This is the second of the two-part series of Keller and Heckman Shanghai's China Regulatory Matters e-news alert on China food law developments from 2015. Part I covered regulatory mechanisms, production and operation, labeling, and recall, while Part II will cover the following additional topics: 1) Food Import, 2) Specially Controlled Foods, and 3) Food Additives.

I. Food Import

The Food Safety Law (FSL) sets up a new framework for the management of imported food. Notably, the FSL requires that each importer establish a system for auditing overseas food exporters/producers.[1] The relevant management rules and implementing regulation (Draft Regulation) are currently being drafted.[2] The Draft Regulation mandates that inspection and quarantine authorities manage imported food per the food category and safety risk level. In particular, it specifies three inspection levels pursuant to three levels of food safety risks.[3] With the strengthening of food import regulation, we expect a series of supporting regulations in the near future.

The "hygiene license" for imported foods has now been replaced by the "entry cargo inspection and quarantine certificate" for foods that have passed inspection and quarantine,[4] and a new version of the online notification system for food importers/overseas exporters was launched on October 1, 2015.[5] Also, the catalogue that subjects certain overseas food producers to pre-market registration is being constantly updated; for example, new registration requirements for overseas producers of imported edible "bird's nest" products became effective on January 1, 2016.[6]

Cross Border E-Commerce Food Import

Not surprisingly, special provisions for food E-commerce in the new FSL have received much attention. Among other things, the law requires that third-party online food trading platform providers demand real-name registration by food operators and specify food safety responsibilities of the operators.[7] The authorities are drafting a regulation on the supervision and management of online food operation, which will set out obligations for both online food operators and third-party platform providers.[8]

As a special form of E-commerce, "cross-border E-commerce" (CBEC) is gaining in popularity in China, as it allows Chinese consumers quicker and less restricted access to overseas foods and other products. The Chinese government has been promoting CBEC as a means to boost the economy. One way this is being accomplished is by designating a number of cities/areas such as Hangzhou as CBEC pilot zones.[9] Food imported through these pilot zones, as well as through free trade zones (FTZs), are subject to less regulation. 

The Chinese government is also taking actions to ensure greater food safety with respect to CBEC food import, such as explicitly requiring that CBEC food import comply with the FSL and the Draft Regulation.[10] Also, innovative regulatory measures have been proposed regarding CBEC food import that hopefully will ease industry's burden. For example, the Chinese government is now drafting a regulation targeting foods imported via the CBEC bonded warehouse model.[11] It allows the use of electronic labels and, except for certain special foods, a food operator may apply either an electronic or a printed label on the food to be imported via the CBEC bonded warehouse model, subject to informed election of the consumer.

II. Specially Controlled Foods

According to a top China Food and Drug Administration (CFDA) official, the regulation of "specially controlled foods" was one of the most challenging to develop. This Draft Regulation identifies three types of foods as specially controlled foods and subjects them to "strict supervision and management." The three types are: health foods, formulated foods for special medical purposes, and infant and young children formula.[12] The Draft Regulation requires specific areas be devoted exclusively to the sales of specially controlled foods. Importers of any specially controlled foods must present registration or notification documentation to inspection and quarantine authorities at the time of import.[13]

The Draft Regulation further elaborates on specific requirements for individual types of specially controlled foods. For example, CFDA may conduct on-site quality control and other types of inspections of formulated foods for special medical purposes and infant and young children formula milk powder.[14] Registration rules are also currently being drafted[15] for "foods for special medical purposes." Also, registration and notification requirements (discussed below) are required for health foods and for infant and young children formula.

Infant and Young Children Formula Milk Powder

According to the FSL, the ingredients, food additives, formulas and labels for infant and young children formula are subject to notification, while the formulations of infant and young children formula milk powder are subject to registration.[16] The most recent draft of the registration rules for these requirements was notified to the WTO on January 7, 2016. This draft extends registration requirements to imported infant and young children formula milk powder, where the overseas producer serves as the registration applicant.[17] This imposes an additional burden on overseas producers of these products in addition to current company registration requirement.

The FSL also upholds the current ban on re-packaging of infant and young children formula milk powder.[18] The Draft Regulation further provides that, among other things, one producer in principle may register no more than three product series and no more than nine formulas in total.[19] These provisions are consistent with the regulatory trend in China toward much stricter requirements for infant and young children formula milk powder.

