far,
55 enterprises have been put on the list.

Over the years, the departments of quality supervision and inspection,
trade, customs, industry and commerce, and taxation have worked closely
to promote the quality and safety level of food exported from China and
satisfy numerous Chinese and foreign customers with high-quality,
delicious and inexpensive foodstuffs. Yet, there are still a tiny number
of enterprises that disregard the law, regulations and standards of China
and importing countries and, by deception or fraud, avoid supervision by
the inspection and quarantine authorities, or export food by improper
channels. Consequently, some adulterated, counterfeit or shoddy
foodstuffs have found their way from China into foreign markets. The
Chinese government is determined to step up the fight against such
activities and prevent substandard foodstuffs from going overseas.

IV. Law Regime and Technological Guarantee System for Food Safety
??
1. Food Safety Law Regime Gradually Improved

China now has a complete law regime providing a sound foundation and good
environment for guaranteeing food safety, improving food quality and
regulating food imports and exports.

The specific laws in this regard include the Product Quality Law,
Standardization Law, Metrology Law, Law on the Protection of Consumer
Rights and Interests, Law on the Quality and Safety of Agricultural
Products, Criminal Law, Food Hygiene Law, Law on Import and Export
Commodity Inspection, Law on Animal and Plant Entry and Exit Quarantine,
Frontier Health and Quarantine Law and Law on Animal Disease Prevention.

The specific administrative regulations in this regard include the
Special Regulations of the State Council on Strengthening Safety
Supervision and Administration of Food and Other Products, Regulations of
the People's Republic of China on the Administration of Production
Licenses for Industrial Products, Regulations of the People's Republic of
China on Certification and Accreditation, Regulations for the
Implementation of the Law of the People's Republic of China on Import and
Export Commodity Inspection, Regulations for the Implementation of the
Law of the People's Republic of China on Animal and Plant Entry and Exit
Quarantine, Administrative Regulations of the People's Republic of China
on Veterinary Medicine, Administrative Regulations of the People's
Republic of China on Pesticides, Provisions of the People's Republic of
China on Place of Origin of Export Goods, Regulations for the
Implementation of the Standardization Law of the People's Republic of
China, Measures for Investigating, Punishing and Banning Unlicensed
Business Operations, Regulations on the Administration of Feedstuffs and
Feed Additives, Administrative Regulations on the Safety of Genetically
Modified Agricultural Organisms and Regulations of the People's Republic
of China on Import and Export of Endangered Wild Fauna and Flora.

The specific departmental rules include the Detailed Rules for the
Implementation of the Measures for the Administration of the Supervision
of Quality and Safety of Food of Food Producing and Processing
Enterprises (Trial), Measures for the Implementation of the Regulations
of the People's Republic of China for the Administration of Production
Licenses for Industrial Products, Measures for the Administration of Food
Hygiene Licenses, Measures for the Hygiene Administration of Food
Additives, Measures for the Administration of Inspection and Quarantine
of Entry and Exit Meat Products, Measures for the Administration of
Inspection and Quarantine of Entry and Exit of Aquatic Products, Measures
for the Administration of Food Safety in the Circulation Sector, Measures
for the Administration of the Safety of Places of Origin of Agricultural
Products, Measures for the Administration of the Packaging and Marks of
Agricultural Products and Regulations for the Administration of Hygiene
Registration of Export Food Production Enterprises.
??
2. Construction of Food Quality and Safety Standard System Gradually
Strengthened

