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The 2008 milk scandal revisited.

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Six years ago today, sixteen infants in China’s Gansu Province were diagnosed with kidney stones. All of them had been fed milk powder that was later found to have been adulterated with a toxic industrial compound called melamine. Four months later,  an estimated 300,000 babies in China were sick from the contaminated milk , and the kidney damage led to six fatalities. The Sanlu Group, one of the largest dairy producers in China, was identified as the chief culprit. But as the scandal unfolded, more Chinese dairy firms became implicated.

The incident not only damaged the reputation of China’s food exports, but also dealt a devastating blow to the booming domestic dairy industry, leading to a series of mergers and consolidations. The inelastic baby formula market boosted the demand for foreign products—indeed,  after 2009, more than 100 foreign brands flooded into the Chinese market . In hindsight, it is not an overstatement that the 2008 incident is one of the largest food safety scandals in PRC history.

The scandal lays bare China’s failure to build an effective regulatory state in its transition to a market economy. Drawing lessons from the crisis, the government sought to strengthen its regulatory capacity in food safety control. In June 2009, China promulgated the Food Safety Law, which prohibits any use of unauthorized food additives. The law also led to the establishment of a high-profile central commission to improve inter-state coordination and enforcement of food safety regulation at the national level. In March 2013, China Food and Drug Administration (CFDA) was set up as a ministry-level agency to consolidate authorities in food and drug safety.

These measures, while important and necessary, have not led to significant improvement in China’s food safety. At the State Council Food Safety Commission meeting in January 2013, Premier Li admitted that while food safety has improved, “there are still a  great deal of outstanding problems and potential hidden dangers ; the situation remains grim.” China’s efforts to address food safety are complicated by new environmental health hazards, such as pollution of  water and soil. Rice and garden vegetables  contaminated by heavy metals  poses major health risks, but the cleanup is highly costly and may take decades. Consumer confidence in Chinese dairy products remains extremely weak. Official media suggests that over  half of the Chinese baby formula market is dominated by foreign brands , and in some cities, the share is as high as 80 percent. In a desperate and bizarre move to beef up the domestic dairy industry, China issued a new regulation that  banned the import of dairy products  from unregistered overseas manufacturers.

In recognition of the challenges, the government leaders over the past months have upped the ante for food safety. In March, Premier Li Keqiang used the melamine scandal to argue for “ the strictest possible oversight and accountability” and “toughest possible punishment”  in safeguarding food safety. Under Li’s blessings, China last week unveiled the draft amendment to the 2009 Food Safety Law. Dubbed “ the strictest food safety law in history ,” the new version has raised the bar of food safety management and provided more explicit requirements for government agencies to follow in the food supply chain.

But how effective these efforts remains to be seen. Since the regulation of food safety incorporates several mutually reinforcing activities (production, marketing and consumption) and involves various stakeholders (e.g., manufacturers, traders, consumers, governmental actors), it is highly unlikely that pure top-down, state-centric  regulatory and legal frameworks will be sufficient to defuse China’s food safety crisis. In order to achieve robust and sustainable regulatory capacity, the government should invest in the building of a vigorous civil society and a free and socially responsible media, which would serve as sources of information and discipline in enforcing food safety laws and regulations.  It should be committed to the building of an independent court system to protect the food safety legal framework from being hijacked by self-serving bureaucrats or other vested interests.  It should also be serious about establishing a code of business ethics at corporate and individual level to keep the “capitalism without ethics” in check.  Such institutional support, as a demonstrated in  my recent book , will enable China to build its regulatory state from more solid ground.

This article originally appeared on the Council on Foreign Relations’ Asia Unbound blog and can be found  here .

