China's Health Ministry has called for a nationwide investigation into the nation's baby formula industry after tainted baby milk was linked to the death of one infant and health issues for many others. The tainted formula, distributed by the Sanlu Group, contains the chemical melamine, which is thought to have caused kidney stones in infants around the world.

While the Sanlu Group has now recalled over 700 tons of the suspect formula, reports suggest that dairy farms knew about the tainted milk even before it hit the shelves. Dairy workers allegedly diluted the formula with water to increase production, adding melamine to hide the diluted contents.

A group of Chinese parents whose children were poisoned by domestic dairy products tainted with Melamine said they planned to reject a government-sanctioned compensation package. Instead, they said they are going to press for long-term health care for the victims and demand medical research into the illnesses that still afflict tens of thousands of children. Over the last few days the parents have gathered more than 250 signatures and have become a serious challenge to officials seeking to quiet public outrage over the widespread contamination of China's dairy supply. The offer currently on the table, which is to be financed by 22 Chinese diary companies, amounts to around $29,000 for each family that lost a child and about $4,400 for each child who suffered serious kidney damage from Melamine poisoning. The families of children with relatively minor health problems are to receive around $290. That is about three months of the average Chinese worker's salary.New York Times: Parents Reject China Milk Settlement (January 13, 2009)