Monthly Archives: September 2008

Missing Melamine

The concerning thing about Cadbury’s recall of its chocolates made with milk tainted with melamine is that all of the dairy suppliers to Cadbury’s Beijing plant had earlier been given the all-clear by the Chinese testing. It was the company’s own tests that uncovered the traces of melamine, although the source and extent is not yet clear. ‘We have received results that cast doubt on the integrity of a range of our products manufactured in China,” the company said.

Cadbury has recalled 11 products sold in Taiwan, Hong Kong and Australia.

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Shenzhou VII Flies Home, Airline Passengers Wait

With the Shenzhou VII mission safely and jubilantly returned to Earth, the FT reports how China’s air traffic controllers grounded civil airliners for the launch of the mission without notice, only the latest sudden and unexplained delay to flights by the Civil Aviation Administration of China when the PLA wants clear skies.

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Buffett Buys Batteries

Warren Buffett knows a smart deal in China when he sees one. He came away from a $488 million investment in PetroChina in 2002/03 with a $3.5 billion profit in 2007 (see Buffett On PetroChina). Now he is putting down $231 million for a 10% stake in BYD Co., China’s largest maker of rechargeable batteries (Announcement).

The investment will be held through Buffett’s MidAmerican Energy Holdings Co. BYD is based in Shenzhen and has 130,000 employees around the world. Its stock is listed just down the road on the Hong Kong Stock Exchange. It had sales of $1.8 billion in the six months to June, two thirds of which were in China. The company’s chairman, Wang Chuanfu says the deal will help give BYD greater access to global markets, particularly for its electric vehicles.

Green all round, I’l bet.

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Spacewalks, Milestones and the Party Plenum

It was shorter than expected, 13 mins, but a spacewalk nonetheless, and the latest milestone in China’s fast advancing space program.

Astronaut Zhai Zhigang, floated out of Shenzhou 7′s orbital module on Saturday afternoon, and at one point waved a Chinese flag. Xinhua has lots of coverage, including pictures of Zhai and flag (How do you get a flag to wave in space, by the way?).

The next milestone is assembling a space station from two Shenzhou orbital modules. Then lunar exploration including putting a man on the moon, possibly ahead of the Americans’ planned return in 2020.

Saturday’s spacewalk was shown live on state TV and watched at a Beijing command center by top party officials, including President Hu Jintao.

The space program provides a patriotic diversion from the tainted milk scandal, which has taken some of the bloom off the glories of the Beijing Olympics ahead of what promises to be a contentious party plenum due to follow the Oct. 1 National Day celebrations. (I commend China Brief‘s curtain raiser on the meeting to those interested.)

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Ripples From Tainted Dairy Products Scandal Spread Wider

It is less than 48 hours since a senior official said the problems with tainted dairy products were under control. Since then the E.U., India, France and South Korea have joined the ranks of those imposing restrictions on Chinese milk and dairy related imports, the maker of White Rabbit candy has issued a product recall, Japan’s Lotte Group has removed its popular chocolate-filled Koala-shaped cookies, which are made in Macau, from Hong Kong supermarket shelves, and there have been reports of baby zoo animals developing kidney stones after being fed melamine contaminated milk.

China’s exports of dairy products are modest, worth $232 million last year, but the danger to Chinese exporters lies in collateral damage to all food exports on the grounds that the lax health and safety standards uncovered in the dairy industry will be thought to be widespread. Government-to-government negotiations to allow cooked chicken exports to the U.S. for the first time are likely to be stalled because of the milk scandal.

Meanwhile, the scandal has brought down its first government minister, but in Taiwan. Lin Fang-yue, the island’s health minister, said he would resign in face of public outrage that the government would allow sales of Chinese milk products with low levels of melamine.

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Filed under China-E.U., Economy

Xinhua Spaces Out

Xinhua’s web site ran a detailed report Thursday on the successful launch of the Shenzhou 7 space mission,  including snatches of dialogue between the astronauts. Only problem was the story was posted hours before lift off. An Associated Press report on the snafu. And another on the actual successful launch is here.

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Venezula, China To Build Oil Refineries Together

Venezuelan president Hugo Chavez would like to sell more of his country’s oil to China and less to the U.S.

Venezuela sold Beijing 38 million barrels in the first seven months of this year, almost double last year’s sales, despite the logistics difficulties of shipping it. Chavez, now visiting Beijing, says Venezuela could be sending China 1 million barrels a day by 2012. Overall trade between the two countries is expected to top $8 billion this year, up from less than $200m a decade ago.

During the three-day state visit, a stop off on trips also taking in Havana and Moscow, the two countries announced they would build two refineries, one in each country, capable of processing Venezuela’s heavy crudes that China currently has to blend with lighter crudes to refine, or sell on.

Meanwhile, Chavez has to settle for the fact that he is dependent on the U.S. he so detests to buy half Venezuela’s oil.

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China’s First Spacewalk Due On Friday

The first Chinese spacewalk is due to occur on Friday, according to the commander-in-chief of the Shenzhou VII spacecraft. As we have noted before, it will be broadcast live, though there will probably be some time delay, for expediency’s sake.

The countdown for Thursday’s launch has started. China’s third manned space flight comes just five years after its first, when the country joined Russia and the U.S. in the space club. Zhai Zhigang, an air force pilot, will make the walk, and, no doubt, unleash a fresh wave of patriotic pride.

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Tainted Dairy Products Scandal Deepens, Claims First Central Government Official

The most senior head to date has rolled in the tainted dairy products scandal. Li Changjiang has resigned as head of the agency responsible for ensuring China’s food supply chain is safe.

Li is the first central government official to lose his job over the scandal, but several local officials have been sacked and several dozen milk brokers and others detained. Wu Xianguo, Party chief of Shijiazhuang City in northern Hebei Province, where Sanlu Group is based, lost his job on Monday, following the sackings of Mayor Ji Chuntang and Vice Mayor Zhang Fawang and three other city officials.

Latest numbers show another jump as the scandal deepens: 53,000 children sickened by melamine-tainted baby formula, 13,000 hospitalized, of whom 104 are in serious condition. Four infants have died.

The fired city officials were blamed for lax supervision and covering up the initial reports of problems with Sanlu’s formula. There is a drive on against officials who fall short on product quality and health and safety standards. A week ago, Meng Xuenong was sacked as governor of Shanxi province following the deadly mining slurry landslide that engulfed Taoshi. The hapless Meng also lost his job as mayor of Beijing following the SARS scandal in 2003. It was after the SARS coverup that Beijing put in place new rules for officials’ accountability.

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More Tainted Dairy Products, More Anger, Less Confidence

It now not just melamine in baby formula from one company sold in three provinces, but in dairy products nationwide, and beyond. Chinese dairy products are being pulled off shelves in Hong Kong and Japan. Malaysia and Singapore have banned Chinese milk imports.

At home, consumer outrage is growing. Beijing has ordered free medical treatment for any baby sickened by tainted formula, and hotlines for worried parents have been set up in eight provinces, Xinhua reports. Central government has also extended testing of dairy products and recalls, and promised exemplary punishments for company executive and officials found culpable.

The death toll now stands at four infants, with dozens of babies still in serious condition among the more than 6,200 stricken with kidney stones after consuming tainted formula.

Nearly 10% of milk and drinking yoghurt samples from three leading dairy companies contained melamine, according to the General Administration of Quality Supervision Inspection. None of which will help shore up public trust at home or abroad already shaken by a series of food scares in recent years involving eggs, pork and seafood.

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