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2008 milk scandal: A new twist in China’s toxic tale

The 2008 Chinese milk scandal was one of the worst food poisoning fiascos on record. An estimated 300,000 children and infants became ill, and at least six died, after ingesting milk or powdered infant formula tainted with melamine. Worse still, the chemical didn’t enter the food supply by chance or even passive neglect, it was deliberately added to the products by multiple companies. An article in the journal Science in 2008 described the operation as “nothing short of a wholesale re-engineering of milk.” While the scope of the tragedy was shocking, there was another worrying element to the case – only a fraction of the children who ingested the tainted milk products actually got sick. How could a chemical be acutely toxic to some without causing as much as a tummy ache in others? From the beginning there were doubts that melamine had acted alone in the poisoning. And now scientists believe that it had an accomplice not within the adulterated milk but in the bodies of the victims themselves, specifically the bacteria residing in their intestines.

Melamine isn’t the kind of classic poison you’d find in an Agatha Christie novel. It’s an industrial chemical used as a flame retardant and plastic stabilizer (the first time I saw the word was on the back of a plate at a Thai restaurant). In fact, it’s not even especially poisonous, requiring hefty doses to kill rodents and presumably humans. The companies stirring melamine into milk probably didn’t think it would do any harm. They were adding it for the unscrupulous but non-murderous purpose of increasing profits by sneaking watered down milk past protein spot checks.* And for the most part unsuspecting consumers just got a product with inferior nutritional content to bring home to their families. But about one percent of the children served melamine-laced milk products developed dangerous kidney problems, including kidney stones.

This wasn’t the first time melamine contamination had been linked to kidney injury. In 2007, the deaths of dozens of pets in North America sparked a recall of cat and dog food from various manufacturers. All shared a common ingredient, wheat gluten from China that contained melamine. But, unlike the milk, the pet food was found to contain an additional contaminant – cyanuric acid. When combined with melamine, cyanuric acid crystalizes and can form kidney stones.

While initial tests of the melamine-tainted milk failed to find cyanuric acid, it may have still played a role in the 2008 poisoning. Cyanuric acid, it turns out, can also be synthesized from melamine. Not only that, the transformation can be achieved by certain bacteria that produce cyanuric acid as a byproduct of melamine metabolism (i.e., they eat melamine and crap out cyanuric acid). And this is where the current study – published February 13, 2013 in the journal Science Translational Medicine – comes in.

Working on the suspicion that gut bacteria of the human victims facilitated the 2008 milk poisonings, researchers at the University of North Carolina Greensboro and the Shanghai Jiaotong University performed a series of experiments using rats to test this possibility. To begin, they fed rats high doses of melamine and gave some of them antibiotics. As you may recall from warnings about antibiotic overuse, these drugs have the unfortunate side effect of killing off normal gut microbes. In this case, however, the side effect was itself the goal. Melamine-fed rats additionally dosed with antibiotics experienced less kidney damage than those given melamine alone. Fewer gut microbes, fewer kidney problems.  Additionally the melamine + antibiotic rats had more melamine in their urine than the melamine alone group. So without enough gut microbes, melamine was more likely to just go in one end and out the other. But with the aid of gut microbes, it stuck around longer, possibly being converted into cyanuric acid and then incorporated into harmful kidney stones.

The team also looked at how melamine and gut bacteria interacted outside of rats. Since feces contain a healthy serving of gut bacteria, this was done by mixing rat droppings with melamine. As the ingredients were allowed to comingle, melamine concentrations in the samples decreased and cyanuric acid increased. As no cyanuric acid was detected in the poo-free control samples, these changes in concentration again appear to be the result of microbes turning melamine into cyanuric acid.

Of the bacteria isolated from the rat feces, species of the genus Klebsiella were especially adept at performing the melamine to cyanuric acid transformation. So the researchers decided to see if upping the numbers of these bacteria in rats’ intestines had any effect on melamine poisoning symptoms. Sure enough the kidneys of the rats fed melamine + Klebsiella bacteria (no antibiotics for anyone this time as we’re going for maximum microbes) were in even worse shape than those of the rats fed just melamine.

The collective results suggest that gut bacteria can influence melamine toxicity, at least in rats. But what about humans? The authors note that the percentage of humans found to have a species of Klebsiella ( K. terrigena ) living in their intestines is about one percent, very similar to the percentage of children affected by the melamine-contaminated milk.

