China reports second infant death in milk scandal

By Chris Buckley

BEIJING (Reuters) - China reported on Monday the death of a second infant from tainted milk powder in a growing scandal that left hundreds more ill but only led to a product recall after the New Zealand government raised the alarm.

Two traders were arrested for selling up to 3 tonnes of contaminated milk a day, police reported.

The latest death blamed on infant milk powder made by the Sanlu Group was in Gansu province, a poor northwestern region where the first infant fatality linked to the chemical-laced milk was also reported, the official Xinhua news agency said.

One of the infants was a five-month-old boy who died in May. The other was an eight-month-old girl who died in July after her parents removed her from hospital, health ministry official Wang Yu told a news conference.

"The family refused an operation to insert a catheter and abandoned treatment," Wang said, without explaining why.

By Monday morning, 1,253 children had been diagnosed with illnesses linked to the milk powder, with 340 still in hospital and 53 "relatively serious", Vice Minister of Health Ma Xiaowei told the news conference. At the weekend, officials said 432 children were ill from the milk powder.

Milk powder producer Sanlu, 43 percent owned by New Zealand dairy giant Fonterra, last week halted production after investigators found the chemical compound melamine in its powder was causing kidney stones and complications in infants.

The scandal threatens to batter the nation's troubled product safety record soon after the public relations success of the Beijing Olympics and following a string of scares last year.

"The Chinese dairy sector has layer after layer of problems -- technological, institutional, business," said Beijing lawyer Guan Anping, a former trade official who has dealt with the sector.

"The government has been trying to strengthen consumer protection, but until deep-rooted problems are addressed, increasing the number of inspectors twenty-fold won't solve them ... The public must have a more direct, active role."

China is the world's second biggest market for baby milk powder and the health scare and public outcry may yet grow.

Sanlu has been the top-selling company in the Chinese sector for 15 straight years, with 18.3 percent of sales in 2007, according to the company's website (www.sanlu.com).

TOXIC FOOD

Two brothers surnamed Geng were arrested for "producing and selling toxic and hazardous food," police in Hebei, the north Chinese province where Sanlu is based, told Xinhua on Monday.

From late last year they added melamine to the 3 tonnes of milk they sold on from farmers every day, the report said.