Other infant formula makers besides Abbott have faced Cronobacter contamination and operational deficiencies, documents show

"Rigorously managing the environment" is particularly important, experts say.

MEANS THEY ARE CLEANING UP THEIR MESS

BySasha Pezenik and Sony Salzman
July 30, 2022

Some of the operational deficiencies that helped trigger the massive shutdown of Abbott Nutrition's infant formula plant earlier this year have also been found at some other companies' factories, according to an ABC News investigation of some of the other formula makers that have stepped in to help fill empty American grocery shelves in the midst of the critical nationwide shortage.

The pathogen that prompted those concerns, Cronobacter sakazakii, can be widely found in the environment -- but in infants, it can be deadly.

Its discovery inside Abbott's Sturgis, Michigan, plant prompted a massive voluntary formula recall in February, after four babies who had consumed Abbott's formula contracted a Cronobacter infection. Two of the infants subsequently died, although Abbott maintains there has not been conclusive evidence that its formula caused the infant illnesses, since none of the Cronobacter strains found at their plant matched the two samples genetically sequenced from the sickened infants.

Ultimately, it was the combined findings of Cronobacter inside Abbott's plant -- along with a pattern of serious operational deficiencies and consumer complaints -- which led to its closure.

Abbott's shutdown ricocheted across the country, exacerbating the supply shortage and forcing families to scramble for alternatives in the hyper-concentrated formula market. In the wake of Abbott's recall, other companies jumped in to ramp up manufacturing to help mitigate the strain.

Yet within the last five years, those companies -- Reckitt's Mead Johnson, Gerber, and Perrigo's PBM -- have also not been immune to operational and even contamination-related concerns.

Nearly a decade's worth of FDA inspections obtained through the regulatory intelligence company Redica Systems and reviewed by ABC News have found the presence of Cronobacter in environmental sampling, in critical and high-hygiene areas, and even in finished product from some of these formula manufacturers' American plants.

In some cases, investigators found crucial equipment in a state that could nurture the spread of potentially dangerous pathogens, according to inspection reports.
'Rigorously managing the environment'

Cronobacter is exceptionally hardy, experts say. It is also "fairly common" in places like soil -- but that's exactly why "rigorously managing the environment" in formula factories and "taking proactive steps to prevent pathogens from creeping into our foods" are particularly important, food safety expert Scott Faber told ABC News.

Akin to a restaurant health inspector, the FDA performs no-notice inspections of U.S. manufacturing facilities to ensure companies are complying with manufacturing and cleanliness standards; they also perform inspections when alerted by a company that product contamination has been found -- or when consumer complaints prompt a for-cause probe into whether the company is upholding an acceptable standard.

Normally fully stocked shelves of baby forumala are empty in a Target store in Queens, New York, June 23, 2022.
Universal Images Group via Getty Images, FILE

ABC News has reviewed FDA inspection documents for the three other domestic companies which, along with Abbott, have been responsible for roughly 90% of the country's formula market.

The right set of circumstances can compound a perfect storm of risk factors for potentially dangerous pathogens to survive, experts say -- and that's especially worrisome when a contaminant like Cronobacter lurks where food is made for babies, who are among those most vulnerable to that germ.

"Especially for sensitive populations, that quality control is so important. You don't want contamination to rise to a level where it becomes a problem," Dr. Amy Edwards, a pediatrician and associate medical director for infection control at UH Rainbow Babies & Children's Hospital in Ohio, told ABC News. "That's why inspections are meant to be incredibly invasive -- we have to get close enough to zero contamination levels to be safe."

Mead Johnson

In August 2021, FDA investigators made a routine visit to Mead Johnson's plant in Evansville, Indiana, where it has operated for more than a century. An inspection report notifying the company's management of objectionable conditions, called a Form 483, was issued, after investigators found the plant's data wasn't recorded frequently enough to ensure proper sterility of their product.

FDA investigators said that company records indicated Cronobacter was found in one of the plant's rooms, and that the area was subsequently sanitized. A plant operator was observed not washing his hands between glove changes, and not changing his gloves between touching non-food and food contact surfaces.

The employee was subsequently retrained, Mead Johnson told the FDA, according to inspection documents. But it was not the first time investigators had flagged concerns at one of Mead Johnson's plants.

In late 2017, seven investigators visited Mead Johnson's plant in Zeeland, Michigan, after the company had alerted the FDA that two finished batches of Enfamil formula -- batches that had already been exported from the country -- tested positive for Cronobacter. An FDA inspection revealed that Cronobacter had been found "in critical and high hygiene areas of the processing environment on 26 occasions" between mid-January and late August of 2017, documents obtained by ABC News show.

FDA investigators also said they found Cronobacter specifically in areas that risked leading to "potential contamination" of "food contact surfaces."

The potential problems the FDA discovered at the plant were addressed in time for later inspections -- but food safety experts told ABC News these issues can become a serious problem if not immediately dealt with.

"Cronobacter is an environmental pathogen -- it's everywhere," food safety attorney Bill Marler said. "But it's really, really bad to have it in infant formula."

Mead Johnson's plant had "multiple wall leaks," nonconformity reports reviewed by the FDA said, as well as "equipment condensation" in areas where positive Cronobacter samples were later found.

"Leaks are the bane of infection control," Edwards said. "Water is life; if you're not controlling your water, then you are not controlling your bacteria."

The Zeeland facility submitted a corrective action plan, promising "increased frequency of cleaning the areas where positive results were identified, evaluation and inspection of equipment" and "repairs to equipment and the facility as needed."

