(Adds details of recall system)

BEIJING, Aug 31 (Reuters) - China has found microscopic worms in wooden packaging from the United States and uncovered substandard U.S. vitamin pills and fish oil for children, Chinese media said on Friday, in the latest volley of cross-border accusations.

China has highlighted several quality concerns with U.S. products in apparent response to complaints in Washington about the safety of Chinese exports ranging from toys to toothpaste.

The pine wood worms, or nematodes, were found in 13 sets of packaging in the manufacturing hub of Shenzhen, the China Daily said.

But apart from the tit-for-tat accusations, China is also taking measures to clean up standards of its own exports amid rising fears about the "made-in-China" label.

China's quality watchdog on Friday introduced what Xinhua news agency called a landmark recall system for unsafe food products and toys to improve product safety.

The regulations, following the introduction of recall system for defective cars in 2005, went into effect on Friday, the General Administration of Quality Supervision, Inspection, and Quarantine announced.

They require manufacturers to stop production and sales, notify vendors and customers, and report to quality control authorities when product defects are found, and are subject to fines of up to 50,000 yuan for failure to do so.

Food producers are to set up systems to record information on food production and sales.

And toy firms, under particular scrutiny after a massive recall of Chinese-made toys by U.S. giant Mattel, are to halt production and sales and recall products when defects are found, even if they meet China's safety laws.

In a separate report, Xinhua said exports of food products must be properly labelled by quarantine and inspection authorities.

"The goal is to effectively curb illegal exports and protect the rights and interests of the exporters whose goods are up to standard," the report said.

Fruit from unregistered orchards packaging plants would also be barred from export, the state news agency said.

In another scare over imports, substandard vitamin and mineral pills and children's fish oil were discovered in the eastern coastal province of Zhejiang, the China News Service said.

"The two failed to reach the nutritious levels promised on their labels," it said, citing the Zhejiang industrial and commercial department.

China recently destroyed a cargo of sub-standard frozen potato slices also shipped from the United States, and the quarantine bureau earlier this month highlighted a cargo of contaminated soybeans that arrived in February.

China has sent a notice to the World Health Organisation defending its own food safety standards and said it was willing to cooperate globally to tackle the problem.

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