In Depth: Ambiguous Reef Protection Laws Leave China’s Coral Sand Traders High and Dry

10 Sep 2024

In December 2021, with the Covid-19 pandemic raging around the world, police arrived at a quarantine site in Binzhou, Shandong province, where Wu Xing was interned and abruptly took him away. They brought the small businessman, who has dealt in coral sand for almost a decade, to his company’s warehouse, where Wu was astonished to find the premises surrounded by a dozen police cars.

Authorities had sealed the warehouse, with all the company’s computers and inventory still inside. The police were intently focused on a recently arrived container carrying 27.3 tons of coral sand, which consists of crushed fragments of dead coral or limestone skeletal remains of other marine organisms like molluscs and crustaceans. This calcium carbonate material, sold in blocks measuring about 3 to 5 centimeters in length, is used as a filter medium for purifying aquarium water.

Wu was informed that these filter materials were considered protected animals under the law and their harvesting and sale was illegal.

“I was completely shocked,” he told Caixin. “It has no life, we’ve always sold it as a rock. How could it be a protected animal?”

Wu and four co-defendants involved in the case, were released on bail pending trial, which began on March 20, 2024, after prosecutors charged them with illegally acquiring and selling precious and endangered wildlife protected under national laws.

The possible legal consequences, while hardly considered dire, are not insubstantial for small businesspeople. In a similar case in the city in 2023, a man was sentenced to two years in prison and fined 120,000 yuan ($16,900) on the same charge leveled against Wu.

The business of dealing in coral and its skeletal remains used in filtration systems for aquariums and fish farms is lucrative, with China set to account for the bulk of the market in the next almost decade. The global aquarium pumps and filters market is estimated to reach $1.5 billion by 2032, almost doubling from $821 million in 2022, with a compound annual growth rate of 6.5% over that period, according to a 2022 report by Future Market Insights Inc.

“China is set to generate the lion’s share in the aquarium pumps and filters market by 2032 with increasing demand for commercial fish farming activities,” according to the report.

Protecting coral reefs is widely accepted as crucial to the overall health of the marine environment globally. Reefs support over 500 million people around the world by providing food, income, coastal protection, as well as playing a vital role in medical research, according to the U.S.-based Coral Reef Alliance. They provide over $375 billion per year in goods and services, said the non-governmental organization.

But should coral sand be categorized as “precious or endangered wild animals”? In China in particular, coral sand accumulated along the shores of provinces such as Hainan and Guangdong in the south form an integral part of the natural coastline. Large-scale collection and excavation of this sand can damage this environment, potentially affecting animals like sea turtles that lay eggs on the beach.

Wu and the other defendants have argued they are being unfairly prosecuted, with their defense attorney Li Erquan saying the items involved in Wu and his wife’s transactions were neither living nor dead stony corals, based on conclusions from two specialized appraisal institutions.

Li contended that trading coral sand does not constitute a criminal act. He further argued that coral sand, coral fragments, and coral aggregates are not classified as precious or endangered wild animals under criminal law.

And therein lies the crux of the matter: should coral sands be considered wild animals under the law and those that harvest and sell them subject to criminal prosecution? Or is the Chinese government over-reaching in its goal of protecting the natural environment at the expense of a traditional business?

The defendants’ assertion has some support from within the environmental protection community. Li Yanliang, president of the Aquatic Wildlife Conservation Branch of the China Wildlife Conservation Association, told Caixin that there is no standard answer within the industry regarding whether coral sand and coral bones are considered wildlife products.

“If the coral is in the sea as part of a reef, it should definitely be protected,” said Li. “However, defining it as illegal if fishermen pick up a bit from the shore is too broad in scope and, in my opinion, inappropriate.”

Ideally, regulations should clearly define whether coral sand collection activities occur at sea or on the shore, whether there are coral polyps attached to the surface, the amount collected, and whether the behavior should be subject to administrative or criminal penalties, said Li.

Regardless of how it is categorized, coral and its derivatives described variously as “coral bones” and “coral sand” on e-commerce platforms such as Taobao, JD.com, and Douyin reveal a plethora of related products. In a store on one of the platforms with over 7,000 reviews, the seller promotes coral bones as a “natural filter material” that offers multiple benefits, including absorbing ammonia, adjusting pH levels, filtering and deodorizing, and decomposing fish waste.

Caixin contacted three stores with high sales volumes to ask their view of how coral is categorized and all of them contended that coral sand is not an animal.

