Safer food in China means a healthier economy

Author: Sacha Cody, ANU

At a time when the Chinese government is trying to increase domestic consumption’s contribution to the economy, food safety has become a problem. This affects the health of China’s economy because it can fuel a nervous, skeptical, cautious and even cynical consumer. It can produce distrust.

Indeed, food safety has become a major concern of ordinary Chinese, especially in the past few years. By late last year, Pew Research’s Global Attitudes Project found that 41 per cent of urban Chinese believed food safety to be a ‘very big problem’, more than three times higher compared with 2008 and now at similar levels to other widespread concerns such as corruption and inequality.

Thus, Chinese take their food purchases very seriously. Their immediate response is to be cautious of everything and take every food safety rumour or news item seriously just in case. As such, they have developed a myriad of strategies for navigating their food purchases. Many of these have direct implications towards the health of China’s economy.

One strategy is to spread risk around and buy more imported products, thereby avoiding domestic alternatives. Research shows that the top-50 most-valuable Chinese brands, which include many food and beverage companies, have an aggregate value of approximately US$325 billion, or just over 5 per cent of China’s national gross domestic product. A dint in trust towards these companies can have very real consequences for China’s economy.

For example, buying foreign infant milk powder directly from overseas is very common now amongst current and soon-to-be mothers. The demand is so high that retailers in markets such as Hong Kong and Britain imposed limits per customer to ensure the outflow of product bound for China won’t impact local supply. Now online purchases of overseas infant milk powder have blossomed across China.

Another strategy is to avoid the mainstream economy and create or tap into smaller moral economies. The growth of urban and sustainable agricultural products in families’ shopping baskets is increasing. Farmers’ markets are springing up in major urban centres such as Shanghai, Beijing and Suzhou. This is intriguing as they operate in an ‘illegal’ grey zone outside state-approved commercial exchange spaces. Unlike the early days of economic reform where people sought more choice, now Chinese are seeking quality and safety in their food purchases.

Furthermore, there is an observable trend of urbanites leaving their white-collar city jobs, renting land and taking up small-scale farming. Farm sizes are large enough to provide for up to 400 urban households year round. They learn their farming practices and techniques largely from scratch. These new farmers often articulate a deep concern for their child’s health and wellbeing in their formative years as one of their prime motivations.

This gets to the heart of the problem: many Chinese feel their country has developed too fast, and profitability now comes before people and safety. In the West, food safety concerns are largely about tracing problems in complicated systems of mass food production. In China, however, concerns are very much a fear of being cheated by unscrupulous business people chasing profits by selling inferior or even toxic goods.

Whether using inferior and dangerous ingredients or manufacturing totally fake foods, it taps into questions of morality and ethics. In such a scenario, systems of trust and transparency have pronounced importance to an economy’s healthy operation. Some companies have recognised this. For example, KFC and Yili, a major Chinese dairy company, have recently announced programs for consumers to tour their production facilities and experience their quality first-hand.

The Chinese government is also highly engaged in solving the problem. Xi Jinping, China’s new president, openly alluded to fixing China’s food-safety record even before he came into office. At the recent National People’s Congress in March, the State Food and Drug Administration, formerly regulated by the Ministry of Health, was elevated to full ministerial status. This was part of a range of legal and administrative initiatives to address the fragmentation inherent in China’s food safety regulatory framework.

As with much else in China though, there is always a gap between policy and enforcement and monitoring. Large companies source many of their ingredients from small farms and workshops scattered throughout the country. Yet most supervisory and monitoring efforts are sporadic and directed only at large companies, because they are easier to monitor with limited government resources. This means problems are getting discovered late in the manufacturing process. Yet it also puts the onus on the large companies to improve the quality of their supply chain, which is without doubt a positive intended outcome.

Yet the spate of food safety issues in China continues. There is still much room for improvement. A spokesperson for the government recently claimed that 99 percent of milk powder in China is safe. A well-known television personality retaliated “How would I know where the 1 percent is?”

This 1 percent could turn out to be China’s Achilles’ heel.

Sacha Cody is a PhD candidate at the China Institute, College of Asia & the Pacific, Australian National University

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