Saturday, July 29, 2017

China Imported Food Safety Regulation Strengthened

Chinese consumers often buy imported food because they have more confidence in its quality and safety, yet China's regulators are raising more hurdles to food imports in the guise of food safety.

A White Paper on the Safety and Quality of Imported Food During 2016 released by China's inspection and quarantine administration (known as AQSIQ) reports on the country's growing and diversifying imports of food, summarizes problems found in rejected shipments, and outlines the agency's initiatives to certify exporters in other countries, track shipments from their source to their final destination in China, keep tabs on both importers and exporters, and shame bad actors.

According to the White Paper, China became the world's largest market for imported food and agricultural products in 2011. The value of imports has stabilized at US$46-$48 billion between 2013 and 2016, but the number of shipments arriving rose from 965,000 to 1.32 million during those years. (Note: the AQSIQ white paper does not appear to include bulk commodities like grains or oilseeds. China's soybean imports alone were valued at $34 billion last year.)

AQSIQ reports that the source and type of food imports is diversifying, yet a few regions still account for most of the imports. While China imported food from 187 countries in 2016, 10 countries accounted for 81.6%. The European Union was by far the largest source, accounting for US$ 11.1 billion of China's food imports and 43 percent of shipments. Southeast Asia was the second-leading source of imports ($7.4 billion and 12.5%), and United States was third ($5.1 billion and 8.6% of shipments. Most of these imports arrive in China at a handful of coastal provinces.

Meats are the largest and fastest-growing food import category. Meat imports totaled 4.6 million metric tons last year and were up 63%. Overall dairy imports peaked in 2014, but imports of infant formula continue to grow rapidly--up 25.6% last year. For some commodities, imports account for a large proportion of domestic supplies. Dairy imports accounted for 17% of the domestic dairy product supply last year, the import share of supply was 29% for edible oils, and 5.5% for aquatic products, according to the paper.

To ensure the safety of the growing stream of food imports, AQSIQ explains that it has set up a system that emphasizes control over the entire supply chain for imported foods: before, during, and after import. This includes approvals of manufacturers in foreign countries to ensure they comply with China's regulations and standards, inspections and testing at points of entry, and tracking products after they enter China.

Implementation of the import food safety system involves extensive testing and inspections at the border plus onerous approvals for exporters. This means there are many hurdles to clear in order to export to China. A country must have its food safety system reviewed by AQSIQ, foreign manufacturers must be certified and registered, and governmental authorities in exporting countries must inspect shipments and issue certificates verifying that shipments comply with China's food safety standards. Last year AQSIQ reviewed food safety management systems in 40 countries, and 16,033 enterprises in 89 countries were registered as exporters. AQSIQ also has authority to inspect and quarantine 291 kinds of imported animal- and plant-based foods to prevent diseases and pests from entering China.

AQSIQ also intends to compile mountains of information about exporters, importers, and every stop imported food shipments make between foreign farms and Chinese consumers. China has a record system to keep tabs on 126,998 foreign food exporters and 30,625 importers in a publicly available "record system for importers and exporters of imported food and cosmetic products." There is also a food recall system for imports and an "importer discussion system" to talk about problems that arise.

AQSIQ posts lists of rejected food shipments and lists of bad actors among foreign producers, foreign exporters, and domestic importers on an AQSIQ web page. As of today (July 29, 2017), the latest rejections for May had been posted July 5, and black lists had been updated June 12. All lists are in Chinese. The importer black list included 217 companies cited for violations from 2014 to this year. The May rejections listed 451 food shipments (some multiple instances of the same item) and 35 cosmetics shipments.
The white paper reports that China's inspection and quarantine authorities rejected 3,042 imported food shipments during 2016. Imports can be rejected for labeling problems (products must be labeled in Chinese with place of production and contact information for importing company), incomplete documentation, detection of dozens of additives and contaminants, presence of microorganisms and bacteria, and being past the sell-by date.

