updated 2/8/2010 2:59:32 PM ET 2010-02-08T19:59:32

A new discovery has punched a 170-ton hole in China's promises to overhaul its food safety system. Officials say they've found yet another case where large amounts of tainted milk powder from the country's 2008 scandal that should have been destroyed were instead repackaged.

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China ordered tens of thousands of milk products laced with an industrial chemical burned or buried after more than 300,000 children were sickened and at least six died from the contamination. But, crucially, the government did not carry out the eradication itself, and this month an emergency crackdown has made it clear that tons of compromised products are still on the market.

Tainted dairy has recently been found in China's largest city, Shanghai, and in the provinces of Shaanxi, Shandong, Liaoning, Guizhou, Jilin and Hebei. At least five companies are suspected of reselling tainted products that should have been destroyed, the Health Ministry said last week. The problem products uncovered in the 10-day emergency crackdown have so far been limited to the domestic market.

The campaign is set to end Wednesday, and it's not clear whether it will be extended. The country's biggest holiday, the Lunar New Year, starts this weekend, and already some offices are closing and millions of people are going on vacation.

Back in the system
The Health Ministry has not commented since the crackdown began, and the China Dairy Association has remained quiet as well.

"The problem is, this is a product with a shelf life of several years. It's very important that the product is not left unattended," said Dr. Peter Ben Embarek, a WHO senior scientist on food safety based in Beijing. "There's always a risk it will find a way back into the system."

The latest discovery underscores the difficulties of policing China's smaller food producers , despite a sweeping new food safety law that took effect last summer and promised stricter quality controls after the 2008 scandal, which was China's worst food safety crisis in years.

In the wake of that crisis, China punished dozens of officials, dairy executives and farmers, even executing a dairy farmer and a milk salesman. But the government didn't destroy seized products itself. Instead, it issued guidelines on how to destroy them, suggesting they be burned in large-capacity incinerators or that small amounts be buried in landfills.

In the southern city of Guangzhou, however, the local government did take over disposal after one garbage company poured tainted milk into a city river.

China's new food safety law places even more responsibility on food producers to ensure their products are safe, including introducing tough new penalties for makers of unsafe products.

Still looking for nearly 100 tons
On Monday, with the announcement that more products contaminated by the industrial chemical melamine had been found, it appeared the new regulations had failed again. Officials issued a recall for more than 170 tons of milk powder tainted by the industrial chemical melamine and closed two dairy companies in the northern region of Ningxia, the China Daily newspaper reported.

The report said officials have already seized 72 tons of the powder but were still looking for the rest, which had been sold by the Ningxia Tiantian Dairy Co. Ltd. to five factories in the neighboring region of Inner Mongolia and the bustling southern provinces of Guangdong and Fujian.

The report said the tainted powder should have been destroyed in the 2008 scandal, but that an unnamed company gave it to Ningxia Tiantian as a debt payment.

Zhao Shuming, secretary-general of the Ningxia Dairy Industry Association, told the China Daily that said Ningxia Tiantian appears to have been unaware the product contained melamine but should have known that the repackaging itself, which usually involves changing production and sell-by dates, was illegal.

Zhao told the paper that many small dairies, including Ningxia Tiantian, don't have the technology to even test for melamine. When watered-down milk is laced with the chemical, it appears to still be rich in protein in quality tests that measure nitrogen, found in both the melamine and protein.

"Flaws in the previous system led to the current chaos. What if companies with tainted milk also hold back their stocks for this round of checkups and reuse them later, just like what's happening now?" the newspaper quoted him as saying.

Zhao spoke more carefully Monday, telling the AP, "We have strict checks, and our client companies have strict checks, too."

'Why are these things happening again?'
Ningxia Tiantian has been shut down, and a second company, Ningxia Panda Dairy Co. Ltd., was also ordered closed because of ties to a Shanghai dairy found with tainted goods last year, the report said.

Online Chinese chat rooms were buzzing Monday over the latest tainted milk finding, with many asking "Why are these things happening again?"

But a large-scale drop in consumer confidence that happened in the 2008 scandal isn't likely this time, said Cindy Yang, a dairy analyst for the Netherlands-based Rabobank Group in Shanghai.

"These companies are quite small ones," she said Monday, adding that China's largest dairies put stricter safety measures in place after feeling the bite of bad publicity — and raised prices 20 to 30 percent to pay for the better quality.

"You can't say that because of these cases, there's no trust in the whole market," she said.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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