SHANGHAI: MILK NOT DOING THE BODY POLITIC ANY GOOD

C O N F I D E N T I A L SHANGHAI 000513


STATE FOR EAP/CM AND DRL
NSC FOR LOI

E.O. 12958: DECL: 11/25/2033
TAGS: PGOV PHUM SOCI ECON EAGR CH
SUBJECT: SHANGHAI: MILK NOT DOING THE BODY POLITIC ANY GOOD

REF: A. (A) SHANGHAI 498

B. (B) SHANGHAI 427

CLASSIFIED BY: CHRISTOPHER BEEDE, POL/ECON CHIEF, US CONSULATE
SHANGHAI, DEPARTMENT OF STATE.
REASON: 1.4 (b),(d)


Summary
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1. (C) Public reaction to the recent milk scandal remains muted
in Shanghai even as local stores have faced difficulties
stocking an adequate supply of imported milk. Observers say
Shanghai residents are angry about the food safety lapse, but
the situation has not led to social instability in large part
because people feel powerless to do anything. Shanghai legal
scholars told Poloff that Chinese laws also offer little support
to victims of the scandal, as local governments still reserve
the right to block class action lawsuits. End Summary.


Public Reaction Remains Muted
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2. (C) More imported milk has appeared on Shanghai store shelves
in the past ten days as the market recovers from a reported
supply and demand problem that caused shortages of imported milk
earlier in the month (Ref A). Despite the market fluctuations,
Shanghai public reaction to the milk scandal -- nearly three
months after Chinese media first reported cases of dairy
products contaminated by melamine -- remains muted with no
incidents of social instability or reports of political
casualties (see also Ref B). Local residents appear to have
returned to drinking Chinese brands of milk.


Angry but Feeling Powerless
--------------


3. (C) Observers said Shanghai residents are angry about the
food safety lapse despite the appearance of relative calm. Lu
Hanlong, Director of the Sociology Department at the Shanghai
Academy of Social Sciences, said food safety remains a "big
social problem" in East China, and affluent consumers are paying
more attention to food safety concerns by closely reading the
packaging of food before purchasing it. Shanghai consumers,
however, primarily view the milk scandal as a "northern" problem
since Sanlu, the main culprit, is based in Hebei Province, Lu
said, so the public's anger has not resulted in a major
political or social impact. Consumers also apparently continue
to trust official pronouncements by the local government; for
example, one Shanghai resident told Poloff she began to buy
Guangming (Bright Dairy) products again as soon as they were
declared "safe" in early October.


4. (C) Another reason the milk scandal has not led to social
instability in Shanghai is people feel powerless to do anything.
Everyone knows there is no social justice, said Zhang Renren, a
Shanghai-based businessman who is well connected politically,
but they do not care and are apathetic because they know they do
not have a voice in the political process. Pointing to the
November 15 multi-fatality collapse of a subway construction
site in Hangzhou, Zhang said he is pessimistic that public
safety problems (including the milk scandal) will be adequately
addressed by the government.


Legal Scholars: Class Action Suits Offer No Hope
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5. (C) Shanghai-based legal scholars likewise hold little
optimism for adequate governmental action to address public
safety concerns, stating that Chinese law offers little hope to
victims of the milk scandal. Zhang Wusheng at Fudan University
Law School told Poloff on October 27 that most lawyers in
Shanghai would support adopting U.S. practices on class action
lawsuits, particularly to address food safety problems.
Unfortunately, however, local governments still have the right
to block class action lawsuits from being accepted by local
courts, Zhang Wusheng said, and especially in developed areas
like Shanghai, courts will not accept class action lawsuits
because the local government believes the suits will lead to
social instability. The only recourse for victims of the milk
scandal, therefore, will be offers of compensation by local
governments, he predicts.


6. (C) Zhang Wusheng lamented that the inability of citizens to
band together for class action lawsuits is yet another example
of China's lack of judicial independence. Tong Zhiwei, a law
professor at East China University for Politics and Law, agreed,
stating that in the milk case, "judges' hands are tied." With
local courts controlled by local governments, and with local
officials afraid that class action lawsuits would overwhelm
courts if they were permitted, there is "no room for judicial
independence," Tong said.


Comment
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7. (C) Shanghai-based observers offered a pessimistic view of
the inability of local governments, civil society, and the
courts to address public safety concerns such as the milk
scandal. While local residents might be angry about food safety
problems, few have protested because either they are privileged
by Chinese standards and are not concerned about the plight of
poor Chinese who are sick or whose children have died as a
result of contaminated milk powder, or they are poor residents
in a relatively wealthy part of China who feel they have no
voice in the political process and no legal recourse. Either
way, the milk scandal further demonstrates that in Shanghai,
economic development has not led to commensurate political or
legal reform.

CAMP