While the numbers don’t contradict the possibility that gut bacteria accounted for the sickening of only some children in the 2008 poisoning, it’s difficult to establish a direct correlation. Analyzing fecal samples of the surviving victims is certainly not impossible, but it wouldn’t necessarily clarify much. Gut microbe populations can change over time, altered by diet and age. Over four years have passed since the melamine-laced milk did its damage. It’s a bit late to start cataloging bacteria now.

But beyond the 2008 milk poisoning episode, this study adds to a growing understanding of importance of the microbial residents in our guts. They’ve been shown to contribute to the metabolism of food and calorie absorbtion , but they may play also play a role in food and drug safety. What constitutes a safe chemical may vary from person to person depending on their microbial makeup. When taking medicines, we worry about their interactions with other drugs and even with food (no grapefruit with your statins please… and a host of other pills ). But as we learn more about gut microbes, we may have to revise some of our warning labels:

Take 1 tablet twice daily with water. Avoid exposure to direct sunlight. Do not take if pregnant, breastfeeding, or colonized by certain intestinal bacteria.

* To determine protein content, the test just looks for nitrogen (a component of amino acids). So while lacking in protein, melamine contains enough nitrogen to boost milk’s perceived protein count.

Alex Reshanov

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China’s image sullied by tainted milk.

BEIJING: The flag flew, the music surged, and state-run television was filled with triumphant images of the Beijing Olympics and the successful Shenzhou VII spacewalk, marking, on Oct. 1st, the Chinese Communist Party’s 49th anniversary in power. But if the party had hoped to spend the day basking in the adulation of the Chinese people and the admiration of the world, it hadn’t counted on the reverberations of a self-inflicted body blow to Brand China – the tainted milk scandal.

At last count, 53 brands of dairy products in China, plus foreign brands made with Chinese milk ingredients including Cadbury chocolate and Lipton milk tea powder, have been found to contain melamine, a binding agent used to make plastics and floor tiles. Chinese dairy producers found another use for the chemical – adding it to watered-down milk, because melamine’s high nitrogen content makes the milk’s protein levels appear higher than they are.

The tainted milk found its way into yogurt, ice cream, cakes, cookies, cereals – and, most unbelievably for many Chinese parents, who have been ordered by the state to have just one child, powdered baby formula.

“Some people are saying the presidents of those milk companies should be executed, and I think they’re right,” says grocery store owner Tian Yang Qing, as she glances through a government-supplied list of dozens of tainted products. “How could those businessmen do this to little babies? Think of how the children’s development is affected. Think of how their lives are affected. It’s terrible.”

Some 54,000 Chinese children have ended up in the hospital after drinking melamine-tainted milk formula, and at least three have died. Other children have been hospitalized with kidney stones in Hong Kong and Taiwan. So far, Chinese authorities have arrested at least 27 people in connection with the crisis.

The global response since the scandal broke in mid-September has been swift. More than a dozen countries have banned some or all dairy products from the affected brands. The European Union slapped a ban on any baby food originating in China that has even a trace of milk. Some analysts estimate it could take until 2010 for the $20 billion Chinese dairy industry to regain what it’s lost in credibility and sales – and that’s assuming China’s leaders get serious about enforcing a rigorous and transparent quality-inspection system, something they’d promised to do after the last year’s food safety scandals.

China’s leaders have been scrambling to send reassuring messages. “The problem shows that we should pay more attention to business ethics and social morality in the development process,” Premier Wen Jiabao told a World Economic Forum meeting in Tianjin. “These are some of the growing pains of China’s road to economic reforms. We will overcome them by facing the challenges truthfully.”

But Wen himself sounded less than truthful in another remark he made in the same speech. “China did not intend to cover the truth when the incident happened.”