The Standardization Administration of the People's Republic of China
administers the country's food standardization work, while relevant
departments under the State Council are in charge of specific food
standardization work in respective sectors. The departments concerned are
responsible for drafting different national standards for food safety,
while the Standardization Administration initiates projects, examines
them, marks the serial numbers, gives formal approval and promulgates
them. Now, a food quality and safety standard system covering all
categories, featuring a relatively rational structure and being fairly
complete, has taken initial shape in China. Food safety standards cover
the place of origin of agricultural products, quality of irrigation
water, rules for the rational use of materials put into agriculture,
rules and procedures for animal and plant quarantine, good agricultural
practices (GAP), standards of maximum amount of pesticides, veterinary
drugs, pollutants and spoilage organisms allowed in food, standards for
food additives and their use, hygiene standards for food packaging
materials, standards for special dietary food, standards for signs or
labels on food packages, standards for the management and control of the
safe production of food and standards for testing methods concerning
food. These standards apply to edible agricultural products and processed
food, such as grain, oil, fruit and vegetable, milk and dairy products,
meat, poultry, eggs and related products, aquatic products, soft and
alcoholic drinks, condiments and infant food; and cover each sector from
food production, processing and distribution to final consumption. So
far, China has promulgated over 1,800 national standards concerning food
safety, and over 2,900 standards for the food industry, among which 634
national standards are compulsory.

To solve such problems as food safety standards overlapping each other
and poorly organized, China has sorted out the over 1,800 national
standards, over 2,500 industrial standards, over 7,000 local standards
and over 140,000 enterprise standards, repealing more than 530 national
and industrial standards. Meanwhile, it has speeded up the revision of
over 2,460 national and industrial standards, issued over 200 new
national standards, and worked out plans to enact over 280 national
standards. It also works hard to promote and enforce these standards, and
urges food producing enterprises to strictly abide by them.
??
3. Food Certification and Accreditation System Basically Established

The Certification and Accreditation Administration of the People's
Republic of China is responsible for administering, supervising and
coordinating certification and accreditation work throughout the country,
putting in order the certification market and regulating certification
activities. A pattern of uniform administration, standardized operatio n
and common implementation for the certification and accreditation of food
and agricultural products has come into being, basically establishing a
certification and accreditation system covering the entire process "from
the farming field to dining table." The certification categories include
certification of feeds, GAP certification, certification of hazard-free
agricultural products, certification of organic products, certification
of food quality, certification of the HACCP management system, and
certification of green markets. At present, China ranks among the top ten
countries in the world in this regard, with 2.03 million hectares
producing certificated organic products. The country has been
experimenting with GAP certification geared to international standards in
286 export enterprises and agricultural standardization demonstration
bases in 18 pilot provinces; 2,675 food producing enterprises have
received HACCP certificates; 28,600 primary agricultural products have
passed the certification tests for hazard-free agricultural products; and
continuous progress is being made in the certification of feeds,
alcoholic beverages by quality grade, and green markets. The government
continuously strengthens its supervision of certificated products and
enterprises, and increases the authoritativeness and effectiveness of
certification.

4. Food Safety Inspection and Testing Framework Taken Initial Shape

Regarding the supervision of foodstuffs for the domestic market, China
has established a number of qualified food inspection and testing
institutions, bringing into initial being a food safety inspection and
testing framework with "state-level inspection institutions playing the
leading role, provincial- and ministerial-level food inspection
institutions forming the main body, and city- and county-level food
inspection institutions acting as supplement." With the improvement of
their testing capability and level, these institutions can satisfy the
demands for quality and safety tests throughout the entire process --
from the environment of place of origin, input materials, production and
processing, storage and circulation to consumption, and can basically
meet the requirements of national, industrial and relevant international
standards for food safety parameters. China adopts the certification
management that is in line with the international practice for food
laboratories, and strengthens international mutual recognition,
information sharing and joint tackling of key scientific and
technological problems, ensuring the accuracy and fairness of test
results. China has accredited the qualifications of some food inspection
and testing institutions. Altogether, 3,913 food testing laboratories
have passed the laboratory accreditation (similar to metrology
certification) of China National Accreditation Service for Conformity
Assessment (CNAS) among which 48 are state-level quality inspection
centers for foodstuffs and 35 are key food laboratories. The testing
capability and level of these laboratories have reached a relatively
advanced international standard. As regards the supervision of import and
export foodstuffs, a technical support system ensuring food safety has
taken shape, with the 35 state-level key laboratories playing the leading
role. There are 163 inspection and quarantine laboratories for import and
export foodstuffs throughout China, possessing more than 10,000 sets of
large precision instruments of various types. Altogether, 1,189
professionals are directly engaged in the laboratory testing of import
and export foodstuffs in these laboratories, with a rational age
structure and allocation of staff according to their specialized fields.
These laboratories can detect all kinds of food-borne pathogens and 786
safety or hygienic items, such as residue of pesticides and veterinary
medicines, additives and heavy metals. By 2006, China had set up 323
state- and ministerial-level quality inspection centers and 1,780
provincial-, prefecture- and county-level testing institutions concerned
with agricultural products. Thus, a quality and safety inspection and
testing framework for agricultural products, with these institutions at
different levels supplementing each other, has taken shape, providing
technical support for strengthening the supervision of the quality and
safety of agricultural products.