FDA investigators followed up with the Zeeland plant in spring 2018. The facility had retooled its sanitization procedures, implemented dryer inspections, and made repairs to flooring, water infiltration, and caulking.

MORE: Baby formula maker Abbott reopens Michigan plant amid shortage

Returning in March 2019, investigators noted the plant's environmental monitoring program had identified and mitigated several instances of Cronobacter in various areas of the plant.

In a statement to ABC News, Reckitt, of which Mead Johnson is a division, maintained that the company manufactures their formula "using the highest standards for quality and safety," adding that whenever the FDA finds an issue they "immediately develop and implement an action plan to address the issue."

Reckitt said they "regularly review and enhance" their facilities' manufacturing processes "and invest in new technologies and equipment," adding that their "robust operating protocols meet or exceed the highest regulatory standards," which they employed while "safely" increasing infant formula amid the shortage.

An FDA spokesperson, when asked for comment regarding their investigators' findings of Cronobacter at multiple formula companies' facilities, said the agency "takes its responsibility seriously" to ensure the rigorous safety of American foods, and that the agency is reexamining whether more can be done.

First Lady Jill Biden, joined by Surgeon General Vivek Murthy, delivers remarks after a shipment of infant formula, sent in through Operation Fly Formula, arrived at Dulles International Airport in Dulles, Va., May 25, 2022.
Stefani Reynolds/AFP via Getty Images

Based on a "close look at recent and historical findings" from inspections, the FDA spokesperson said, "We will be looking at what additional strategies could be employed to better prevent microbial contamination during the production of powdered infant formula," adding the agency is "conducting an evaluation" of their response to the formula crisis "to determine what additional steps should be taken to ensure the maximum effectiveness of agency programs and policies related to infant formula and medical food."

Nevertheless, said the spokesperson, "It is important to note that it's a firm's responsibility to ensure the consistent quality and safety of the products they produce."

"We are most interested in how aggressively a firm addresses and responds to potential contamination," the FDA spokesperson said.

Steven Lynn, the former director of the FDA's pharmaceutical Office of Manufacturing and Product Quality, told ABC News that manufacturers' oversight "must be robust to assure no adulterated product reaches the vulnerable infant population they serve."

MORE: Baby formula timeline: Plant posed a risk last fall

"It sounds easy, but it's not," said Lynn, an expert on good manufacturing practices. "Problems can and do occur. That's a fact of life."

Lynn, who reviewed the inspection documents obtained by ABC News, noted that there appear to be "problematic similarities" among some of the formula manufacturers' lapses in quality control, including "issues with inadequate process controls, including cleaning, sampling and ultimately controlling the production environment to assure there is no microbial contamination," he said.

Lynn said that FDA investigators did what they were supposed to do: identify deficiencies for the companies to fix.

"The key is making sure the issues are thoroughly investigated, and then implementing robust solutions to correct and prevent them from reoccurring in the future," in order to ensure that "safe formula is on the market," Lynn said.
Gerber

In August 2021, FDA investigators made a routine visit to Nestlé Nutrition's Gateway facility in Eau Claire, Wisconsin, which makes Gerber products. They found "dirty scoops used during the previous production day" lying on a stainless steel table in one of the raw material rooms, and "debris" on the floor.

It was determined that some cleaning activities were resulting in water getting "trapped in cracks in the floor" and "onto equipment located on lower decks."

In addition, Cronobacter was detected in an in-process powder sample of infant formula.

The finished lot of that product was immediately destroyed.

FDA investigators discussed their findings and suggested remedies with management, but did not issue a Form 483 at that time, according to inspection documents reviewed by ABC News.

MORE: Abbott, FDA were warned about formula plant a year before recall

A Gerber spokesperson told ABC News that their infant formulas go through up to 500 quality and safety checks, "many of which are above and beyond regulatory requirements."

"If we find Cronobactor or any other contaminant in the product, that is when we take the most extreme reaction," Scott Fitz, Vice President of Technical & Production for Gerber told ABC News.

"All the product in that batch is blocked, and all the batches around that product are blocked," he said, adding that the company thoroughly investigates the contaminant's origins and destroys any impacted product.

"Given the sensitive consumer we're dealing with, we can't take the chance of it getting to shelf," Fitz said. "This isn't about regulation, it's about doing what's right."
PBM Nutritionals

After a routine visit in August 2019, the FDA issued a Form 483 identifying a cold storage temperature regulation deficiency at the Milton, Vermont, plant of PBM Nutritionals, a subsidiary of Perrigo, which makes store-brand formulas for retailers like Walmart and Amazon.

Investigators found that some of the facility's data was not specific enough "to ensure there is no significant growth of microorganisms of public health significance" in their storage tanks. Documents provided by the company to the FDA noted a recent roof leak had overwhelmed the drainage system, and that, upon inspection, environmental sample swabs tested positive for Cronobacter before additional cleaning.

In a statement to ABC News, Perrigo said they are "proud" of their compliance track record, adding that the Cronobacter within the plant had been found by their own self-monitoring, rather than by FDA investigators.

"Our facilities in Vermont and Ohio are in good regulatory standing and remain compliant with all FDA processes and procedures," they said.

Perrigo said they had hired independent experts "a few years ago" to "enhance" their manufacturing processes and protective measures. The company said the experts found their "aging equipment could lead to concerns in the future," so they invested approximately $110 million in improving formula plant quality, and hired an additional 100 quality and sanitation personnel.