The state-run media have reported a different story. It is a story about managers of a major Chinese brand, Sanlu, knowing as early as last December that its powdered baby formula had problems, but doing nothing. It’s a story of a father, 40-year-old Wang Yuanping of Zhejiang province, worrying as far back as February about why Sanlu’s powdered milk was making his daughter sick. He was persuaded to shut up with the free supply of four cases of the same.

It was not until early August that Sanlu informed local government authorities of the problem. By then, just days before the opening of the Beijing Olympics, local officials knew better than to spoil the celebration. Weeks went by. More children fell ill. Eventually, in mid-September, the New Zealand government intervened with Beijing on behalf of Fonterra, a New Zealand company, which owns a 43 percent share of Sanlu. The hushed-up story was finally blown wide open.

As an online editorial on Access Asia, a China and Asia consumer market analysis group concluded, “Fonterra knew something was wrong. They decided to try and deal with the problem internally, worried about the negative effect on Sanlu, on China during the Olympics and of course on themselves.”

But this isn’t a story about just one bad actor. It’s about dozens of Chinese dairy producers and collectors, gaming the quality-inspection system over time, adding not just melamine but also, in the past, other chemicals, so they could water down their milk, pass cursory quality inspection tests and make more money. It’s also about a state regulatory system that failed.

“In any (regulatory) system, you can’t rely on testing alone,” says Jorgen Schlundt, director of the World Health Organization’s food-safety department. “That’s the old-fashioned way. You have to have a system where you look at what are the risks and how do we prevent them, as close to the source as possible. You need to have a system where you have a culture of openness and quick reporting.”

That’s exactly what China does not have. Instead, it has a system where many businesses try to get away with what they can, and many local officials try to cover up problems that happen on their watch, either because they’re profiting from the businesses in question, or because they fear that problems could cut into their chances for a raise or a promotion. That mentality has delayed reporting in recent years on SARS, bird flu, toxic chemical spills and food contamination. In each case, local officials preferred to risk other people’s lives than their own careers. The central government’s warnings that it would fire those who don’t report promptly have failed to transform the old mentality.

Meanwhile, consumer protection mechanisms in China remain weak, and the government appears to want to keep them so. About 20 of the lawyers who have been trying to help families affected by the tainted milk scandal say they have received calls from local governmental legal authorities, warning that they could lose their licenses if they continue to help affected families.

What the government appears to fear, in this case as with previous class-action attempts on property and pollution, is a snowballing effect that could lead to a national political movement. It seems to prefer to keep victims isolated from one another, while stressing social harmony and promising to pay medical bills and fix the problems.

Premier Wen has now pledged to overhaul the quality-inspection system for food and dairy. One problem, says the WHO’s Schlundt, is that up to 16 different authorities now split that responsibility: “It is always a problem when you have many separate authorities that may not have the same culture of reporting.” He says it’s a good first couple of steps that China has put the Food & Drug Administration under the Ministry of Health, and suspended a system that allowed some favored companies, including Sanlu, to do their own quality inspection. But a thorough reorganization will take years.

Meanwhile, there’s urgent damage control to be done. Without swift and effective action to better protect its own consumers and citizens, China’s leaders may find that the wave of goodwill they’ve been riding of late may dry up, and bring them down to earth with a thud.

Mary Kay Magistad covers Northeast Asia for The World.

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China’s tainted milk scandal spreads around world

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Dozens of countries have banned the sale or imports of dairy products from China. Melamine tainted milk has killed four infants in China and hospitalised tens of thousands of infants and children with kidney problems.

The European Union has banned all baby food containing Chinese milk; France has gone further by banning all foods containing Chinese milk as a precautionary measure. Altogether 24 other countries in Asia, Africa, and South America have imposed bans on some or all Chinese milk products.

The World Health Organization has called on countries to be alert to possible melamine contamination of dairy products sourced in China.

“While breast feeding is the ideal way of providing infants with the nutrients they need for healthy growth …

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A Decade Later, China's Lethal Milk Scandal Still Haunts Industry

More than a decade after tainted infant milk powder in China killed six children and exposed institutional neglect of food safety, Chinese parents still don’t trust local companies to feed their babies.