Health Foods

Similarly, China is imposing more stringent regulations on health foods. For example, the revised food advertising regulation being drafted by the State Administration for Industry and Commerce (SAIC) contains extensive provisions governing health food advertising, with almost half of the text devoted exclusively to health foods.[20]

The new FSL imposes detailed labeling requirements for health foods.[21] These include the formulation, adjustment and publication of a health food ingredients catalogue, as well as a catalogue of health function claims permitted for health foods.[22] Notably, the new FSL introduces a "two-track" system under which certain health foods must be registered, while the others only need to be notified. The registration requirements apply to health foods containing ingredients not covered by the health food ingredient catalogue and health foods imported for the first time (except those supplementing nutrition substances, e.g., vitamins and minerals).[23] CFDA is currently drafting three health food regulations on the above-mentioned catalogues, labeling requirements, and registration/notification requirements, respectively.

Notably, the Draft Regulation provides a definition for "special dosage foods in a fixed consumption amount," which includes foods using special dosage forms such as capsules, oral agents, tablets, granules, and pills that must be consumed at a fixed amount or have a pre-set daily intake volume.[24] Given the fact that dietary supplements are not a legally established food type in China, the new provisions on "special dosage foods in a fixed consumption amount" clarify the regulatory identity of dietary supplements in China. Manufacturers of any of these foods that include health function claims, but are not registered as health foods, will be subject to investigation and penalties.[25]

Another significant development with respect to health foods took place when the National Food Safety Standard for Health Foods (GB 16740-2014) became effective on May 24, 2015. Consequently, an approval holder who needs an updated approval letter and to make product label changes to achieve compliance with the new Standard, must file an application with a provincial level FDA by May 24, 2016.[16] Furthermore, the government ceased to approve health foods with names containing words related to the product's functions effective August 25, 2015. Such products may not be produced after May 1, 2016.[17]

III. Food Additives

The new FSL imposes stricter requirements for food additives. These include subjecting food additives to food safety risk assessment and import inspection and quarantine.[18] In addition, the new National Food Safety Standard for Food Additives (GB 2760-2014) became effective on May 24, 2015. The new Standard includes approved food additives not included in the previous version (GB 2760-2011), in addition to other changes. One of the more significant changes impacting food additives is the addition of new restrictions on the use of some food additives that contain aluminum, and the removal of several other such food additives, such as sodium aluminosilicate, from the approved list.

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IV. Conclusion

With recent dramatic changes in China's food law regulatory framework, more developments are certain to come. With growing concerns about inconsistent enforcement practices between the central and local governments, it is essential for the industry to keep abreast of the new food regulatory requirements in China. China Regulatory Matters will continue to provide updates. Our 2015 Year in Review of Food Packaging Regulations will be released later this month. 

^{[1] Article 94 of FSL}

^{[3] Articles 105 and 109 of the Draft Regulation}

^{[4] See 质检总局关于进一步规范进口食品、化妆品检验检疫证明的公告（2015年第91号）}

^{[5] See 国家质量监督检验检疫总局《质检总局关于启用进口食品进出口商备案系统升级版的公告》（2015年第98号）The online notification system is located at http://ire.eciq.cn}

^{[6] See 国家质量监督检验检疫总局《质检总局关于更新的公告》（2015年第152号）}

^{[7] Article 62 of FSL}

^{[8] See 食品药品监管总局关于征求《网络食品经营监督管理办法﹙征求意见稿﹚》意见的通知}

^{[9] See 质检总局关于进一步发挥检验检疫职能作用促进跨境电子商务发展的意见}

^{[10] Article 117 of the Draft Regulation}

^{[11] See 关于对《网购保税模式跨境电子商务进口食品安全监督管理细则》征集意见的通知}

^{[12] Article 74 of FSL}

^{[13] Article 107 of the Draft Regulation}

^{[14] Article 115 of the Draft Regulation}

^{[15] See 国家食品药品监督管理总局关于《特殊医学用途配方食品注册管理办法》公开征求意见的通知}

^{[16] Article 81 of FSL}

^{[17] See https://members.wto.org/crnattachments/2016/TBT/CHN/16_0022_00_x.pdf}

^{[18] Article 81 of FSL}

^{[19] Article 92 of the Draft Regulation}

^{[20] See 国家工商总局关于《食品广告发布暂行规定（修订稿）》（征求意见稿）公开征求意见的公告}

^{[21] Article 78 of FSL}

^{[22] Article 75 of FSL}

^{[23] Article 76 of FSL}

^{[24] Article 195 of the Draft Regulation}