In the news: Danone ups stake in Mengniu, environment ministry strengthens and officials are disciplined

Danone increases stake in Mengniu
French group Danone will raise its 4% stake to 9.9% in China Mengniu, the world's biggest yoghurt maker. The stake would be combined with the holdings of Cofco, China's largest state-owned food group, and Denmark's Arla Foods, in a jointly owned group called Cofco Dairy Investments. The rapid rise in China's dairy industry triggered the increased stake, as Mengniu doubled from $20 billion in 2008 to $40 billion last year. Market experts note a mutual benefit, as Mengniu will help Danone distribute their products more aggressively while an international tie-up will bolster the perception that Mengniu adheres to high food safety standards and controls.

Sources:
Financial Times
Reuters

The dairy industry is booming in China. After the melamine-tainted baby formula fiasco in 2008, consumers have been wary of local dairy brands and turned to premium and overseas formulas. This deal positions both companies well for further growth in China. Danone was targeted for price-fixing last year which eroded its image, but closer ties with state-owned Mengniu can smooth relations with Chinese authorities and consumers. The move suggests high confidence in China's dairy market.

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More power to the environment ministry
The government is considering a sweeping reorganisation of cabinet ministries next month, dissolving the Ministry of Land and Resources and transferring some powers to the Ministry of Environmental Protection. The latter has long been regarded as too weak to punish violating polluters. On the agenda are imposing unlimited penalties, forcing industries to disclose precise emission levels, and levelling criminal charges against those who misreport them. These proposals are efforts to steer the economy away from investment-led growth towards more sustainable, consumption and services-based development.

Source:
Reuters

China's leadership has been concerned by the widespread social unrest over high pollution levels. The only way to stop polluters from violating the law is to impose stronger penalties, and the current fines are a joke relative to their profits. These amendments will abolish a maximum fine. Many SOEs that pretend to comply have turned to the NDRC for lenient treatment. The NDRC has recently been stripped of many of its powers for resisting environmental reform and intervening heavily in the economy. Whether the environment ministry will be able to keep the skies blue depends on how effectively they can regulate.

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CPC publicises corrupt officials
The Commission for Political and Legal Affairs of the Communist Party of China (CPC) Central Committee has publicised 10 cases of disciplinary or legal violations by police offers, judges and prosecutors. Cases include a Shandong policeman dismissed for drinking and driving a police vehicle, and a Hubei provincial high court judge expelled from the Party and office for accepting bribes and maintaining improper sexual relations with a female lawyer. Liu Yong, an official with the Supreme People's Court was also expelled for taking bribes of over Rmb2 million. The commission has promised a zero tolerance attitude towards violations and a crackdown on corruption with high-profile naming and shaming.

Sources:
Xinhua
Reuters

This is another step taken by the Party to deepen the reform of the discipline inspection system. President Xi announced last month that the political and legal system must clean up corruption “with the most resolute will and most determined action”. Public shaming may seem medieval, but the ceaseless scandals are a headache. China knows its hands aren't clean, but it wants to show they're at least being washed. The commission's statement emphasised strict education, management and supervision standards for law enforcement staff... which all sounds promising, but nobody will ever know if it's truly working.

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