V. International Exchanges and Cooperation Regarding Food Safety

The Chinese government sets great store by cooperating with other
countries, regions and international organizations regarding food safety,
as well as by learning advanced management expertise and monitoring
technology, to improve the overall quality of its foodstuffs.

1. Strengthening Exchanges and Cooperation Regarding Food Safety
Technology

China encourages and supports its technical experts to participate in
various food safety technological training programs, seminars, exchanges
and comparative reviews. It also welcomes overseas experts to visit China
for study or training. Besides the activities organized by the World
Health Organization (WHO), China has, since 2001, conducted many rounds
of technological training and exchanges on food safety, especially the
implementation of the Agreement on the Application of Sanitary and
Phytosanitary Measures (SPS), with the US, the EU, Italy, Canada,
Germany, the UK, Switzerland, Denmark, Australia, New Zealand and
Thailand. In August 2006, China sponsored food safety training for people
from 14 South Pacific countries. To furnish itself with timely
information to ensure the foodstuffs it exports are up to the relevant
standards, China has translated the laws on food safety and hygiene of
the US, the EU, Russia, the ROK and other countries and regions. It has
also invited experts from the US, the EU and Japan to offer training on
HACCP application, the National Shellfish Sanitation Program (NSSP),
residue control and Positive List System. China's laboratories for import
and export food inspection and quarantine have taken part in several
comparative experiments, such as the Food Analysis Performance Assessment
Scheme (FAPAS) of the UK, and joined on regular intervals the
international proficiency testing conducted by established certification
agencies, such as the Asia Pacific Laboratory Accreditation Cooperation
(APLAC) and the Australia's National Association of Testing Authorities
(NATA). The national center for disease control and prevention and a
dozen provincial ones have passed the WHO food safety inspection capacity
verifications. By November 2006, a total of 22 inspection agencies had
been granted by the ROK to be "Acknowledged Overseas Official Inspection
Agencies," which means that the food items that pass their checks will be
free from entry inspection in that country. The testing results of the
laboratories of the 35 quality inspection and quarantine agencies
directly under the General Administration of Quality Supervision,
Inspection and Quarantine have also won acknowledgement from Japan, and
many of the laboratories are open ones and have hosted delegations of
experts from the US, Canada, the UK, France, Italy, Germany, Switzerland,
Australia, New Zealand, Japan, the ROK, Singapore, Hong Kong, as well as
other countries and regions.

2. Actively Participating in International Activities Regarding Food
Safety

The Chinese government has always been a keen advocator of and
participant in international food safety activities. It has dispatched
delegations to the Codex Alimentarius Commission (CAC), the International
Plant Protection Convention (IPPC) and other international conferences.
Its call for regional cooperation on food safety at a meeting of the
Asia-Pacific Economic Cooperation (APEC) has received positive responses
from Australia, New Zealand and Southeast Asian countries, as a result of
which the APEC Food Safety Cooperation Forum was established, co-chaired
by China and Australia. China actively participates in international
standardization activities for food safety. It is a member of the
Technical Management Board and Committee on Conformity Assessment of
International Organization for Standardization (ISO). In May 2007, it
formally joined the World Organization for Animal Health (OIE). On
October 20-21, 2007, it will host, in Nanning, the China-ASEAN
Ministerial Conference on Quality Supervision, Inspection and Quarantine,
with the theme of "Strengthening Cooperation on Food Safety Management
and Protecting Consumer's Rights." The event will discuss the
establishment of a cooperative mechanism on food safety, so as to
increase exchanges and cooperation among the relevant departments of
China and ASEAN to ensure the quality, safety and sanitation of the foods
traded among them.

