BEIJING, Jan 8 (Reuters) - China defended its fish farming industry on Tuesday and said it was making progress in curbing use of illegal additives, from pesticides to banned steroids, as the country's food safety record remains in the spotlight.

China has suffered a rash of scares over the safety of its food and manufactured products in the last year that highlighted shoddy oversight and prompted a wave of new regulations and clean-up campaigns from the central government.

Vice Minister of Agriculture Gao Hongbin said the country had made "encouraging progress".

"However, regulation of quality and safety of agricultural products is still faced with arduous challenges due to a number of factors," he told a news conference.

"There is still a gap between China's standards and that in other countries."

But Gao said the government has curbed the use of highly toxic pesticides in vegetable production and was making progress in stamping out the use of clenbuterol, a steroid used in pork production that is illegal in China.

He also said the compliance rate for the use of three toxins used in fish production, including malachite green, a potential carcinogen illegally used to kill fungus and bacteria in fish tanks, was rising, and he defended China's fish farming against a New York Times piece entitled "Fishing in Toxic Waters".

"It is a question of common sense. Do you believe that fish can live in toxic water?" Gao asked. "Personally, I believe that this report is sensational and misleading."

But the United States said last June it would not allow imports of Chinese farm-raised catfish, shrimp and other seafood unless suppliers could prove shipments were free from harmful residues, including malachite green.

Gao said 98 percent of China's aquatic products exports met standards.

China is also seeking to assure the millions of athletes, spectators and journalists descending on Beijing for the Olympic Games this August that its food will be of the highest quality.

Gao said the Ministry of Agriculture was working with Olympic organisers to ensure food safety during the Games.

"With regard to where the food will come from, undoubtedly it will come from China," Gao said. But he added: "I will not rule out the possibility that some food could be imported from abroad."

(Reporting by Lucy Hornby, writing by Lindsay Beck; Editing by Sanjeev Miglani)

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