China’s Toxic Dairies: Why Capitalism Can’t Afford the Milk of Human Kindness

October 6, 2008. A World to Win News Service. Tainted milk products from China are turning up throughout the world because China is so much at the core of capitalist production worldwide. Further, while the contaminated milk scandal that has killed at least four babies and sickened more than 53,000 is very linked to the particularities of capitalism’s functioning in China, it is even more a product of the global profit system itself.

The Cover-up and the Criminal Responsibility of China’s Rulers

One of the most widely reported aspects of the scandal has been the role of the Chinese government and the ruling, so-called “Communist” Party. For some time now, perhaps as much as three years, Chinese government officials at various levels have had indications that the chemical melamine, normally used to make plastics and other industrial items, has been present in milk and milk products. Melamine is toxic for human beings because of the damage it does to their kidneys. Not only are infants especially vulnerable to this chemical, but they are doubly at risk because they live largely or almost exclusively on powdered milk formula. So far four of the poisoned under-two-year-olds have died of renal failure. Most suffer painful urination. More than a hundred are known to have passed kidney stones—extremely rare in babies, and excruciatingly painful.

Melamine is not hard to detect in children’s urine, especially in the enormous doses that have been found in Chinese milk. The infant’s urine turns slushy (filled with crystals) and strangely colored, in a way that alarms parents immediately, and ceases as soon as the children stop drinking the formula, even though their kidneys may have already suffered permanent damage. The Sanlu Group, the dairy company most implicated in today’s scandal, is known to have received complaints about this in December 2007. The first formal illness report came in March 2008, and the first reported deaths in May and July. After parents in several provinces began to kick up a fuss about the contaminated milk they suspected of making their babies sick, the company began running tests in June, and confirmed the presence of melamine. Yet the company actively covered up these and other indications of a serious problem. It continued its intense TV advertising campaign to get women to give up breast feeding and use its formula instead.

According to People’s Daily and other official central Chinese government sources speaking recently, after the scandal broke, in August Sanlu asked officials in Shijiazhuang, the city in the northern province of Hebei where it is headquartered, to help “manage” public response (including media) if and when the company began to recall its products. Local authorities are said to have failed to inform provincial officials about the problem for another month. Some analysts suspect that the central government’s current revelations of a provincial cover-up are in fact an attempt to shift the blame downward. (BBC, October 6) It is known that the center received reports from officials in other provinces in July, and in that month it prevented an exposé from appearing in print. It seems that top officials were anxious to prevent this scandal from breaking into the news until as long as possible after the feel-good glow from the Peking Olympics. Finally, in mid-September, amid a barrage of exposures (including a detailed account posted on a professional Web news site, the confirmed death of two babies and the banning of mainland milk powder by Taiwan), Sanlu stopped its powdered milk manufacture, and it and other dairy companies began recalling their poisoned products.

The biggest of the dairy industry’s three main corporate culprits, Sanlu used to be state-owned. Now officially private, nonetheless the provincial party committee appoints its chief executive, who, in this case, was also a party official. This is likely one reason why local and provincial officials kept the affair secret for so long. When that failed, in September, she was fired, as were some health and safety officials, including China’s chief quality supervisor. In May his agency had declared the dairy sector the country’s safest industry and said no inspections were necessary for Sanlu and the 21 other big milk companies.

Last year, the head of the Chinese Food and Drug Administration was executed for “corruption,” and harsh punishment may await various scapegoats, sacrificed to save the ruling party’s reputation and the system’s political stability. In early October several dozen dairy industry people were arrested for introducing melamine into the food chain. They ranged from farmers and managers of pastures and milk stations to melamine merchants and the Sanlu CEO. At the same time, officials sent police to visit lawyers for groups of parents of sick children—13,000 remained hospitalized as of late September—to warn them to let the matter drop. Although the government has promised free health care for these infants, there are reports of parents being charged exorbitant amounts to have their children tested, and then being told they have to put up even more money in advance if they hope for treatment. The dismantling of China’s once advanced universal health care system—a major factor in the doubling of the average life span in China during the first decades after the revolution—has been a major aggravating factor in this current crisis.