Widely used material

Wu’s journey that landed him in court began in 2015, when he and his wife launched an aquarium products business, selling items such as fish feed and aquarium supplies through e-commerce platforms.

In 2018, at the China International Pet Show, the country’s largest aquarium trade show, Wu met Xu Yilong, an exhibitor from Guangdong. Following their meeting, Wu began purchasing coral sand from Xu at a price of 2,450 yuan per ton for repackaging and sale.

Xu ended up as one of Wu’s four other co-defendants, with prosecutors presenting key evidence from the South China Wildlife Species Identification Center under the Institute of Zoology, Guangdong Academy of Sciences.

According to the center’s report, the coral sands in question were all species of stony corals categorized as Anthozoa, a class of marine invertebrates that form a skeleton made of calcium carbonate. They are classified as national second-level protected wild animals and are listed in Appendix II of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).

Xu meanwhile submitted the coral sand samples involved in the case to the Third Institute of Oceanography for identification. In September 2023, the institute concluded that the samples did not have the complete skeletal structure of corals and had undergone long-term natural weathering and erosion. Therefore, they were not subject to regulation under the CITES convention.

The Judicial Appraisal Center of the Hainan Academy of Ocean and Fisheries Sciences, commissioned by Wu, also conducted an appraisal of items related to the case. Their conclusion was similar to the opinion from the Third Institute of Oceanography.

The expert evaluations in the case appeared to be at loggerheads.

Conflicting evaluations

It’s not surprising, as it’s a complicated issue that involves nuanced classifications that can vary between the institutions authorized to make that determination.

In 2017, the then Ministry of Agriculture, which was the forerunner of the current Ministry of Agriculture and Rural Affairs, approved 32 institutions to identify rare and endangered aquatic wildlife. Among these, the Hainan Academy of Ocean and Fisheries Sciences and the Third Institute of Oceanography, formerly under the State Oceanic Administration, were specifically recommended for identifying stony corals.

Further complicating the topic, in 2021, China updated its National List of Protected Wild Animals, increasing the number of protected aquatic species to 294. Notably, all species of Scleractinia (stony corals) and Gorgonacea, as well as those in the Helioporidae family, were reclassified as second-level protected wild animals under the two-tier protection system for wildlife. The penalties for harvesting or hunting first-level protected animals, which are endangered or rarer, are generally more severe.

As part of Wu’s bid to prove his innocence, he flipped the script on the investigators and began looking into the qualifications of the so-called experts in coral sand, in particular the South China Wildlife Species Identification Center. This organization was approved in 2017 to identify groups such as freshwater turtles, fish, mollusks, and cephalopods like octopuses.

However, Wu discovered that one of the center’s personnel tasked with identifying different coral was an associate researcher in zoology who had not published any research on coral species, according to his papers published on the China National Knowledge Infrastructure. Another staff member also responsible for identifying corals was an assistant researcher specializing in entomology, the study of insects, not marine species.

Believing both lacked the necessary qualifications, Wu and his wife filed complaints with the Department of Justice in Guangdong, and other relevant authorities.

Unclear legal boundaries

Wu recalled that in May, shortly after the trial began, local prosecutors, accompanied by experts from the First Institute of Oceanography of the Ministry of Natural Resources, visited his company to inspect the products involved in the case. However, no conclusions were provided following the inspection.

Ultimately the prosecution dismissed the six sets of evidence presented by the defendants, which included the appraisal reports. A verdict is yet to be handed down for Wu and his co-defendants. But it seems the government is now taking a closer look at resolving the ambiguity.

Caixin has learned that in early April, the Fisheries and Fishery Administration Bureau of the Ministry of Agriculture and Rural Affairs held a symposium in Beijing to discuss the regulation of stony coral use.

Based on how the issue is actually being managed on the ground, participants suggested that the utilization of stony corals be “classified and managed.” For stony corals and their products, other than living specimens, management should be carried out according to the “actual situation and relevant laws.”

Not the sort of hard and fast language that adds clarity to the legal boundaries and predicament for people like Wu.

“Currently, we don’t have corresponding laws and regulations to clarify these points,” said Li, president of the Aquatic Wildlife Conservation Branch of the China Wildlife Conservation Association. “The answers to these questions are inherently unclear, and when the grassroots police enforce the law and the judicial system makes judgments, the rulings are also unclear.”