updated 7/23/2007 3:46:06 PM ET 2007-07-23T19:46:06

China is investigating a state-owned trading company’s role in tainted medicine that killed at least 94 people in Panama, an official said Monday, as the European Union urged Beijing to be more vigilant about product safety.

The developments came as Beijing battled international mistrust about Chinese exports found to contain potentially toxic chemicals and additives. China has recently taken steps aimed at recapturing global confidence in its commitment to ensuring that food, drugs and other products from China are safe.

Last week, quality officials announced that they had shut down the Taixing Glycerin Factory, the company that made the chemical linked to the deaths in Panama, but did not say what happened to the state-owned distributor, CNSC Fortune Way.

“We are currently investigating this business too,” said Li Changjiang, head of the General Administration for Quality Supervision, Inspection and Quarantine.

A woman who answered the phone at the Beijing-based Fortune Way said no one was available to comment.

Fortune Way is a unit of a trading and logistics company under the Cabinet’s Assets Supervision and Administration Commission, which oversees China’s state-owned companies.

Meanwhile, EU Consumer Commissioner Meglena Kuneva said Beijing should improve its product safety monitoring and provide more information about the measures it takes against manufacturers of fake or shoddy exports.

“There is need of more step-up of the reforms on the market and on the market surveillance,” Kuneva told reporters after meeting Li, the quality official. She said talks had been “very open, very frank and very fruitful.”

Over a quarter of all goods the EU imports are from China. In 2006, 924 products — from unsafe lighters to wobbly strollers to short-circuiting kettles — were identified as too dangerous to be sold in the 27 European Union nations, plus Iceland, Liechtenstein and Norway.

China was the country of origin in almost half of all those cases.

“For product safety, China is the No. 1 concern,” said Kuneva’s spokeswoman, Helen Kearns.

Kuneva suggested that China begin issuing quarterly reports on its corrective actions against problem exporters. Kearns said the proposal was “well-received” but no new agreements were signed.

Kuneva was to visit a toy factory in coastal Jiangsu province on Tuesday to see Chinese surveillance at work. Her trip comes ahead of a U.S. delegation, which is scheduled to arrive at the end of the month to discuss the safety of China’s seafood exports.

The United States and other countries have cracked down on Chinese products since the Food and Drug Administration found in April that North American dogs and cats had been poisoned by tainted Chinese pet food ingredients.

In the Panamanian medicine case, Taixing made a product consisting of 15 percent diethylene glycol and other substances, which it sold under the product name “TD glycerin.” TD stands for ’ti dai,’ or ’substitute’ in Chinese, but the substance was not a substitute for glycerin, a more expensive sweetener commonly used in drugs.

Li, the quality official, said according to material gathered by Spanish investigators, CNSC clearly informed the Spanish purchaser, Rasfer, that the shipment was “not for use in food or medicine” — a claim Rasfer denies.

“That is not true,” said Susi Criado, a spokeswoman for Rasfer. “We ordered pure glycerin, 99.5 percent, and they sent us a product that said, ’glycerin 99.5 percent’ ... nowhere did it (say) anything about diethylene glycol or anything else.”

Criado said the company did not test the shipment because it was an importer and “we can’t manipulate the products.”

The substance eventually ended up in Panamanian cough syrup and other medicines that killed at least 94 people. The deaths were first reported last October, with the link to China emerging in May.

“My feeling is that at least this company (CNSC Fortune Way) paid attention and warned the (Spanish) side, but because the other side did not pay attention, a problem occurred further down the chain,” Li said.

But he did admit the Chinese companies were wrong to use a misleading name for the product.

Li denied that China had been slow to investigate the matter. He said China cooperated with an FDA probe into the deadly shipment last year but that a second investigation was launched this year due to a request from Panama.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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