MORE: FDA audited over baby formula crisis

Perrigo said that they had addressed the FDA's observation regarding cold storage.

"Our quality control process is a continuous improvement process, and any concerns found are promptly addressed," the company said.

"Everybody knows what the persistent problems are that cause bacterial contamination in product," said Marler, the food safety attorney. "It's cracks, water, old equipment. It's when companies stop realizing they're producing food that is going into the bodies of babies and they start thinking about it as a widget, as a commodity."

Patrick Stone, a former FDA investigator, says factories that make infant formula should be held to a higher quality-control standard than other mass market food products. But too often, he said, "it actually takes an outbreak or something to happen before people wake up and say .... 'Why is this happening?'"
Abbott Nutrition

After inspecting Abbott's Sturgis facility earlier this year, FDA chief Dr. Robert Califf described the "shocking" and "egregiously unsanitary conditions" investigators had found.

"Standing water; cracks in the key equipment that present the potential for bacterial contamination to persist, particularly in the presence of moisture; leaks on the roof; a previous citation for inadequate hand washing," Califf testified before Congress in May. "Many signs of a disappointing lack of attention to the culture of safety, in this product that is so essential to the lives of our most precious people."

Investigators discovered five strains of Cronobacter from environmental sampling of Abbott's plant, and Abbott ultimately agreed to shutter the facility and recall the formula.

Food safety experts ABC spoke with emphasized the importance of establishing -- and adhering to -- a proactive protocol for rooting out risk factors, before they snowball.

"You don't wait for the accident to happen before you build a stoplight," said Faber, the food safety expert. "You probe your factory for where pathogens could be lurking, and then adopt critical controls to eradicate them.

The Abbott manufacturing facility in Sturgis, Mich., May 13, 2022.
Jeff Kowalsky/AFP via Getty Images

"If we're seeing any of the conditions found at Sturgis in other plants, we need to ask whether that philosophy has been sufficiently embraced," he said.

"Abbott has a zero-tolerance policy for Cronobacter in our plants, which is why we took the steps we did at Sturgis," an Abbott spokesperson said. "Our highest priority is getting babies safe, quality formula they need."

Further complicating the matter is that Cronobacter infection is listed as a reportable illness by only one U.S. state: Minnesota, where the first of the four infants was reported infected after consuming Abbott's formula last September.

Because there are no national requirements that Cronobacter be reported, doctors and labs are not required to report cases to their local health department -- which leaves the FDA to rely on consumer complaints and health care providers for on-the-ground data regarding infections.

"Until you increase that oversight, you're going to limp from mini-outbreak to mini-outbreak," Marler said.

A 'stringent enough' system?

In August 2017, a few months before the FDA found Cronobacter inside Mead Johnson's Zeeland plant, a two-week old infant from Illinois was declared brain dead after being diagnosed with a Cronobacter infection. The infant had consumed "multiple lots of Enfamil Newborn Premium ready-to-feed liquid milk product at the hospital, and some product was sent home with the parents," FDA inspection reports say.

But FDA sampling of the available formula was negative for Cronobacter.

Reckitt told ABC News they "cooperate fully with the FDA to investigate consumer complaints," underscoring that their formula had never conclusively been proven as the cause of an illness.

In the case of Abbott, too, no conclusive causation has been proven between the Cronobacter found at the Sturgis plant and infants' illness or death. Nevertheless, FDA chief Califf noted in congressional testimony that "we cannot rule it out either, as the confluence of events is highly unusual. There is no dispute that the facility was unacceptably unsanitary."

Food and Drug Administration Commissioner Robert Califf attends a hearing in Washington, April 18, 2022.
Xinhua News Agency via Getty Images, FILE

"There is some room for human error, but not for persistent human error," said Edwards. the pediatrician. "You have to have your process in place. And you have to have a process for monitoring your process to make sure it's always being followed."

When several controls fail at once, it risks prompting an unfortunate domino effect and "raises important questions about whether our current regulatory system is stringent enough," Faber said.

The FDA spokesperson told ABC News that the agency is assessing whether their annual surveillance inspections of formula facilities should include more environmental sampling going forward, albeit in a way that "minimizes any disruptions to the supply chain."

In June, ABC News was first to report that the Health and Human Services' Office of Inspector General had launched an audit into how the FDA responded leading up to the recall and closure of Abbott's Sturgis plant.

The CDC says Cronobacter infections are rare, but serious in infants -- noting that powdered formula can be contaminated at a processing facility, or at home. Because Cronobacter can survive so well -- on kitchen counters, on sinks, or in a manufacturing plant -- the CDC recommends that families using formula wash hands frequently around infants, thoroughly clean bottles, and safely store any powdered formula, or, if possible, use liquid formula.

"There are babies out there whose lives depend on formula. So what happens when the thing that you're giving your baby is actually the thing that makes them sick?" Edwards said. "That is incredibly scary. For parents, for all of us."

ABC News' Eric M. Strauss contributed to this report.

Stopping the autocratic spread in Southeast Asia

30 July 2022

Author: Salvador Santino F Regilme Jr, Leiden University.

Alongside the global decline of democratisation, the spread of authoritarianism and deterioration of human rights in Southeast Asia continues at an accelerated pace. The region appears to be on a trajectory towards autocracy, with countries undoing their progress towards democracy.