“It’s just changing the water without changing the herbs,” a Beijing bartender said of the resignations and arrests. “This scandal is caused by the whole system, so it’s no use replacing a single official.” (Washington Post, September 23)

The contrast could not be sharper between the China of today, where the watchword is “To get rich is glorious,” and the China of Mao’s time, when the guiding principle was “Serve the people.” In the name of that infamous former slogan, Deng Xiaoping, the leader of those whom Mao warned were “capitalist roaders” in the party, overthrew the socialist system after Mao’s death. The revolutionaries in party leadership were arrested or otherwise eliminated. The party, once an organization whose task was to lead the people in transforming China and the world to emancipate humanity from the division of society into classes, the system where profit is the supreme rule and highest good and all the laws, customs and ideas that go with that, has become an instrument of a particular kind of capitalist ruling class, both in the state and private enterprise. By the way, now food for the central authorities, their bodyguards, the police, etc., is grown on organic farms and specially tested.

But it isn’t exactly news that China is no longer socialist. Much of the global media reportage has treated this scandal as simply evidence of the extreme corruption that characterizes this newly-born Chinese-style capitalism, as if the problem were particular to China and to an early stage of capitalism that more mature capitalist countries have long since surpassed.

The Market Did It

Corruption did play a huge role. But to focus on that begs the question: why was melamine being added to milk in the first place?

Melamine was added because the raw milk was being diluted with water. Wholesale purchasers often test milk for protein content precisely to guard against not getting what they pay for. Adding the chemical thwarts those standard tests. According to the Chinese government, this took place chiefly at the level of milk stations, the middlemen who buy up raw milk from dairy farmers.

Why was milk diluted? Obviously, the milk station owners, who are in practice the real bosses of the supposedly independent small farmers who are in fact dependent on them, have every interest in trying to stretch their product and make more money. But there is more than just greed at work here. In order to survive as capitalist enterprises themselves, they faced a compulsion to pour water in the milk.

The price of milk, like other basic foods, is controlled by the government in China, just as it is in Europe and elsewhere. That government has resisted allowing milk prices to rise, because that would increase the cost of living for China’s workers and others—and China’s chief advantage in the world market is the cheapness of its labor. Meanwhile, farmers’ costs have been mounting, especially for cow feed (due to international price pressures) and anything related to oil (fertilizer, fuel for tractors and trucks, etc.). This is driving up milk prices all over the world at the moment. The particularly sharp “scissors effect” effecting Chinese dairy farms is an example of how the extraction of value from the peasantry has been an important component in the profitability of capital in China. Whether added at the level of the individual farm or the milk station, the market itself dictated that milk could not be profitably produced at the price for which farmers and the milk stations had to sell it.

“For a long time, milk products were cheaper than bottled water,” a Beijing professor of food science told the Washington Post. (September 23) “We were afraid the consumer price index would rise and further pressure consumers, so we kept the price of milk products low. Making milk is profitless. If you want to produce good-quality milk, you have to feed cows well.”

Yet it is key to note here that the government’s attempts to hold down milk prices does not reflect a failure to abide by the market but a response to the rule of the broader market nationally and internationally. Further, in addition to the price of Chinese labor power, the country’s core market product, the profitability of the dairy industry itself has been another major factor compelling the poisoning of milk, and this, too, is world market-driven.

No One Wants to Know

China’s $19 billion dairy industry is an increasingly major source of profit for both Chinese and foreign capital. This is due to both increasing consumption of milk and dairy products domestically, and the export of dairy products. Even more, Chinese dairy companies supply rapidly increasing amounts to foreign-owned food companies in China, whose chocolates, biscuits, coffee whiteners, etc. in turn are exported worldwide.

