China Council for the Promotion of International Trade (ccpit) 2009 Preface

Market Supervision

1. Outlines of the Rectification and Revival of the Dairy Industry

On the first half of 2008, milk powder poisoning incident took place in some areas of China, which not only caused damage to health and life of infants and young children, but also brought negative impact on the social stability and national image. As a result, dairy development encountered serious difficulties and crises. Consumer confidence suffered a serious setback, dairy products market saw a downturn; enterprises suffered from overstocked productions, tight liquidity, and were trapped in cut-off, semi cut-off state; main cow milk producing areas saw widespread phenomenon of pouring the milk, people even slaughtered cows in individual regions, and the majority of farmers’ production enthusiasm received a heavy blow; national brand reputation was damaged, when a number of countries (regions) banned the import of Chinese dairy products. 13 government ministries and commissions including Reform Commission, Ministry of Agriculture, the Ministry of Industry and Information Technology, Ministry of Commerce, Ministry of Health, General Administration of Quality Supervision, Inspection, Business Administration, Ministry of Finance, People's Bank, China Banking Regulatory Commission, China Insurance Regulatory Commission, the Central Propaganda Department, Ministry of Supervision jointly formulated the "Milk reorganization and revitalization of the Plan"

In December 2008, 13 jointly formulated the Outlines of the Rectification and Revival of the Dairy Industry specifying the targets to rejuvenate the dairy industry in China. It aimed to achieve the following targets by October 2011: increase in the scale of milk cattle breeding operations; integration of production and sales; improvement in the processing flow; standardization of the industry; regulatory control over market competition and enhancement of the quality standard system. The outline set out revolutionary requirements on matters such as the ratio of first-class milk cattle, the average output per cattle and the scale of breeding farm operations. To date, milk consumption in China remains far below the international average consumption level, representing huge growth potential. On the back of strong support from the State and efforts of dairy enterprises, it is believed that China dairy products will continue to have promising growth prospects.

Goals:

1. To the end of 2008, take chance of disposing infant milk powder incident, conduct a comprehensive rectification and reform on dairy production, acquisition, processing, marketing and other areas, increase support efforts to enable all sectors basically return to normal state. 2. Before the end of October 2009, perfect relevant laws and regulations, improve the milk quality standards, promote technical regulations of fresh milk production, to enhance standardization construction and management at milk stations, promote dairy production enterprises to establish good manufacturing practices, so that the institutional development of dairy industry will take another important step towards institutionalized and standardized building. 3. Before the end of October 2011, achieve substantial progress in promoting large-scale breeding, production and marketing integration, processing and layout optimization, industry-wide standardization, as well as standardization of the market competition, improving the quality standard system etc.

Tasks and Measures:

1. Comprehensively strengthen the quality supervision, including improving quality standards system, strengthening inspection capacity-building, improving quality management system. Rebuild consumer confidence, including the timely disclosure of information, safeguarding consumer rights, universal knowledge of dairy products.

2. Speed up market recovery and development work, including making clear fund settlement on goods return and refund, and destruction ways of substandard products, ensuring market supply and maintaining the market order, and continuing to promote the School Milk Program.

3.Enhance the quality of dairy production enterprises in a all round way, including industry consolidation, maintaining a normal production, improving enterprise management level, and optimizing the industrial structure. Strengthen management of fresh milk purchase, including rectifying and standardizing the milk stations, raising access threshold of milk stations, and implementing standardized management.

4. Improve the breeding level, including the continued implementation of the relevant supporting policies, implementing interim relief policies for those dairy farmers who suffer particular difficulties in key areas, and promoting large-scale, standardized breeding.

5. Promote the industrialization of operations, including vigorously developing professional production cooperative organizations of dairy farmers, establishing a rational interests linking mechanism, and standardizing the fresh milk transactions.

Responsibility and assessment:

Make clear responsibility and labor division, including definiting responsibility of market players, and strengthening responsibility of local government who conscientiously fulfill the functions of the departments. Strengthen the implementation and evaluation of the outlines. From the year of 2009, all regions and relevant departments shall review and evaluate systematically the outline implementation every six months, and submit the results to China's Reform and Development Commission, who collects all information and reports to the State Council. Each year, the Ministry of Supervision in conjunction with relevant departments shall inspect and evaluate the outline implementation in all regions and relevant departments.

2. Notice on Restricting the Production, Sale and Use of Plastic Shopping Bags

The State Council issued Notice on Restricting the Production, Sale and Use of Plastic Shopping Bags. Starting from June 1, 2008, there was a ban on the production, sale and use of plastic shopping bags less than 0.025 mm in thickness (hereinafter referred to as ultrathin plastic shopping bags) within the area of this country. With a view to guiding the masses to use plastic shopping bags reasonably and economically, all commodities retail places in this Municipality such as supermarkets, shopping malls, fairs and marketplaces shall practice the paid use of plastic shopping bags from June 1, 2008. No free plastic shopping bags shall be provided at any commodities retail places, and the price of plastic shopping bags shall be clearly marked and charged separately from the commodity price. The price of plastic shopping bags shall not be included in the total value of commodities and charged together. The implementation of the Notice directly gave result to the closure, settlement of accounts and declaration of overall transfer of Henan Huaqiang Plastic Co., Ltd., the largest plastic bags production enterprise in China who generated an annual output value of 2.2 billion yuan and topped in the same industry in scale for 11 consecutive years. 60,000 plastics production enterprises in China will meet new challenges.

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