China vows clean up of "chaotic" dairy sector

BEIJING (Reuters) - China's dairy industry suffers from chaotic production and lax oversight, the government said on Monday, announcing toughened rules after tainted milk products left thousands ill and shook confidence in "made-in-China."

Premier Wen Jiabao presided over the meeting of the State Council Standing Committee, or cabinet, which announced rules intended to ensure the safety of milk products, the government reported on its website (www.gov.cn).

The announcement was the government's latest move in a campaign to calm alarmed domestic and foreign consumers after infant milk powder adulterated with the industrial chemical melamine was found to have killed four children and left many thousands more ill with kidney problems and complications.

Dozens of countries consuming products with Chinese dairy ingredients have undertaken bans, recalls or strict checks after melamine was also found in those products.

The government meeting blamed lawless individuals and businesses for the country's latest food safety scandal, but also said the scandal exposed deeper problems.

"At the same time, this has exposed chaos in our country's dairy product production and distribution and serious shortcomings in oversight and administration," stated the official summary of the meeting.

The government is "determined to take in hand every link in inspection and administration from the field to the dinner table, so that the reputation of our country's food sector is restored and consumer confidence is enhanced," it said.

Beijing made similar vows last year, after scares over tainted and dangerous foods, medical and pet-food ingredients, toys, tires and toothpaste made in China shook international confidence in quality controls.

China says the latest chemical tests on milk have come back clean, and police said they have detained six more people suspected of crimes related to producing and selling melamine.

The arrests were made in Hohhot, capital of the northern region of Inner Mongolia, which is the country's main dairy-producing area, the official Xinhua news agency said in an overnight report. The arrests were made during an investigation into melamine contamination at Yili and Mengniu, two major dairy companies based there, it said.

Inner Mongolia Yili Industrial Group, Mengniu Dairy and Bright Dairy group were found earlier to have produced milk contaminated with melamine.

But the government's announcement also came on a day that brought more bad news for China's battered dairy sector.

South Korea's food watchdog said it had found melamine in 10 Chinese dairy products and ordered them to be taken off shelves.

"The levels of melamine found in those products do not pose a big health threat but we'll take the necessary steps to ensure food safety," the Korea Food and Drug Administration agency said in a statement.

Iran announced a ban on imports of Chinese dairy products and ordered stores to remove goods containing those products.

Widely used in making plastic kitchen utensils, melamine can pose serious health risks if consumed in large quantities.

Dairy firms that produce substandard products or lack the necessary quality controls face closure, the Chinese government announcement said.

"The whole food sector must establish comprehensive quality standards ad improve testing and monitoring measures," it said.

(Additional reporting by Jason Subler in Beijing, Miyoung Kim in Seoul and Parisa Hafezi in Tehran; Editing by Sanjeev Miglani)