Indonesia — the region’s largest electoral democracy — has witnessed the deterioration of civil liberties, an expanded military presence in civilian politics and increased influence of political dynasties. Both Laos and Vietnam remain under their own forms of Leninist dictatorship, while Singapore has long been under a one-party authoritarian rule where political opposition is effectively curtailed. Brunei remains an absolute monarchy with severe problems in the harshness of its justice system. Cambodia has been a constitutional monarchy under the nearly four-decade personalistic rule of Hun Sen.

There are only two countries in the region that possess a relatively longer history of electoral democratic governance — Thailand and the Philippines.

Since 2010, Thailand and the Philippines — two of the region’s largest post-Cold War constitutional democracies — have demonstrated a remarkable shift to autocracy. Both countries are middle-income and emerging economies with a long-standing treaty alliance with the United States. If Thailand and the Philippines stand as Southeast Asia’s only nominal democracies and US allies, how can the regional shift to autocracy be curtailed?

After the fall of prime minister Thaksin Shinawatra’s administration, Thailand has been haunted by military juntas and political crises. The militaristic National Council for Peace and Order has been blamed for widespread human rights abuses. Since the 2014 coup, China has emerged as a key patron of military defence and political support for the Thai state despite Bangkok’s security commitments with Washington.

Thai elites have welcomed China’s patronage, which emerged in an effort to fill the absence of US support that has dried up as the country declines towards militaristic autocracy. Beijing has capitalised on its increasingly active economic trade relations with Bangkok, forming what is now dubbed by China’s State Council the ‘comprehensive strategic cooperative partnership’. Thailand has responded by positioning itself directly within China’s sphere of influence.

In the Philippines, the post-1986 constitutional order — the liberal constitutional democratic system that emerged after the collapse of Ferdinand Marcos’s brutal dictatorship — dramatically deteriorated when Rodrigo Duterte assumed the presidency in 2016. The ‘war on drugs’, the persistent red-tagging, the forced closure of the nation’s largest media conglomerate and the systemic harassment of political opposition leaders demonstrates how the state abandoned its commitment to human rights.

During the 2022 national elections, Ferdinand Marcos Junior and the incumbent authoritarian president’s daughter, Sara Duterte, registered a record-breaking landslide victory amid widespread disinformation, electoral irregularities, suppression of peaceful political dissent and politically-motivated killings.

The United States had been a key supporter of domestic political, economic and military elites in Thailand and the Philippines, especially during the Cold War years up until the war on terror. While it is in China’s strategic interest to ensure that the political establishments in two of the United States’ enduring treaty allies are amenable to Beijing’s economic and geostrategic interests, that is most likely to happen under an autocratic state that is shielded from any form of dissent.

While the US track record in the region is far from consistent, China’s blatant promotion of autocracy in the Southeast Asian region represents a fundamental threat not only to the further deterioration of democratic institutions but also to the integrity of international law. Beijing’s demand for autocratic stability in Asian countries undermines the emergence of progressive social movements, checks-and-balances amongst various branches of the government and the absence of accountability among abusive state agents.

If there is any hope in stopping the spread of autocracy in Southeast Asia, at least from the perspective of the United States foreign policy establishment, then political support and material resources must be provided to state and nonstate actors that are committed to competitive electoral processes, democratic governance and human rights.

Those actors include progressive civil society groups and independent journalism and media outlets which can counter the widespread disinformation perpetrated by autocratic elites. Military and state elites who are committed to re-establishing democratic civilian control and opposition politicians who have been consistent in upholding the interests of those in the margins should also be supported.

Salvador Santino F Regilme Jr. is an Assistant Professor in international relations and human rights at the Institute for History at Leiden University, the Netherlands.

 https://www.eastasiaforum.org/

 

China’s women students escape tradition at home

29 July 2022

Author: Fran Martin, University of Melbourne

In recent years, the Western media has depicted Chinese international students as either a worrisome source of political influence or an economic resource to be secured post-COVID-19. The gender perspective has rarely featured in discussions — even though a majority of Chinese students in Western countries, including Australia, are women.

Chinese women currently studying abroad are a historically unique cohort. They are largely from China’s wealthier first- and second-tier cities, and belong to China’s most highly educated generation of women. Due to the combined effects of the one-child policy and the growth of China’s middle classes since the 1980s, they have unprecedented parental resources available to them to support their studies.

In China’s post-socialist society, a powerful, state-endorsed neoliberal-style discourse of individual self-reliance and competitive self-advancement appeals to these well-resourced young women. It nurtures their ambitions to achieve personal fulfilment and career success through investment in education.

Yet a resurgent gender neo-traditionalism is causing misgivings about these women’s ambitions. The manifestations of this trend range from the mockery of women with PhDs as a sexless ‘third gender’ and the state-led disparagement of unmarried women over 27 as ‘leftover women’ to the jailing of feminist activists.

It seems that both China’s government and conservative public opinion fear young, middle-class urban women’s self-transformation going ‘too far’ as a result of the new opportunities available to them. This leaves these women in a conundrum. They are caught between their own desire for self-advancement and strong social pressure to follow a standardised feminine life script that would see them married with children by age 30.

For many women, studying abroad offers an attractive alternative, an ‘escape route’ — whether temporary or permanent — from intense gendered pressures at home. This route is more accessible than ever, despite recent COVID-19-related disruptions. Yet this too produces gendered anxieties.

In Chinese popular media, women studying in Western countries are associated — often negatively — with the de-traditionalisation of their sexual and gendered identities. Popular WeChat accounts have published articles claiming that ‘there are many leftover women among overseas graduate returnees’.