That could mean another gold mine for foreign producers as the battle for infant milk shifts to the hundreds of smaller cities beyond the metropolises of Shanghai and Beijing.

The deadly milk scandal of 2008 was a watershed moment for China’s consumers. Some 300,000 children were poisoned after Chinese suppliers added melamine, a chemical used to make plastic, to powdered milk to artificially boost protein levels. Tuesday marks the 10th anniversary of the sentencing to death in China of those at the center of the contamination and its concealment.

The scandal fueled a new era of consumer suspicion and China’s $27bn infant-formula industry was reshaped to the near-exclusion of homegrown companies among the market leaders.

While Chinese government regulations on milk powder production are in line with international standards, consumers like Chen Jijie, a Beijing-based mother of two, will neither forgive nor forget.

“I won’t even consider giving domestic brands a chance, even 10 years later,” said Chen, who has a two-year-old child and a newborn baby. “The incident brought my confidence in Chinese baby formula brands to the lowest level.”

Nestle SA’s share of China’s milk-formula market has quadrupled since the scandal to make it the clear leader, while annual revenue at Australia and New Zealand upstart A2 Milk Co. has soared to close to NZ$1bn ($673m) from only NZ$1.5m before the crisis.

Foreign milk labels are still viewed by consumers as safer, higher-quality and a mark of affluence, but domestic suppliers are fighting back with savvy branding and lower prices. The prize is clear: With only a quarter of Chinese moms breast-feeding, China’s infant-formula market will expand 21 percent to about $32bn in 2023, according to Euromonitor International.

Both Danone and Nestle are focused on parents in so-called lower-tier cities. Danone is bolstering its e-commerce business, since there are fewer retail stores that stock its goods in rural China, while Nestle is assessing which of its products can best capture demand in these areas.

In a statement, Nestle said it carefully chooses its ingredient suppliers. The company also set up a dairy farming institute in northeast China in 2014 that helps teach farmers to produce safe, high-quality milk.

Meanwhile, Chinese dairy companies are finding that some sort of association with foreign cows — real or imagined — can go a long way toward gaining market share. Chinese milk giants Inner Mongolia Yili Industrial Group Co. and China Mengniu Dairy Co., both of which were found to have batches of tainted milk a decade ago, are racing to build up foreign milk sources in a bid to win over local mothers.

Mengniu sells a high-priced, made-in-New-Zealand line called Milk Deluxe, whose tins are emblazoned with snowy, Alps-like mountains.

“Ten years ago, everyone felt depressed and said there was no hope for China’s domestic dairy industry,” Jeffrey Lu, Mengniu’s chief executive officer said in an interview at the World Economic Forum in Davos on Tuesday. Most local brands now have international supply chains that produce baby milk powder on par with the global brands, he said.

While more than 90 percent of Chinese consumers are drinking local milk, Lu admits that its harder — and will take longer — to gain Chinese mothers’ trust for infant milk. “We need to make the supply chain more transparent,” he said.

“In the short term, seeking overseas milk sources is the most effective way for Chinese milk powder brands to win back consumer confidence,” said Luo Yixin, a consumer analyst at Hua Tai Securities.

Among Chinese producers of milk powder, the only company that’s managed to eke out any meaningful share since the scandal is Feihe International Inc. It had 8.6 percent of the market in 2017, Euromonitor said.

Even then, Feihe’s success is likely tied to a branding campaign that implied a foreign provenance: Up until 2013, it was listed on the New York Stock Exchange and named American Dairy Inc.

After reverting to its Chinese name and going private, the company’s top-selling product line, Firmus, emphasizes that its milk is sourced from cows in the milk belt that spans from Wisconsin in the U.S to Hokkaido in Japan. Its cows are actually located in Heilongjiang in the country’s northeast.

“Domestic baby formula has the highest quality in history and compares with the leading brands in the global market in technology, equipment and management,” said Feihe in a statement to Bloomberg. “We spare no efforts to improve the technology and enhance linkages with international dairy peers.”

