China Became Net Food Importer In First Half of 2008

Jonathan Lynn, PlanetArk 22 Aug 08;

GENEVA - China became a net food importer in cash terms in the first half of this year, as soaring food prices ate into its traditional surplus in agricultural goods.

The swing into deficit largely reflects the surge in prices of commodity staples such as grain and soybeans.

But it also sheds an interesting light on China's stance in last month's abortive global trade talks when Beijing, increasingly concerned about food security, sided with India and against the United States in pushing for a safeguard to protect developing-country farmers from a surge in imports.

According to data from Global Trade Information Services Inc, Geneva, (GTIS), China had a deficit of $5.78 billion on its trade in agricultural products in the first half of this year, against a surplus of $2.45 billion a year earlier, as the value of imports rose 72 percent while exports rose 12 percent.

GTIS supplies and analyses international merchandise data. The figures show trade in categories 1-24 of the harmonised system (HS) used internationally to classify products, covering animal products, vegetable products and foodstuffs, and including products for animal feeds as well as food for people.


FOOD FROM UNCLE SAM

In that period imports from the United States, China's biggest farm supplier, almost doubled. They rose 95 percent from Brazil and 132 percent from Argentina, the next biggest suppliers. But exports to Japan, China's biggest food customer, fell 12 percent, while rising 13 percent to the United States.

World Trade Organisation (WTO) data, measuring trade in food on a slightly different basis, show China was a net food exporter every year from 2000 to 2007, except for 2004 when it ran a small deficit of $0.2 billion.

Its surplus in food peaked at $6.4 billion in 2002, and was only $0.9 billion in 2007, as food prices started to climb.

The sheer size of China's food trade meant that in 2006, when it still ran a surplus of $5.0 billion, it was both the world's fourth biggest exporter, behind the European Union, United States and Brazil, and fourth biggest importer, behind the European Union, United States and Japan, WTO data show.

Since then it has suffered a classic deterioration in its terms of trade, with the price of its food imports rising much faster than the price of its food exports.

In terms of value, China's main agricultural imports are grains and cereals, soybeans, and edible oils, while its major exports include fish and fish products, vegetables, grains including rice, and fruit and fruit juice.

The value of imports of soybeans in the first seven months of this year rose 118.6 percent to $12.3 billion, but in volume terms the rise was only 22.8 percent, to 20.7 million tonnes, according to official data in Chinese Customs Statistics.

The value of fish exports rose only 9.5 percent to $2.88 billion, but they fell 4.0 percent in volume terms to 1.0 million tonnes, the data show.

The rising food bill will have put pressure on Beijing to adopt a more protectionist stance in farm trade, even though it has benefited from the free-trade system umpired by the WTO, which China joined in 2001.

China is now the world's second biggest overall exporter, after Germany.

In last month's WTO talks, India and other developing countries insisted on a safeguard that would allow poor nations to raise tariffs temporarily above current levels to withstand a flood of imports threatening subsistence farmers' livelihoods.

The proposal was of particular interest to China, which cut its tariffs sharply as the price of admission to the WTO.

"On those important issues... which affect millions of poor farmers, that is an area we can't really make further concessions," China's WTO ambassador Sun Zhenyu told WTO members after the collapse of the talks.

(Editing by Stephanie Nebehay and Mark Trevelyan)