The party-state, business and a half kilo of milk: a study of the dynamics of regulation in China’s dairy industry

This thesis examines the challenge of regulation in China’s dairy industry—a sector that went from being the country’s fastest growing food product to the 2008 melamine-milk incident and a nationwide food safety crisis. In this pursuit, it attempts to bridge the gap between analyses that view food safety problems through the separate lenses of the state regulatory apparatus and industry governance. It offers state-business interaction as a critical and fundamental component in both of these food safety mechanisms, particularly in the case of China where certain party-state activities can operate within industry chains. Using this framework, it traces party-state involvement in the dairy value chain from the industry’s initial takeoff in the late 1990s and early 2000s through the years leading up to and following the melamine-milk incident. It reveals that the realities of upstream dairy production diverged significantly from party-state and industry demands, creating space for food safety issues. At the same time, state-business interaction—particularly at the local level—limited the ability of actors to address these vulnerabilities. It constrained coordination and control between lead firms and their suppliers, between chain actors and party-state institutions and within the operations of vertically integrated enterprises. In sum, dairy’s regulatory challenges stemmed from structural issues in the way that the party-state interacted with business, and not necessarily from a lack of appropriate legislation or value chain models. The thesis draws on fieldwork conducted from 2009-2010 and incorporates material from relevant government policy as well as from a set of internal documents detailing the operations of a particular Chinese dairy processor, here called “Company X,” one year prior to the melamine-milk incident.