Products made and packaged overseas can command a price that’s as much double that of domestically produced milk, said UOB Kay Hian consumer analyst Robin Yuen.

In Australia and New Zealand, Asia Pacific nations that promote their agricultural credentials, the 2008 scandal helped forge a new trading channel: China-bound infant formula sold through the mail. From Sydney to Adelaide, so-called daigou shoppers soon started clearing supermarket shelves of tins to resell them at a profit to Chinese mothers.

A2 Milk, named after a naturally occurring protein, was vaulted into China’s top league and Chinese demand now accounts for an estimated 50 percent of revenue. There’s little sign of demand dropping off any time soon, even after China introduced tighter manufacturing controls and, on Jan. 1, new e-commerce rules that seek to formalize the daigou trade and make it taxable.

“We’ve got decades in this cycle and we’re right at the start,” said Keong Chan, chairman of AuMake International Ltd., a Sydney-listed owner of shops targeting Chinese buyers and re-sellers of Australian products including A2 Milk powder. The next generation of middle-class consumers in lower-tier cities “could be an even bigger market than the first,” he said.

A spokesman for A2 declined to comment. Chief Executive Officer Jayne Hrdlicka said in an interview late last year that she saw “a huge opportunity” in China, as well as in the U.S.

China’s home-grown infant formula producers see younger and lower-income parents, less scarred by the melamine scandal, as their hope for growth.

But some consumers like Chen, the mother of two, may be lost to Chinese companies forever.

“The most important criteria for baby formula is whether it’s safe,” she said. “I only choose international brands.”

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Corporate crime and state legitimacy: the 2008 Chinese melamine milk scandal

• Published: 31 May 2015
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Ghazi-Tehrani, A.K., Pontell, H.N. Corporate crime and state legitimacy: the 2008 Chinese melamine milk scandal. Crime Law Soc Change 63 , 247–267 (2015). https://doi.org/10.1007/s10611-015-9567-5

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Despite Warnings, China’s Regulators Failed to Stop Tainted Milk

By Jim Yardley and David Barboza

• Sept. 26, 2008

SHIJIAZHUANG, China — Barely a month ago, China’s staging of the Beijing Olympics demonstrated how the Communist Party could mobilize its authoritarian political system. But the international scandal now unfolding over China’s contaminated dairy products is demonstrating, again, the weaknesses of that system.

In recent days, Prime Minister Wen Jiabao has apologized for a scandal that has sickened 53,000 children, killed at least three and devastated China’s dairy industry, which he has promised to reform.

But a year ago, Mr. Wen made a similar pledge to overhaul safety regulations for food, drugs and other products in response to other safety scandals. His government authorized $1.1 billion and sent 300,000 inspectors to examine food and drug producers, but regulators could not prevent China’s biggest dairy producers from selling baby formula laced with an industrial additive called melamine.

The dairy scandal raises the core question of whether the ruling Communist Party is capable of creating a transparent, accountable regulatory structure within a one-party system. Party leaders realize that effective regulation is essential to convince the world that China’s products are safe and so maintain the rapid economic growth that has helped to sustain the party’s power. But many analysts say the party’s need to maintain control — of the economy and of information — undermines the independence of any regulatory system.

Beijing’s political priority of holding a “harmonious” Olympics was also a factor. Parents who tried to act as whistle-blowers were thwarted by an unresponsive bureaucracy, while Chinese journalists were blocked by censorship edicts banning coverage of politically touchy subjects during the prelude to the Olympics.

Officials now acknowledge that China’s leading dairy companies — including the Sanlu Group, the worst offender in the scandal — were exempted from mandatory government inspections. In hindsight, inspections might not have mattered: in May, the government’s top food quality agency rated dairy companies among the safest producers in China’s food industry, reporting that 99 percent of them passed safety inspections for their infant milk formula. Now, the government says that 22 dairy companies, including export brands like Mengniu and Yili, have produced powdered baby formula that contains traces of melamine.

