posted September 20, 2008 08:58 AM         

China's national product safety agency said that all batches of milk that tested positive were being recalled, and by Saturday the dairy sections of many grocery stores were empty in Beijing and Shanghai.

The recalls come as evidence is mounting that adding chemicals to watered-down milk was a widespread practice in China's dairy industry.

The chief financial officer of one of the companies, Mengniu, apologised on Friday for the tainted milk. But he insisted only a small portion of the company's inventory had been contaminated and said the tainted milk came from small-scale dairy farmers.

``Large-scale milk farms are very disciplined. They won't take the risk to do something like that,'' Yao Tongshan told reporters in Hong Kong. Yao sipped from a carton of milk in a display meant to bolster consumer confidence.

The crisis was initially thought to have been confined to tainted milk powder, used to make baby formula that has been blamed in the deaths of four infants and for sickening 6,200 other children.

But tests found melamine, a chemical used in plastics and fertilizers, in samples of liquid milk taken from China's two largest dairy producers, Mengniu Dairy Group Co. and Yili Industrial Group Co., as well as Shanghai-based Bright Dairy.

They join the discredited Sanlu Group, whose tainted milk powder and infant formula touched off public complaints.

The apparently widespread contamination has rapidly become a political headache for a communist government that hoped to be basking in popular adulation over last month's successful Beijing Olympics.

Instead, the government is being forced to scramble to regain public confidence.

President Hu Jintao, in an address to senior Communist Party members, excoriated local officials for risking the public trust.

``Some officials have ignored public opinion and turned a blind eye to people's hardships, even on major problems that affect people's lives and safety,'' Hu said Friday in a largely dry policy speech published Saturday in state newspapers.

Also Friday, the State Council ordered hospitals to provide free treatment for sick infants and local officials to redouble efforts to remove all tainted products. Companies found to have produced contaminated milk will later have to reimburse the government for medical expenses, the council said. ( Watch )

Melamine is high in nitrogen and when added to dairy products makes them appear to be higher in protein. But when ingested by people, especially infants, the chemical can also cause kidney stones, which can lead to kidney failure.

Suppliers trying to cut costs are believed to have added it to watered-down milk to cover up the resulting protein deficiency.

A senior dairy analyst said Chinese farmers were cutting corners to cope with rising costs for feed and labor.

``Before the melamine incident, I know they could have been adding organic stuff, say animal urine or skin,'' said Chen Lianfang of Beijing Orient Agribusiness Consultant Co. ``Basically, anything that can boost the protein reading.''

But he and others expressed skepticism that so many farmers would know to add melamine to milk. The chemical is not water-soluble and must be mixed with formaldehyde or another chemical before it can be dissolved in milk.

``Farmers can't be well-educated enough to think of melamine,'' Chen said. ``There must be people from chemical companies contacting them and telling them it's a good idea.''

The crisis has raised questions about the effectiveness of tighter controls China promised after a series of food safety scares in recent years over contaminated seafood, toothpaste and a pet food ingredient tainted with melamine that was blamed for the deaths of dogs and cats in the United States. In 2004, more than 200 Chinese infants suffered malnutrition and at least 12 died after being fed phony formula that contained no nutrients.

Reactions to the latest recalls were immediate. Starbucks Corp. said its 300 cafes in mainland China were pulling all milk supplied by Mengniu.

Major Hong Kong grocery chains PARKnSHOP and Wellcome ordered Mengniu liquid milk removed from their shelves Friday, a day after products made by Yili, including milk, yogurt and ice cream, were taken off. Singapore suspended the sale and import of all Chinese milk and dairy products on Friday.

Meanwhile, two distributors of Sanlu baby formula said the company ordered them to pull its products off shelves in early July, weeks before it announced its milk powder was contaminated.

The statements raised further questions about when the company and government knew the formula was contaminated.

Sanlu received complaints as early as March and tests in early August found the milk powder contained melamine.