These accounts range from conservative laments about the ‘tragedy’ of unmarried, educated women to the bravery of women resisting neo-traditionalist pressures. A more openly misogynist online stereotype, which has been criticised by female netizens, paints overseas female students as ‘loose’ women corrupted by Western sex culture, who should be avoided as marriage partners.

The idea that studying overseas risks young women abandoning neo-traditional gender ideals is reflected in the personal experiences of students. The recently published book, Dreams of Flight, revealed mothers’ fears that their daughters could become ‘left over’ as a result of studying abroad. Chinese men similarly complained that studying overseas makes women ‘too independent’ and unsuitable as wives.

Studying overseas transformed the sense of self and life plans of the cohort of women studied in Dreams of Flight in complex ways. After several years abroad, graduates describe a series of changes in themselves — changes that differentiate them from female relatives and friends who remained in China. Overseas graduates feel that they have become more personally and professionally ambitious. They also feel they have broadened their cultural horizons and developed a higher tolerance for unconventional ways of living compared to their peers who stayed in China.

These changes relate to transformations in gendered identity. Graduates feel that — thanks to years of living independently at a distance from the surveillance of their relatives — they have become more self-focussed. They are more inclined to put their own individual needs and desires, rather than those of their family members, at the centre of their life plans.

For this cohort of graduates, educational mobility results in increased gender de-traditionalisation. Many can no longer relate to their female peers’ desires to get married and have children on the schedule set by mainstream Chinese state and public opinion. They instead hope for lives shaped by more personal desires like ongoing travel, further study and other projects undertaken for pleasure and self-enrichment rather than duty or convention.

Whether these graduates will be able to realise their collective desire to shape their lives in defiance of gendered conventions remains to be seen. What is clear is that they embody a historical paradox. It is the state-led economic, educational and cultural transformations of the past 30 years that have enabled the emergence of this generation of ambitious young women and allowed them to travel far and wide for their education. Yet, as we have seen, the kind of women they are becoming as a result of these transformations makes the official culture nervous.

While conservative voices at home are trying to rein in these women’s unconventional desires and encourage a return to neo-traditional gender roles, it may prove difficult to persuade this particular genie to return to her bottle.

Fran Martin is Associate Professor and Reader in Cultural Studies at The University of Melbourne.

https://www.eastasiaforum.org/

Can aquaculture meet China’s demand for food?

27 July 2022

Author: Yu Sheng, Peking University

China has made great efforts to meet increasing domestic food demand over the past four decades. From 1978–2021, China’s real agricultural output grew on average 5.4 per cent a year (over five times the population growth), with increased diversification towards high protein and high-value products. Yet a substantial gap remains between food demand and domestic supply — and is expected to increase.

In 2021, net imports of grains were 165 million tonnes, including 96.5 million tonnes of soybeans (58.6 per cent) and 10.4 million tonnes of cooking oils (6.3 per cent) and 28.35 million tonnes of corn (35.1 per cent), accounting for around a quarter of domestic production.

Given their high-quality protein and relatively low production costs, aquaculture products are seen as having higher economic value than the livestock industry — both as food and substitutes for feed grains. This makes aquaculture a prioritised industry in China — the world’s biggest fisheries subsidiser — that could help decrease the gap between food demand and supply.

Between 1980 and 2020, the annual growth rate of China’s fishing industry total output averaged 6.7 per cent a year, comparable to the livestock industry (6 per cent a year) for the same period. In 2020, the total output of China’s fishing industry was 65.49 million tonnes, 52.24 million tonnes of which came from domestic freshwater and offshore aquaculture. This makes China the leading aquaculture producer and exporter in the world, accounting for 60 per cent of global aquaculture production in 2019.

Aquaculture in China has experienced an expansion in output, including rapid change in its output structure and way of production over the past four decades. Driven by ongoing policy reforms and increasing economic concerns, China’s aquaculture production focusses on freshwater and offshore aquaculture as opposed to its focus on fish catching in the 1980s.

Offshore aquaculture produced 20.65 million tonnes of seafood in 2020, accounting for 40 per cent of total aquaculture output. Mussels, oysters and scallops ranked as the top three seafood products (accounting for 35 per cent, 28 per cent and 13 per cent of seafood production respectively), while fishery products accounted only for 7.3 per cent of the market.

Regarding the geographical distribution of offshore aquaculture, the majority of offshore aquaculture activities are located along the northern and southern coasts of China’s exclusive economic zone. 46.7 per cent of sea fishing and farming in 2020 came from the Huanghai and Bohai Seas, 29.5 per cent from the East China Sea and 23.5 per cent from the South China Sea. Less than 15 per cent came from far-sea catches.

Looking to the future, increased per-capita food demand in both quantity and quality will further drive up the need for more aquaculture products in China. According to the recent forecast by the Chinese Academy of Engineering, total aquaculture demand and consequently production will grow from approximately 81 million tonnes to 100 million tonnes by 2035. This growth imperative puts great pressure on domestic aquaculture production competing for limited feed supply.

In addition to freshwater aquaculture such as molluscs and carp, higher trophic species raised in offshore waters may also increase domestic supply in the future. The industry needs to substantially increase its production and efficiencies in resource usage. Yet challenges arise from increasing environmental constraints, bottlenecks in technological and feed development, interactions between political narratives and policy development and the availability of seafood and feed resources globally.

