Import barriers may be lowered as food shortage threat grows

PUBLISHED : Saturday, 19 February, 2011, 12:00am
UPDATED : Saturday, 19 February, 2011, 12:00am

China is mulling an overhaul of import barriers as it seeks to improve food supply and stem inflation amid a lingering drought in the north.

Reuters yesterday reported that the Ministry of Commerce, which oversees both foreign and domestic commerce, has been asking other ministries to consider potential tariff cuts on goods ranging from foods and technology products.

Expanding imports may become necessary to help the up-to-now largely self-sufficient mainland economy to use overseas food supplies to curb inflation, now worsened by a lingering drought in northern China's wheat belt, economists said.

The press office of the Ministry of Commerce did not provide confirmation or any comment on the report. To expand imports and reduce the surplus has been government policy since last year. Minister of Commerce Chen Deming has said China would expand import channels for grains and cotton at the end of January.

One purpose, as quoted by the financial magazine Caijing, was to 'ease the pressure from domestic supplies', which is a euphemism for short supply and inflation. Chen said the ministry would streamline regulatory procedures for importers, and would be happy to see larger import and a smaller surplus, although he did not mention tariff cuts.

Commenting on January's large import growth, ministry spokesperson Yao Jian said: 'We used to think exports were a driving force for the economy. Imports can also influence the economy's transformation and long-term development in important ways.'

As of April 1, major meat imports - pork, beef, and mutton - will be included into a system, in which importers will have to report to provincial-level commerce administration about their purchases overseas.

The report system may allow more importers to exist and result in a stronger integration between import regulation and domestic market stability, said Zheng Jinxiu, head of a Beijing-based meat processing company.

During the Lunar New Year holidays, there were reports that some allegedly quality 'green' pork was selling for 60 yuan (HK$71) to 100 yuan per kilogram and even more, while the prices for beef and mutton were on the increase at the same time.

Chen Xu, a Shanghai-based economic blogger, noted that in five years, China's annual grain demand would rise by four million tonnes. In 2010, China hit a historical high in grain imports, including 1.57 million tonnes of corn and 1.2 million tonnes of wheat, according to customs figures.

Cheng Manjiang, a senior researcher with Bank of China (International), warns if the rice crop fails in China, there would no option but to buy overseas as the local supply is too small to meet Chinese demand.

Chen Xikang, a researcher with the Chinese Academy of Science, told the Oriental Morning Post in Shanghai grain prices in China were likely to see a 4-5 per cent annual rise in the next few years.

Imports grew faster than exports in January, much of it caused by buying more expensive commodities from abroad, such as grain and metal ores.

The General Administration of Customs reported that in January total foreign trade was worth US$295.01 billion, with exports of US$150.73 billion, up 37.7 per cent year on year, and imports of US$144.28 billion, up 51 per cent. The rise in import value saw China's trade surplus fall to US$6.45 billion, below the US$10 billion mark for the first time in eight months.

Imports leap

China's trade surplus for January fell below US$10 billion for the first time in eight months as imports increased: 51%