China to test dairy products, launch sector reform

BEIJING (Reuters) - China's cabinet on Wednesday said it would launch comprehensive tests of milk products and reform the industry, state media said, after three infants died and thousands were sickened in a spreading scandal.

Premier Wen Jiabao presided over the State Council meeting, which said the incident involving tainted milk powder reflected chaotic industry conditions, loopholes in the supervision and management of the industry, said Xinhua news agency.

"It is necessary to learn lessons, properly deal with the incident, improve the inspection and supervision system and strengthen the management of the dairy industry," it said.

China said on Wednesday the number of children ill after drinking powdered milk laced with the compound melamine had risen nearly five-fold to 6,244, while an official said the health threat was concealed for at least a month.

The escalating scandal triggered a recall of exports, sacking of officials and detention of a sacked company executive.

"China's dairy industry has been pushed to the brink of outright crisis," said Li Zhiqi, a Beijing-based consultant who works with dairy companies.

The country's biggest baby milk powder maker, the Sanlu Group, last week revealed its products contained melamine, which can be used to bamboozle milk quality checks.

(Reporting by Kirby Chien; Editing by Sanjeev Miglani)