To resolve the issues facing future aquaculture development in China, a new guiding principle has been initiated in the 14th Five Year Plan (for 2021–2025). This new guideline emphasises sustainable production for directing future aquaculture development in China and is expected to be achieved through productivity enhancement. As evidence, wild capture fisheries have already been strictly restricted for the 2016–2020 period and their output in absolute and relative proportion of total aquaculture output has been declining over the same period.

Parallel to speeding up domestic production in freshwater and offshore aquaculture, China is also actively extending its capability to outsource increasing demand. On the one hand, China is increasing its efforts in far-sea fishery resource exploration along with increased vessel-building capacity and technological progress. At the same time, China is increasing its trade and investment overseas to increase the import of aquaculture products.

This is a strong indication that China’s current strategy is to move towards a market-based, demand-driven economy for aquaculture products, along with the Belt and Road Initiative. While outsourcing from international markets is an attractive option, this strategy depends on whether China can access sufficient production internationally. Either way, the consequences are expected to have great implications for the rest of the world.

Yu Sheng is Professor in the School of Advanced Agricultural Sciences and Deputy Director of the New Rural Development Institute at Peking University.

https://www.eastasiaforum.org/

Colombo’s controversial new president

24 July 2022

Author: Neil DeVotta, Wake Forest University

On 20 July 2022, Sri Lanka’s parliament voted to make Ranil Wickremasinghe the country’s eighth Executive President until November 2024. That is when Gotabaya Rajapaksa, who fled the island on 13 July, would have completed his term. Gotabaya’s humiliating exit stemmed from ferocious island-wide protests precipitated by Sri Lanka’s worst ever post-independence economic crisis.

Wickremasinghe’s appointment is controversial. He was once considered a highly credible presidential candidate. Yet most Sri Lankans believe he now lacks legitimacy to be president, which is why they opposed his candidacy.

Wickremasinghe’s election is procedurally legitimate. But it is politically less so. He won less than 31,000 votes during the August 2020 parliament elections and his United National Party (UNP) failed to win a single seat. The UNP is a storied party that negotiated Sri Lanka’s independence and Wickremasinghe is related to nearly all its important leaders.

The UNP has withered under Wickremasinghe’s leadership. In the 2020 parliamentary elections it qualified for one of 29 national list seats. This is how Wickremasinghe managed to become a party of one in parliament.

The constitutional prerogative that allows the prime minister to succeed a deposed president assumes that the prime minister will have been elected to parliament. But Wickremasinghe was not elected and is considered to have entered parliament through the back door.

His close ties to the Rajapaksa family is the second reason Wickremasinghe is considered ill-suited to be president. Wickremasinghe shielded the Rajapaksas from prosecution when he was prime minister between 2015 and 2019. The Rajapaksas picked him to be prime minister because they believed that he would continue to protect their interests. He is now branded ‘Ranil Rajapaksa’.

Wickremasinghe’s reputation was further tarnished during the 2015 bond scandal involving the UNP when he was prime minister. Having prevented Mahinda Rajapaksa from winning a third term and campaigning on a platform that promised good governance, the national unity government Wickremasinghe was part of turned out to be as corrupt as its predecessor. In typical Sri Lankan fashion, no one has been held responsible for the scandal.

Wickremasinghe has always sought to be politically relevant. After insisting he would not enter parliament via the national list following the 2020 elections debacle, he went months without nominating anyone from UNP and then appointed himself. His determination to latch on to UNP’s leadership despite successive election losses is why the party split. The breakaway group formed the Samagi Jana Balawegaya (SJB).

After Gotabaya fled to the Maldives, Wickremasinghe agreed to step down as prime minister. But the gazette Gotabaya released conveniently appointed Wickremasinghe acting president. Once Gotabaya resigned, Wickremasinghe became interim president and now he has been elected president.

Sajith Premadasa, leader of the SJB opposition, was supposed to compete against Wickremasinghe. He ended up backing Dulles Alahapperuma, a former journalist with strong ties to the Rajapaksa-led Sri Lanka Podujana Peramuna (SLPP). In exchange for the support, Premadasa was to become prime minister in an Alahapperuma presidency.

Leading up to the secret ballot vote in parliament, it appeared Alahapperuma’s candidacy was building momentum. But the Rajapaksas preferred Wickremasinghe and most SLPP members did too.

Wickremasinghe won handily with 134 votes, while Alahapperuma captured 82 votes. Mahinda Rajapaksa pretends he is sorry to see the SLPP’s candidate losing to Wickremasinghe, but this is what the Rajapaksas preferred. Bribing parliamentarians to secure their votes to pass constitutional amendments or switch parties is now a common practice in Sri Lanka. It appears the Rajapaksas may have resorted to bribery in helping Wickremasinghe get as many votes as possible.

Wickremasinghe’s election does not represent the will of the people. The public already view him as a Rajapaksa stooge. Under his leadership, the Rajapaksas will avoid being prosecuted for their sundry crimes. Gotabaya Rajapaksa is bound to return to Sri Lanka and enjoy a high security retirement. This does not mean that the Rajapaksas would have been held accountable for their economic malpractice and plunder under president Allahapperuma. He too has long operated within the Rajapaksa camp. The family can continue using the SLPP parliament majority to dictate the government’s agenda until the next parliamentary elections.

The struggle to get rid of the Rajapaksas has only partly succeeded. Mahinda Rajapaksa may have been ousted as prime minister but the family continue to be represented in parliament. The protestors wanted Wickremasinghe out, but he is now president — an outcome no one envisioned. And with Wickremasinghe picking former schoolmate Dinesh Gunawardena to be the new prime minister, the Rajapaksa family will also have a strong ally overseeing parliamentary affairs.

