China’s 12th five-year plan expounded the key goal of reforming China’s food safety environment and the safety and quality of foods circulating in the supply chain. The State Council’s aims were to modernise China’s food industry, aligning it with international standards. It also includes an internal shift towards the “new normal growth” where sustainability was emphasised and key economic drivers would diverge from the traditional reliance on primary and secondary industries and be slowly replaced by an economy fueled by consumerism.
China’s food sector shoulders the leviathan burden of feeding some 1.4 billion citizens and a 300 million strong middle class demographic with a penchant for high quality, safe and authentic imported pre-packaged foods. With this in mind, China’s food sector has been earmarked as a key battleground and much of China’s new food safety policies particularly the contents of its new food safety law have been shaped by these underlying impetuses.
China’s Food Safety Roadmap: Steering China towards its New Food Safety Law
Under the 2013 plans the new face of China’s food industry was to be characterised by:
- Centralised regulation by the China Food and Drug Administration (CFDA) of the entire food supply chain with the devolution of certain regulatory responsibilities to provincial authorities under its oversight;
- stricter regulation of key food industry sectors (infant formula and other dairy, health foods, foods for special medical purposes [FSMP] etc.);
- relative deregulation of other sectors;
- an overall shift towards a self-regulating industry and increased post-market supervision by authorities (except infant formula, dairy, health foods, etc.);
- refinement and optimisation of China’s national food safety standards; and
- improvement in the quality and safety of edible agricultural products circulating in the food supply.
The most important change in China’s food safety roadmap was the formation of the CFDA. In the CFDA, China had, for the first time, a single centralised authority tasked with regulation and administration of the entire domestic food supply chain. This was a significant step for a supply chain which had, in the past, been plagued by inefficiency, redundancy and overlap caused by inefficient regulation on the part of some 10 different ministries. However, to realise much of the new plans, it was clear that a new legal basis for administration was required just four years after China implemented its first ever food safety law.
Since March 2013, China has been ultimately working towards the promulgation of two key legislative documents which will serve as the foundation for future developments in China’s food safety environment. These are China’s New Food Safety Law which was promulgated on 1 October 2015 in addition to the development of the China’s Food Safety Law Implementation Rules (still in draft stage) which will flesh out the basic details articulated in the 2015 law.
The Strictest Food Law in History or a Bark Worse than its Bite
As stated, China’s food safety law was released on 1 October 2015 and was the culmination of extensive work spearheaded by the CFDA in conjunction with the General Administration of Quality Supervision, Inspection and Quarantine
(AQSIQ) and the National Health and Family Planning Clinic
(NHFPC). It was widely billed as “the strictest food law in China’s history”. There were huge anticipation and anxiety surrounding the release and many international stakeholders were fearful of a beefed up regulatory regime that would impose prohibitive technical barriers to trade and block market access to both established industry and potential investors.
After 10 months since its launch, many of the “fire and brimstone” predictions of a massively reformed system with prohibitive technical barriers to trade have proven largely unfounded with some key exceptions, especially for the infant formula sector.
Let’s take a look at some of the key articles of the food safety law and its practical implementation and briefly analyse the key implications for stakeholders. Let us also quickly scan the horizon for any pipeline changes to food safety and market access requirements in the offing:
The New Food Safety Law: Key Legislative Articles and the Reality of Practical Implementation
Legislation: Centralisation of regulatory responsibility and chief oversight on all food supply chain elements to CFDA with the devolution of certain supervisory and inspection issues to provincial authorities and other ministries and departments.
Touted as the panacea to China’s overly-bureaucratic administrative inefficiencies, the elevation of CFDA to a ministerial-level agency with the sole purview over China’s food supply chain has certainly improved some of the old problems and likely contributed to its food safety scandals. The “too many cooks spoiling the administrative broth” issues are however still raising their ugly head. Although regulatory responsibility is clearly articulated within the new food safety law, conflicting information from CFDA and AQSIQ and their sub-departments is still a major headache for the industry. In addition, regional disparities in the “interpretation” of regulation and legislation amongst the provincial authorities of both subordinate provincial CFDA and AQSIQ departments are a consistent source of problems for importers and international business using different ports throughout China.
Legislation: Greater regulatory requirements for “special foods”. Special foods in China include infant formula, health foods and nutrient supplements and FSMPs.
A whole section of the food safety law has been dedicated to dealing with these industry sectors. Since the promulgation of the food safety law, a slew of supporting regulations for each of these sectors has been drafted, refined and implemented. Huge changes in the regulation of infant formula, health foods and FSMPs are having a massive financial impact on the industry and providing new opportunities for growth.
Legislation: Goods sold through e-commerce must adhere to the requirements of China’s food safety law.
E-commerce and China’s own brand of cross-border e-commerce is one of the most significant developments within China’s food industry in the last several years. Staggering growth rates and billions in revenue every year makes e-commerce an extremely important issue coming just behind infant formula in terms of total significance. The paradox of spending hundreds of millions of RMB on food sector administrative reform, building technical and supervisory capacities, developing new legislation, product standards and imposing strict new requirements on market entry of special foods seems absurd given the state-sanctioned sale of all categories of imported goods through e-commerce and cross-border e-commerce without basic regulatory compliance. This is in direct violation of almost every article of the new food safety law. However, there are some extremely complicated forces at play here that are significant for the stability of China’s economy and the potential to realise its food industry driven economic development plans that help to explain the “Dr. Jekyll and Mr. Hyde” role being taken by China’s authorities on this issue. Changes have been made in the last couple of months which if enacted will mean a stop to many of these practices, but again given the significance of this sector nothing is certain.
Legislation: Refinement and optimisation of China’s National Food Safety Standard System.
In the past, China had over 5,000 food safety standards, and needless to say it was a mess. For domestic enterprises, regulatory compliance and new product development were difficult but for international stakeholders, it was almost an impossible task to wade through thousands of documents and resolve on a specific compliance and market entry strategy. Therefore, most were reliant on partners with relationships with regulatory authorities in customs and food inspection bureaus. As such, one of the key focuses of reform in China’s food safety administrative network was the consolidation of overlapping standards, the updating of old regulations, the deletion of unnecessary standards and the formulation and development of new scientific standards designed to meet state-of-the-art requirements. The most recent news is that China’s 5,000 standards have been whittled down to just 683. Four hundred more standards are pending release in 2016.
Clearly, there still remains a lot of issues to be ironed out, better clarified and ultimately implemented to really achieve the goal to modernise China’s food industry, aligning it with international standards.
Paul O’Brien is a seasoned Food Regulatory Analyst with Chemlinked and has in-depth experience of regulatory affairs in China.