“The system needs to be re-examined, top to bottom,” said Eliot R. Cutler, an expert on regulation and energy policy at the Beijing office of Akin Gump, an international law firm.

Much of the public outrage in China over the dairy scandal is focused on how the problem remained hidden for months as parents bought bad formula without realizing they were poisoning their babies. Beijing authorities say they learned about the problem only this month. They have blamed greedy corporations and local officials for wrongly hiding the crisis. But there were early warnings that were muffled by censorship or lapses in Beijing.

Fu Jianfeng, an editor at one of China’s leading independent publications, Southern Weekend, recently used a personal blog to describe how his newsweekly discovered cases of sickened children in July — two months before the scandal became public — but could not publish articles so close to the Games.

“As a news editor, I was deeply concerned,” Mr. Fu wrote on Sept. 14. “I had realized that this was a large public health disaster, but I was not able to send reporters to do reporting.”

Even earlier, on June 30, a mother in Hunan Province had written a detailed letter pleading for help from the food quality agency, the General Administration of Quality Supervision, Inspection and Quarantine. The letter, posted on the agency’s Web site, described rising numbers of infants at a local children’s hospital who were suffering from kidney stones after drinking powdered formula made by Sanlu.

The mother said she had already complained in vain to Sanlu and local officials.

“Urgent! Urgent! Urgent!” she wrote. She called on Beijing authorities to order a product recall, release the news to the Chinese media and provide medical exams for babies who had consumed Sanlu formula. “Please investigate whether the formula does have problems,” she wrote, “or more babies will get sick.”

Hundreds of miles north, the health bureau in Gansu Province was also facing an unusual outbreak of sick infants. The Gansu Health Bureau spokesman, Yang Jingke, said his agency sent an urgent report in July to the Ministry of Health in Beijing describing how local hospitals were reporting high numbers of babies with kidney stones. Mr. Yang, speaking at a news conference this month, said all the babies had taken the same brand of formula. He said the Ministry of Health responded that it had attached “great importance” to the problem and would investigate. But nothing happened.

Beijing typically tries to address scandals with high-profile firings and arrests. After last year’s food and drug safety crisis, the head of China’s Food and Drug Administration was put to death for corruption. His execution was interpreted as the party’s way of sending a stern message warning lower officials to toe the line.

The government also oversaw a four-month crackdown that resembled a nationwide vice sweep: 1,187 criminal investigations opened, 300 drugmakers shuttered, 192,400 unlicensed food shops closed and 1,400 substandard slaughterhouses shut down.

The crackdown in response to the dairy scandal already echoes last year’s campaign. The country’s top food quality official, Li Changjiang, resigned while lower officials were fired or arrested.

But the essential relationship between regulators and industry seems unchanged. Some dairy farmers interviewed this week in Hebei Province said it was an open secret that milk was adulterated, although many claimed they did not know that melamine was being used. Some dairies routinely watered down milk to increase profits, then added other cheap ingredients so the milk could pass a protein test.

“Before melamine, the dealers added rice porridge or starch into the milk to artificially boost the protein count, but that method was easily tested as fake, so they switched to melamine,” said Zhao Huibin, a dairy farmer near Shijiazhuang.

Mr. Zhao said quality testers at Sanlu took bribes from farmers and milk dealers in exchange for looking the other way on milk adulterated with melamine. “In this business, bribery keeps everyone silent,” he said.

A company spokesman at Sanlu, after receiving a faxed list of questions, said the company would have no comment on this or any other aspect of the scandal.

Analysts say the lack of a truly independent regulatory system means that high-profile gestures, like executing or firing officials, have limited impact, especially because local industries are so often intertwined with local officials.

“These after-the-fact administrative measures miss the point,” wrote Arthur Kroeber, managing director of the Beijing-based consultancy, Dragonomics, in a recent note to clients. He said the problem was rooted in the Communist Party’s continued involvement in pricing control, company management and the flow of information.

“The party views control of all three as necessary to its rule,” he added. “Further major scandals are thus inevitable.”