They buy their milk from China because it’s cheaper, just as it’s also cheaper to manufacture their milk-based products there. For the bosses of the milk companies in China, like the owners of sweatshops where other goods ultimately marketed by the multinationals are made, there’s no escaping awareness of horrendous conditions of production (long hours in the factories, adulterated milk in the dairies). That’s where corruption comes in, to get the relevant authorities to look the other way. But for the multinationals that buy the products, no such corruption is required. All they have to do is…not ask. They don’t want to know.

Melamine isn’t hard to detect. Some people say that in the high percentages involved here (in some cases thousands of times above the safety level for human consumption), the adulteration is visible with the naked eye. Did Cadbury, Kraft, Mars, Danone, Dean Foods and the baby formula merchants ever ask themselves why they were able to buy milk so cheaply in China, even though the world market determines much of the price of farmers’ inputs there? Did they ever bother to test either the milk they bought or the products they made with it?

Like the owners of famous labels in trainers, clothing, toys, electronics, etc. etc., made in China for the world market, they just didn’t really want to know.

Global Criminals

Sanlu, it turns out, is not a wholly Chinese company after all. Somewhat less than half of it (43 percent) has been owned by a New Zealand dairy giant, Fonterra, itself a cooperative owned by NZ dairy farmers (who probably, like dairy farmers in other countries, are actually run and squeezed by the co-op they supposedly own, whose real loyalty is to broader financial interests). Fonterra bought into Sanlu in 2005 for $150 million, and since then has invested another $200 million in the company. The New Zealand enterprise says that although its representatives sit on the Sanlu board, it has no operational responsibilities, and was unaware of the problem until August (a mere month before the scandal exploded), when the Chinese board members overruled the New Zealanders in regard to going public.

Didn’t the New Zealand dairy company wonder why Chinese milk was so cheap? Did they wonder about the secret to Sanlu’s success—known as a “poor people’s” product, its baby formula was one of the cheapest? Didn’t they remember the major scandal in China in 2004, when 13 Chinese infants fed bogus formula died of malnutrition? Didn’t they ever conduct any testing themselves, even in the interests of protecting their own investment? Did they stuff $200 million into expanding the company’s facilities without having the slightest idea of what was going on? Diluting milk with water happens all over the world, and apparently the use of melamine was an open secret throughout the province, and to some degree elsewhere in China and East Asia. Didn’t they talk to anyone in the industry or follow Chinese blogs? Didn’t they even have someone just take a glance at the milk? Or did they just not want to know?

After September, Fonterra reduced its holdings in Sanlu. The public explanation was that the brand was irrevocably tainted. Another possible factor is this: if public scrutiny means that Sanlu can’t use adulterated milk, it can’t be so profitable anymore. In 2007-08, it booked record profits per kilo of milk sold. That won’t happen this year.

What about the argument that all this is due to the fact that China is still in the early days of capitalism, like the West before government inspection and regulation of food was established?

Consider this: melamine is very toxic and conceivably carcinogenic (since it’s not supposed to be eaten in the first place, its effects on humans hasn’t been sufficiently studied). The amount allowed in food products in Europe and the U.S. is strictly regulated (although the American authorities allow almost 20 percent more than in Europe). For babies, the tolerance level is supposed to be zero.

Yet in the wake of the scandal in China, the authorities in many Asian countries began to test all foods containing dairy products. They found some melamine in almost all of them, and fairly high levels in some, including the biggest global brands. Some of these products were made from Chinese milk, and some not. One factor may be that adding melamine to milk is not confined to China. But the brands accused, notably Nestlé, have come up with another excuse: that melamine enters food products from the plastic they are wrapped in. Why hasn’t this come out before, and the potential hazards evaluated and dealt with?

These companies aren’t just corrupt. They’re normal capitalist enterprises—these culpable dairy and food companies aren’t so different from the cigarette corporations that have fatally poisoned so many million human beings, or any other kind of capitalists who must submit to the supremacy of the market and the dictates of profit if they want to stay in business.

A World to Win News Service is put out by A World to Win magazine (aworldtowin.org), a political and theoretical review inspired by the formation of the Revolutionary Internationalist Movement, the embryonic center of the world’s Marxist-Leninist-Maoist parties and organizations.

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