Many want a cut from the fat on bacon, but not the diners

August 16, 2008
 
Olympic food safety rules reveal wider problems in China's bureaucracy, writes John Garnaut
 

ON AUGUST 1 a rising star of the Chinese bureaucracy, Wu Jianping, received the door knock every powerful and rich Chinese official most fears.

It was the Communist Party's Discipline & Inspection Commission, asking if the food safety chief could reconcile his meagre official salary with his portfolio of Beijing properties and bank accounts containing more than 1 million yuan (almost $170,000).

The following day, Wu's body was found at the bottom of a Beijing high rise. Caijing magazine said it was suicide. A spokesman from Wu's department claimed it was "an accident".

His death shines new light on the contradictions between China's hugely profitable market economy, its aspirations for the rule of law and its age-old habits of nepotism and absolute administrative power. It also raises a delicate predicament for those in the top leadership who want reform: can they root out corruption in the Communist Party without killing the tree?

When 43-year-old Wu fell to his death, his food safety division of the China's General Administration of Quality Supervision, Inspection and Quarantine was responsible for ensuring the Beijing Olympics was not mired by scandals about contaminated food. His world of Olympic food safety is a neat microcosm of the problems besetting the quality-inspection administration and the broader Chinese bureaucracy.

From last month, hundreds and possibly thousands of top chefs across Beijing were forbidden from using any of the food suppliers they had previously relied upon. Chefs and hoteliers, many of whom had never had a food quality problem and had spent years testing their preferred suppliers, were suddenly ordered to buy their fresh and processed foods exclusively from a Government-approved list of 64 suppliers.

"The bacon from the designated bacon supplier was so fatty that you had to burn it black to make it edible," says an executive chef at one of Beijing's 46 five-star hotels. "And it was nearly twice the price."

The eggs were undersized, the milk (from an Olympic sponsor) was said to be tasteless and the price of red chilli was 1200 per cent above the outside market price. Orders had to be made a month in advance because the official suppliers had no capacity.

Beijing's finest restaurants have since scrambled to adjust their menus and raise their prices.

The motives for the draconian food safety rules may have been pure and the rules have achieved the narrowly defined objective. There have been no food scandals at these Olympics.

In recent weeks the rules have been relaxed after a barrage of complaints by state-owned luxury hotels such as the famous Beijing Hotel.

But the relief has come too late for some. One of Beijing's finest hotels was fined 200,000 yuan for placing unauthorised noodles as a decoration on a table display.

Zhang Xianfeng, a Beijing lawyer involved in competition cases, said government agencies had no legal right to "play the role of a promoting salesman for its chosen companies".

He said playing corporate favourites brought the risk of corruption and also hurt competing companies, consumers and "eventually it harms the Government itself".

China's quality-inspection administration is no stranger to the excesses of administrative power.

One example was its corruption-riddled "famous brand" campaign, where it promoted a list of consumer brands and vouched for their quality while also exempting those products from quality inspections for three years.

"On paper you don't have to pay," said Zhou Ze, another Beijing competition lawyer. "But everyone knows producers hired public relations companies to help, so you understand what was happening."

On Thursday the website for the Southern stable of newspapers and magazines, southcn.com, published a provocative opinion piece about Wu's death.

A contributor, Yang Tao, wrote that Wu may have chosen suicide as a means of keeping the ill-gotten gains within the family. But he also raised another motive.

"The suicide of Wu Jianping may have another purpose, the so-called 'she shen cheng ren' (righteous self-sacrifice). After committing suicide, you prevent the flames from burning higher up, protecting the corrupt officials behind."

Beijing had imposed a newspaper black-out on the story, but the propaganda police have not yet shut down hundreds of websites that are running Yang Tao's report.

It appears that Wu's death has fuelled the fire rather than extinguished it.

On the day Wu Jianping received his death-knock, the lawyer Zhou Ze launched the first case under China's anti-monopoly laws. His target was an internet platform called the Product Identification Authentication Tracking System, or PIATS..

Zhou's case in the Beijing No. 1 People's Intermediate Court, on behalf of six companies, claims there is no legal basis for a government agency to force producers to sign up to the platform.

It is is ostensibly a bar-coding service enabling consumers to trace the origins of any product ever produced in China. Critics say it is a costly replication of services that already exist. Some of the world's biggest food manufacturers, including Nestle, Coca-Cola and Pepsi, have reportedly complained about it.

PIATS has an innocuous name that belies the power behind it. This is the part China's boldest news outlets leave for their readers to work out themselves.

The platform appears to be run by China Credit Information Technology Co, whose chief executive is Chen Xiaoying, the daughter-in-law of Zhang Zhen, the former vice-chairman of China's Central Military Commission.

The company's controlling shareholder is a financial behemoth called CITIC, which also has connections. CITIC's officially retired chairman, Wang Jun, is the son of Wang Zhen, who is one of the "eight immortals" of the 1949 revolution.

China's top quality inspection agency owns a 30 per cent stake in China Credit (the company that runs PIATS). CITIC reportedly lent it the money to buy the shares and the quality inspection bureau has promised to give the shares back to CITIC (there is no evidence that this has happened).

The quality inspection administration therefore holds an opaque financial interest in a product identification system at the same time as it requires almost every producer in China to hand over 600 yuan for the privilege of being listed on it.

"How much money does that add up to? It's uncountable," said lawyer Zhou Ze. "There are 400,000 Chinese producers in the food sector alone."