3. Striving to Promote International Cooperation Regarding Food Safety

While organizing regular and irregular seminars or mutual visits of
experts with Japan, the ROK, Australia, New Zealand, Singapore, Norway,
Russia, Hong Kong, and other countries and regions, China's General
Administration of Quality Supervision, Inspection and Quarantine has
signed 33 cooperative agreements or memorandums on food safety and 48
import and export food inspection and quarantine protocols with 30
countries and regions, namely the US, the EU, Russia, Japan, the ROK,
Singapore, Thailand, Mongolia, Vietnam, the Philippines, Denmark, France,
the Netherlands, Ireland, Hungary, Poland, Italy, Norway, Switzerland,
Canada, Brazil, Argentina, Chile, Mexico, Uruguay, Australia, New
Zealand, South Africa, Hong Kong and Macao. Thus, a long-term and
effective cooperative mechanism between China and its food trade partners
has been established. And, based on this, the General Administration of
Quality Supervision, Inspection and Quarantine has built a system of
annual meetings with many countries and regions. The second China-EU
meeting on safety of food and consumer products at the ministerial level
is scheduled to be held on September 12, 2007 in Beijing, and the third
China-US food safety meeting at the vice-ministerial level is scheduled
on September 11-12, 2007 in the US.

4. Promoting Food Trade

The food safety cooperative mechanisms established between China and
other countries have greatly promoted bilateral and multilateral
cooperation to ensure the safety of foodstuffs traded among them and ease
the wide concerns about food safety. For instance, the Sino-Japanese
cooperative mechanism plays a key role in ensuring the safety of Chinese
food exported to Japan. After Japan's release of its Positive List
System, the Chinese government, through communications and negotiations,
persuaded Japan to accept its reasonable proposals and adjust some
projects accordingly, and co-sponsored three demonstrations and eight
special training workshops to help China's food export enterprises
further standardize the use and administration of pesticide and
veterinary medicines, improve the quality tracing system and guarantee
the quality and safety of food exported to Japan. The China-US food
safety cooperative mechanism plays a similar role. Since the end of 2005,
China's entry-exit inspection and quarantine authorities have
continuously found residues of prohibited medicines, pollutants and
pathogenic microbes in US meat products exported to China. Their timely
notification of such information let the US learn of China's legal
requirements concerning food safety, thus effectively protecting Chinese
consumers as well as ensuring healthy development of US export of meat
products to China. In 2004 and 2005, the two countries, under this
cooperative mechanism, evaluated the safety and sanitation of China's
exported cooked poultry products. The China-EU food safety cooperative
mechanism also works well in solving problems both sides are concerned
about. Through timely communication and on the basis of risk assessment,
China has solved problems in the import of pork products from some
dioxin-affected EU countries. While continuously improving its own food
safety management and epidemic prevention and control work, it has
actively cooperated with the EU in undertaking hygienic system inspection
and risk appraisal which helps build confidence in China's cooked poultry
products. The EU has worked out a timetable to resume imports of China's
cooked poultry products in 2007.

Food is the first necessity of man, and it is the most direct and most
important consumption product of mankind. China is a responsible country,
and the Chinese government is devoted to working for the benefits of the
people. Over the years, the Chinese government has endeavored to improve
food quality, ensure food safety and protect consumers around the world.
But, it must be pointed out that China is still a developing country, and
the overall level of food safety, including the standards and the
industrialization level of food production, still lags behind that of
developed countries. China has a long way to go to improve the quality of
foodstuffs. Food quality and safety is a common concern of the human
society and a shared duty of the international community. As a large
importer and exporter of food, China is keen to strengthen exchanges and
cooperation with other countries and make unremitting efforts to ensure
the safety of food and promote the healthy growth of the global food
trade.

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