China has had restrictions on the production of saccharin for some time but a circular issued last month by the National Development and Reform Commission (NDR), the State Administration for Industry and Commerce and the State Environmental Protection Administration shows that it wants to step up its controls.
The state departments said they will strictly ban the launch of any new or expansion projects to produce the sweetener and the five companies allowed by the government to produce saccharin have been told that they cannot shift production to new locations.
The government did not reveal the reasons for its renewed pressure on the sector but industry insiders say China wants to both promote its sugar industry and protect the environment from damage by saccharin production.Saccharin is the most widely used artificial sweetener in foods and drinks and is approved for use in more than 100 countries. It is viewed as the major competitor to sugar in China.
The country's five designated producers - Suzhou Fine Chemicals, Tianjin Northern Foodstuff, Tianjin Changjie Chemical, Kaifeng Xinghua Chemical and Shanghai Fuxing Chemical - produced 22,850 tons in 2005, exporting more than 19,000 tons of the total volume.
According to the China Sugar Association, the government has restricted saccharin sales to its domestic market to 3,500 tons, which is the same target set in previous years.
However illegal producers are also involved in the saccharin market and with high sugar prices driving food makers to look for alternatives, the demand for artificial sweeteners remains strong.
In China, standard grade sugar in the southern provinces cost RMB4960 (€515) per ton in March compared to about RMB2000 per ton during the same period last year. Saccharin currently costs around RMB34,000 per ton, rising from RMB29000 in October due to the rising cost of its crude oil-derived raw material, but saccharin is 300-500 times sweeter than sugar.
"We now have a capacity of 500 tonnes per month, and we are receiving orders everyday, but we are only allowed to produce 450 tonnes by the NRDC, which cannot meet all the demands," Cheng Shaoxiong, marketing manager at Tianjin Changjie Chemical, told AP-Foodtechnology.com.
There is also significant demand for the sweetener on export markets. Cheng says that more than 70 per cent of total production in China is required to be exported although much of global saccharin demand comes from non-food industries such as pharmaceuticals and cosmetic products like toothpaste.
The measures taken to restrict saccharin come at the same time as China launches research into the promotion of its sugar industry.
The Economic Operation Bureau of the NDRC said in a recent statement that it will work together with relevant departments to step up studies on establishing a long-term effective macro control system for the sugar market and drafting new rules on administration of the industry.
The government wants to better coordinate putting reserves of sugar on the market with imports of sugar and sugar production in the coming season.
China has recently auctioned some of its state sugar reserve to stabilise prices forced upwards by a shortage of the ingredient caused by drought last year.
Some in the industry also say that the government wants to reduce environmental damage caused by the sweetener's production. A key raw material in saccharin is phthalic acid, used also in plasticizers and for surface coatings, and responsible for significant pollution of water in China.
Additional reporting by Francis Yang.