The structure of the Sanlu Group, which keeps its headquarters in this gritty industrial city, is a case in point. The Hebei Province Communist Party appointed the company’s chairwoman, who was also a party official. Meanwhile, city officials in Shijiazhuang are now accused of helping cover up the problem rather than trying to warn the public.

For Sanlu, a pivotal moment came on Aug. 2 when company officials informed the board about the melamine problem. Sanlu is a joint venture with the New Zealand dairy giant Fonterra. Fonterra owns a 43 percent share and has three members on the board. Fonterra’s executives say their representatives immediately pushed for a public recall at the board meeting, only to be overruled by the rest of the board.

Sanlu had first received complaints about its powdered baby formula last December, according to state media. By March, the company had hired private companies to test its milk powder for contaminants. Yet Sanlu never issued any public warnings and never stopped promoting its products. On May 18, days after the devastating earthquake in Sichuan Province, the company made a much-publicized donation of $1.25 million worth of baby formula for infants orphaned or displaced by the catastrophe.

But problems were surfacing. On May 21, a father named Wang Yuanping posted a notice on a popular Internet message board, Tianya, in which he detailed months of frustrating interaction with the company. His infant daughter had been sickened after drinking the powdered formula. “Her urine was viscous and yellow, with granule,” Mr. Wang wrote. “This stopped when she stopped drinking and resumed when she started drinking.”

He had first alerted Sanlu in February because he feared someone might be counterfeiting the company’s products. Sanlu asked him to send a sample for testing and later company officials confirmed that the sample was their product. But they told Mr. Wang that the results were a “business secret” and refused to divulge them. By late March, Mr. Wang also complained to local officials in his hometown in Zhejiang Province but they said he needed to pay for expensive testing to prove the formula was bad.

By midsummer, some Chinese journalists were learning that sick babies were arriving at hospitals.

Mr. Fu, the editor at Southern Weekend, wrote in his blog that Sanlu applied pressure to block reporting and used its political connections to prevent some other newspapers from publishing articles about the problem. But with only weeks before the Olympics’ opening ceremony, the timing made media coverage nearly impossible. “We couldn’t do any investigation on an issue like this, at that time, in order to be harmonious,” Mr. Fu wrote.

For two years, the Central Propaganda Department had been issuing broad reporting guidelines that were distributed in Internal Digest, a classified bimonthly Communist Party bulletin. The emphasis was on promoting good news about the Olympics. But the scandals in 2007 over the safety of Chinese food and drug exports complicated this agenda. A huge pet-food recall in the United States was traced to Chinese animal feed adulterated with melamine. At home, Chinese consumers were alarmed over a bad-pork scare.

Propaganda officials responded by issuing rules that required domestic publications to obtain permission before publishing any articles about food safety and other politically delicate subjects.

On July 24, a television station in Hunan Province reported that infants who had consumed the same powdered formula were suffering kidney problems. The station showed packages of Sanlu formula, but was careful not to name the company.

Yet the problem remained largely concealed. “I felt very guilty and frustrated then,” Mr. Fu wrote. “The only thing I could do was to call every friend I knew to tell them not to feed their children with Sanlu milk powder.”

The problem was finally exposed in September when the New Zealand government, after discussions with Fonterra executives, contacted authorities in Beijing. Beijing officials say they knew nothing about the scandal until September, though a Fonterra company spokesman said the company believed the central government knew in August.

Chinese leaders have since responded forcefully, even as they have distanced themselves from responsibility for the scandal. The aggressive initial tone of media coverage shifted this week, as state media outlets like Xinhua, the country’s official news agency, emphasized how much the public appreciated the government’s response. And censors were filtering the Internet and removing certain postings, including the blog item by Mr. Fu.

Reached by telephone on Friday, Mr. Fu said he could not answer any questions about his blog.

This week, China Central Television, the government network, has been offering reassurances that the dairy products still on the shelves are safe.

Chen Yang, Huang Yuanxi and Zhang Jing contributed research.

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