China’s sugar industry ‘panics’ as Beijing removes protective tariff in a bid to plug shortage

Name: Coronavirus backlash further fraying China’s ties to global economy
Uploaded: 2020-06-03T09:00:11.000Z
Duration: 5 min 2 s
Description: Coronavirus backlash further fraying China’s ties to global economy

In a bid to fill a shortfall in sugar demand, China has let a safeguard tariff lapse, meaning foreign imports will now be cheaper to buy

Local industry ‘panicked’ by the move, which may put a stop to widespread smuggling of sugar along China’s border regions

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Brazilian exporters expected to take full advantage of the safeguard lapse, which will see the tariff for foreign sugar shipments to China above the annual quota level reduced. Photo: Reuters

Orange WangandSu-Lin Tan

Published: 5:00pm, 3 Jun 2020Updated: 10:33pm, 3 Jun 2020

China has ignored its own sugar industry’s pleas for protection after allowing a safeguard tariff on sugar imports to lapse, a move that was welcomed by some of the world’s major producing nations, including Brazil and Australia.

A three-year safeguard tariff on sugar imports was enforced in 2017 after China’s Ministry of Commerce found an increase in imported sugar had “caused serious damage” to the Chinese industry, which was already crippled by rising production costs.

China imposes a tariff of 15 per cent on shipments within its annual quota of 1.95 million tonnes. But the safeguard measure, which lapsed on May 22, meant imports above this annual quota were initially taxed at 95 per cent, reduced by 5 per cent each year over the course of the three-year term.

Now, with the term lapsed, import volumes above China’s annual quota will now be taxed at 50 per cent, instead of the 85 per cent tariff applied before May 22 – a move which has been decried by domestic producers.

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Coronavirus backlash further fraying China’s ties to global economy

The Chinese government did not respond to a petition filed in early-May by sugar associations in seven Chinese provinces and cities, including the biggest production hub in Guangxi, asking to extend the safeguard. The organisations said that the industry was “panicking” at the change.

“The survival and development [of China’s sugar industry] are facing very severe challenges,” read a copy of the letter from seven industrial associations seen by the South China Morning Post. “All domestic producers are operating at a loss. It is hard to keep the market stable and in turn this is causing social conflict and commercial instability.”

The Guangxi Sugar Association confirmed that it has yet to hear from the National Development and Reform Commission, the economic planning agency. Neither China’s Ministry of Commerce nor its customs authority responded to requests for comment.