Wickremasinghe’s election is bound to rattle China, given its close ties to the Rajapaksa family. On the one hand, China is a major creditor and Wickremasinghe will need the country’s help restructuring Sri Lanka’s debts. On the other hand, the new president has long championed neoliberal economics and is more sensitive to Indian and western interests in the Indo-Pacific. His election, therefore, has geopolitical ramifications as well.

Once Wickremasinghe was elected president, a magistrate’s court barred people from congregating within 50 metres around the statue of SWRD Bandaranaike, Sri Lanka’s fourth prime minister. The statue lies next to the main protest site outside the Presidential Secretariat. The ruling was in response to police claiming that protestors could damage the statue — despite the protestors having gathered at the site for 103 days. Wickremasinghe will not tolerate disorderly conduct, which may herald a more muted struggle going forward.

The protestors’ demands are laudable but come across as utopian. Their struggle also disregards how the country’s majoritarian politics has fanned nepotism and corruption. The now fatigued protest movement may fizzle and this is especially likely if Wickremasinghe can form a cross-party government and minimise the current scarcities. Sri Lanka represents an economy of deficits. It must cough up US$500 million a month just for fuel. Food inflation exceeded 80 per cent in June 2022. Nearly 90 per cent of Sri Lankans are skipping meals.

The island needs to restructure its debts and restructure its economy. How long the pain lasts and how future protests pan out will determine Wickremasinghe’s presidency.

Neil DeVotta is Professor of Politics and International Affairs at Wake Forest University.

https://www.eastasiaforum.org/

 

China’s entrepreneurial capitalism faces a grim future

23 July 2022

Author: Martin Miszerak, Renmin University

In May 2022, China’s Vice Premier Liu He signalled the government’s intention to end its ‘regulatory rectification’ campaign — a raft of regulations imposed on the education, ride-sharing and technology sectors. He is the top economic advisor to Chinese President Xi Jinping — so his message must have been approved by Xi, who seems to have finally awoken to the damage the year-long crackdown has wrought on investor sentiment.

The Heng Seng index dropped by 23.7 per cent between December 2020 and mid-May 2022, a result partly explained by the regulatory crackdown. While the worst appears to be over, the deeper issues caused by the campaign remain unresolved.

One interpretation of the regulatory crackdown is that the campaign is part of Xi’s strategy to steer China towards a Maoist model of governance in which the private sector is significantly downsized and private companies are ‘likely to lose what is left of their independence and become mere appendages of the state’.

Yet recent research contradicts this view as China’s economy is increasingly penetrated by the private sector. In the 2015–2021 period, the number of private Chinese Fortune 500 companies tripled from 9 to 32, while the number of all Chinese Fortune 500 companies — including state-owned enterprises (SOEs) and companies under mixed ownership — increased by only 40 per cent.

Another interpretation is that wealth inequality is the target of China’s tech crackdown. Founders of technology companies are now among China’s richest citizens, a statistic that Xi could see as an ‘excess of capitalism’ and a barrier to ‘common prosperity’. But expropriating the combined wealth of China’s top tech entrepreneurs would have no impact on the country’s massive income inequality. The majority of China’s top 100 billionaires appear untouched by the ‘common prosperity’ imperative.

The most likely explanation for the campaign is that it is an assault on China’s entrepreneurial private sector. The companies targeted include taxi-hailing platform DiDi, Alibaba affiliate Ant Financial, entertainment streaming service Tencent, food delivery platform Meituan and e-commerce company JD.com.

International Management Professor Yansheng Huang’s ‘varieties of capitalism’ framework suggests that these companies eschew business opportunities from state-owned connections, relying instead on their founders’ entrepreneurial genius and international investors. This distance from the state is being disrupted by the crackdown through which the Chinese Communist Party is moving to solidify political control over corporate cash flows.

China’s large private companies have grown through joint ventures with ‘special investors’ — namely SOEs — over the past 20 years. The 2000–2019 period witnessed a fivefold increase in such joint ventures. In 2019, 358 of the 542 largest private companies were directly connected with SOEs, while 73 had indirect connections.

The universe of China’s largest companies resembles a maze in which ‘large private owners are deeply connected to the state and large state owners have deep ties with private owners’. This maze is exemplified by the East Hope Group conglomerate — a corporate group that operates 236 companies, including 15 ‘special investor’ joint ventures.

Though well evidenced, the specifics of these connections are vague and assumed to be beneficial to large private companies. While true, such connections involve SOEs laying claim to private cash flows in exchange for proprietary market opportunities.

These ‘special deals’ involve ‘access money’ — a form of ‘profit sharing with Chinese characteristics’ in which private companies pay for growth opportunities by sharing equity with SOEs, whose leaders likely pay opaque rents to senior Party officials.

A large private company may choose to be ‘disconnected’ from the state when its business model and access to private capital removes the need to pay ‘access money’. This is the case for top tech platforms targeted by the crackdown, whose digital platforms can generate revenue by signing up more users and selling services without the need for ‘special investors’.

DiDi’s extremely slim and transparent corporate structure, as shown in the company’s initial public offering prospectus, is an interesting case. Few state-affiliated investors participated in DiDi’s earlier fundraising rounds, as its founders have always sought to raise capital from world-famous names such as Apple, Temasek and Alibaba. Softbank, Tencent and Uber were DiDi’s principal shareholders after the initial public offering round — a very different world to East Hope Group.