The number of rejected shipments in 2016 was relatively steady over the last five years--the largest number of rejections was 3,503 in 2014 and the lowest was 2,164 in 2013. These rejections constitute a tiny proportion of food imported. The 3042 rejected shipments equaled just 0.23 percent of the 1.3 million total number of food shipments reported by AQSIQ for 2016. Calculations show the same percentage was rejected in 2015 and it was essentially the same (0.22 percent) in 2013. The highest percentage was 0.34% in 2014, still tiny.

China food import rejections
Year All food import shipments Rejected shipments Percent rejected
2012 834,000 2499 0.30
2013 965,000 2164 0.22
2014 1,042,000 3503 0.34
2015 1,199,000 2805 0.23
2016 1,324,000 3042 0.23

Beverages (596 rejections) were the most commonly rejected food item, followed by cakes and cookies (578). These categories also had the highest percentages of shipments rejected: 0.53% for beverages and 0.41% for cakes and cookies. The percentage of shipments rejected was under 0.1% for meat, seafood, and wine and spirits.

Estimated China food import rejections, by type of food, 2016
Type of food Rejections Share of shipments rejected

Number Percent
Meat 134 0.05
Seafood 94 0.09
Dairy 155 0.24
Grain/milling products 271 0.30
Wine and spirits 213 0.09
Sugar and confections 246 0.30
Beverages 596 0.53
Nuts and fruits 128 0.16
Cakes and cookies 578 0.41
Other food 627 0.31

A large number of food shipments China rejects come from countries known for having higher food safety standards than China, including the European Union (678), United States (198), Japan (183), and Australia (94). In fact, the large numbers may reflect the propensity for Chinese consumers to import from those countries because the products are safer than those in China. Another large group of rejections are for foods from nearby countries. Shipments from Taiwan accounted for the largest number of rejections (721). It's unclear why Taiwan had so many rejections--they included a variety of products and reasons. Other top sources were Southeast Asia (399 rejections) and South Korea (161), and Russia (91). The rate of rejection was below the average for the EU (0.16% of shipments), Australia (0.11%), South Korea (.13%) and Brazil (0.17%), while the U.S. rejection rate of 0.23% was equal to the overall average. Russia (0.54%) and Southeast Asia (0.32%) rejection rates were above the average but still very low. Rejection rates could not be calculated for Taiwan and Japan because AQSIQ did not report their total food shipments.

Estimated China food import rejections, by country-supplier, 2016
Country/region Rejections Share of shipments rejected (%)
Taiwan 721 NA
EU 678 0.16
Southeast Asia 399 0.32
U.S. 198 0.23
Japan 183 NA
South Korea 161 0.13
Australia 94 0.11
Russia  91 0.54
Brazil 64 0.17
Turkey 40 NA
Other countries 414 NA

Chinese regulations will now influence how food is regulated in exporting countries. Exporters must conform to China's requirements if they want to sell to China--and the incentive to adopt China's requirements are strong since China is a large export market. Countries more reliant on selling to China will be more inclined to shift their regulatory system to harmonize with China's.

Moreover, China intends to actively participate in international bodies that set food regulatory standards and practices. The White Paper says China is gaining a voice in the formation of international rules for food safety by participating in multilateral bodies that set such rules. China signed bilateral food safety agreements with 24 countries during 2016. AQSIQ anticipates that China's "going out" program of encouraging Chinese companies to invest overseas to supply food to China will resolve safety problems for food imports.

In much the same way that China is building out its physical infrastructure of roads and airports from scratch, it is also building a food safety system from scratch using blueprints supplied by foreign experts. Thus, a country known for abysmal food safety problems now has--on paper--some of the highest standards and a logically designed system. China's regulatory approach may clash with those of some counterparts who have developed their own approaches to ensuring food safety through many years of practical experience. The systems China is installing look great on paper, but frequent flyer miles for Chinese inspectors, scanners, microscopes, and mountains of data cannot protect food without the human elements of expertise, experience, logic, and integrity.

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