Saturday, August 21, 2004

China Records First Crop Trade Deficit

In another sign of world demand outgrowing the ability to supply, China has recorded it's first net trade deficit. In the first half of 2004, China imported $3.73 billion more agricultural good than it exported. This compares to an average surplus of $4.3 billion a year between 1995 and 2003. Ministry officials and academics tried to downplay the significance of the reversal. "The deficit is glaring but not surprising, given the country's commitments following WTO entry, the implementation of tariff rate quotas and competition in the global market," said Han Yijun, a researcher with the ministry's Research Centre for Rural Economy.

But the stunning turnaround in basic foodstuffs brings into question whether environmental factors such as the huge dustbowl that has been created on the northern China plains, or the dwindling water tables are cutting into China's ability to feed itself.

Compared with the first half of last year, China imported 1.8 times as much as grain (rice, corn, wheat and barley), or 4.115 million tons, in the first half of this year, partly in response to the straining supply-demand relations in the domestic market, according to Han.

In particular, wheat trade made a U-turn during the period, Han said.

Back in the first half of last year, China was a net exporter of wheat. But it imported 2.727 million tons of wheat by the end of this June, the latest customs statistics indicated.

Wang of the Agriculture Trade Promotion Centre said grain imports constituted just a marginal part of food consumption in China, and the country will by no means rely on imports for food security.

Wheat imports, for example, have been used to replenish stocks rather than for direct consumption, according to Han Jun, a senior researcher with the State Council Development Research Centre - a leading government think-tank.

But if wheat imports were being used to replenish stocks that means that demand had outpaced supply in previous years, making these imports inevitable. Scientists had been predicting that China would soon have to enter the import market in a big way and now it has. China's problems have now become the world's problems.


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