Aug. 31 (Bloomberg) -- China issued food and toy recall rules that become effective today in response to international criticism and domestic concern over its product and food safety.

The rules require makers of defective products to stop making and selling them, notify stores and consumers and issue replacements or refunds, the General Administration of Quality Supervision, Inspection and Quarantine said in statements posted on its Web site today.

The food recall rule establishes three levels of severity and a timeline for action in each case, the statement said. The agency also tightened inspection procedures for exports, especially of seafood, to ensure quality, it said.

China's food and product safety reputation has been damaged in recent months by U.S. recalls of Chinese-made goods, including tainted dog food and 20 million Mattel Inc. toys. The U.S. also banned seafood found to be laced with dangerous chemicals.

El Segundo, California-based Mattel, the world's biggest toymaker, on Aug. 14 announced its second recall of Chinese-made toys in as many weeks. Eight of Mattel's nine recalls since 2004 involved products made in China, where the company gets 65 percent of its toys.

On Aug. 1, the world's biggest toymaker recalled almost 1 million Fisher-Price toys because they had paint that contained lead. Mattel's Aug. 14 recall included 253,000 die-cast cars with lead paint and more than 1 million other toys containing magnets that are potential chocking hazards.

Fish Ban

The U.S. Food and Drug Administration halted the import of all farm-raised shrimp, catfish, basa, dace and eel from China on June 28 after finding residues in the seafood of antibiotics not approved for use.

China this month named Vice Premier Wu Yi the head of a 19- member committee given the responsibility of improving scrutiny of the nation's products.

A Shanghai court today sentenced a Chinese businessman to 3 1/2 years in prison for selling counterfeit Johnson & Johnson diabetes test kits in another sign that the country is cracking down on faulty and dangerous exports.

Su Zhiyong, also known as Henry Fu, was also fined 400,000 yuan ($53,000) by the Putuo District People's Court of Shanghai today, according to court documents obtained by Bloomberg News.

Su was charged with producing fake versions of OneTouch Test Strips sold by J&J's LifeScan unit, which are used by 10 million Americans to take sensitive measurements of blood-sugar levels.

China was the source of about 1 million counterfeit test strips that have been found in 35 U.S. states, Canada, Greece, India, Pakistan, the Philippines, Saudi Arabia and Turkey, according to U.S. federal court documents.

To contact the reporter on this story: Dune Lawrence in Beijing at dlawrence6@bloomberg.net.

Last Updated: August 31, 2007 07:18 EDT