It is hardly surprising that these companies have enraged the CCP. Former executive chairman of Alibaba Group Jack Ma’s criticism of China’s regulatory and financial system may have triggered this fury, but the underlying reasons go much deeper. While these companies raised billions of dollars without paying ‘access money’ and maintained distance from the Communist Party, demand for profit sharing eventually materialised into a government-led regulatory crackdown.

It remains unclear how DiDi’s case will unfold, but much can be learnt from looking back on Jack Ma’s experience with Ant Financial. Though Ant Group might be allowed to proceed with its much-delayed public offering on the Hong Kong stock exchange, the company has paid a steep price. Regulators are pushing for a corporate restructuring in which Ant Financial will take on SOE partners to run what were once privately-owned business units. The future of China’s entrepreneurial capitalism looks decidedly grim.

Martin Miszerak is Visiting Lecturer at Renmin Business School, Renmin University, Beijing.

https://www.eastasiaforum.org/

Explainer: What's driving the power struggle in Iraq?




Supporter of Iraqi Shi'ite cleric Moqtada al-Sadr protest against corruption, inside the parliament in Baghdad, Iraq July 30, 2022. REUTERS/Thaier Al-Sudani


BAGHDAD, July 31 (Reuters) - A power struggle in Iraq between the influential Shi'ite cleric Moqtada Sadr and Iran-backed Shi'ite rivals has escalated with his supporters breaking into parliament and beginning an open-ended sit-in protest. read more

The tussle over who gets to form the next government has deepened a fissure in the Shi'ite community that has dominated Iraqi politics since the U.S.-led invasion that toppled Sunni dictator Saddam Hussein in 2003.

What is the background to the rivalry, why has it escalated, what does this mean for Iraq and what are the risks of violence?

WHO ARE SADR AND HIS RIVALS?

Heir to a prominent clerical dynasty, Sadr is a populist with a fiercely loyal support base and a track record of radical action, including fighting U.S. forces after the invasion and clashing with Iraqi authorities.

He commanded a powerful militia, the Mehdi Army, in the years after the invasion, but officially disbanded it in 2008. Its successor, the Peace Brigades, retains thousands of armed fighters.

He exercises big sway in the state, where his supporters hold many positions. He has emphasised his credentials as an Iraqi nationalist in recent years, opposing the influence of both the United States and Iran.

His Shi'ite rivals form an alliance called the Coordination Framework, which includes Tehran-aligned politicians such as former prime minister Nouri al-Maliki and paramilitary groups armed and trained by Iran.

Many of these groups' ties to Tehran date to the Iran-Iraq war, when Iran supported Shi'ite insurgents against Saddam.

Each side accuses the other of corruption.

WHY HAS THE STANDOFF ESCALATED?

Tensions have worsened since an October election in which Sadr's movement emerged as the biggest bloc with 74 of parliament's 329 seats and the Iran-backed factions' share slumped to 17 from a previous 48.

After failing to overturn the result in the courts, the Iran-backed factions set about stymying Sadr's efforts to form a government that would include his Kurdish and Sunni Arab allies but exclude groups he described as corrupt or loyal to Tehran.

Despite their diminished numbers in parliament, the Iran-aligned groups managed to frustrate Sadr by denying the two-thirds quorum needed to elect a Kurdish head of state - the first step towards forming a government.

Frustrated at the deadlock, Sadr instructed his lawmakers to quit parliament in June. The move ceded dozens of seats to the Coordination Framework, meaning it could try to form a government of its choosing, though this would risk Sadr's wrath.

Eyeing a comeback, Sadr rival Maliki put himself forward to be prime minister - a post that must go to a Shi'ite in Iraq's political system - but retreated after Sadr criticised him on Twitter.

Sadr's rivals then floated another candidate, Mohammed Shiya al-Sudani, seen by Sadr's supporters as a Maliki loyalist. This step appears to have been the final straw for Sadr supporters, igniting the protests.

WHAT DOES THIS MEAN FOR IRAQ?

Iraq has now gone more than nine months without a new government - a record in the post-Saddam era.

The standoff adds to political dysfunction in a country suffering dire public services, high poverty and widespread unemployment despite huge oil wealth and no major conflict since Islamic State's defeat five years ago.

At a time when soaring crude prices have boosted Iraq's oil revenues to record highs, the government has no budget for 2022 and spending on much-needed infrastructure projects and economic reforms has been delayed.

Ordinary Iraqis meanwhile suffer power and water cuts. The World Food Programme says 2.4 million of the population of 39 million are in acute need of food and livelihood assistance.

The paralysis is diverting attention from problems including soaring global food prices, drought and the lingering threat posed by Islamic State.

Outgoing Prime Minister Mustafa al-Kadhimi continues in a caretaker role for now.

WHAT ARE THE CHANCES OF VIOLENCE?

A call by the Coordination Framework for its supporters to rally on Sunday gave rise to concerns of confrontation in the streets, but it then cancelled the demonstrations.

The United Nations has called for a de-escalation, saying "voices of reason and wisdom are critical to prevent further violence". Many Iraqi leaders have also called for the preservation of civil peace.

Sadr has vowed peaceful political action, but is backed up by the armed Peace Brigades and many of his civilian followers keep weapons, stoking fears of armed clashes if the standoff escalates.

Conflict among Iraqi Shi'ites would be bad news for Iran, which has carved out major influence in Iraq through its Shi'ite allies since the United States toppled its foe Saddam.

Iran, which has yet to comment on the latest developments, has previously intervened to quell internal unrest in Iraq.