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China open to importing grain

02/01/2013 @ 7:32am

China appears to be coming to terms with its reliance on grain imports it agreed to as a condition to accession to the World Trade Organization over a decade ago, with a senior rural planning official saying Friday that such trade is good for China and for global markets.

Even since significantly opening up trade with the West after relative isolation for the first few decades under Communist rule, China has kept tight control over its grain imports, aiming for self-sufficiency while capping low-tariff quotas for wheat, corn and rice at less than 5% of total consumption. Rising affluence and changing diets could soon test the cap, and any move to raise it would spell opportunity for foreign grain exporters.

Cheaper imported wheat and rice of late put downward pressure on domestic prices and squeezed profit margins for some farmers, triggering fears that China may curb some food imports. But Chen Xiwen, the director of the Office of the Central Rural Work Leading Group, the Chinese Communist Party's top rural policy-making body, told reporters Friday that such a move would be out of the question.

"We won't go back to closing the doors," Mr. Chen said.

China should use both international and domestic supplies to meet local demand, importing products that are in shortage to stabilize domestic prices, Mr. Chen said, describing such trade as beneficial to markets both at home and globally.

Efforts to contain food-price inflation by selling corn to feedmills at auctions strained government corn stockpiles in 2011.

While the experience drove home the message that the government needed global markets as a backstop for food security, Mr. Chen stopped short of indicating China has any plans to abandon or expand its import quotas.

In October, it issued the same quotas for rice, corn and wheat that it established during WTO-entry negotiations, and which have been in effect since 2004.

Not that the quotas have yet been at serious risk of being exceeded. Last year, corn and wheat imports tripled to 5.2 million and 3.7 million metric tons, respectively according to customs data. Rice imports quadrupled to 2.3 million tons.

That's against quotas of 7.2 million, 9.64 million and 5.32 million tons, respectively.

And though Mr. Chen gave a nod to the benefits of trade, he also emphasized the need for a high degree of self-sufficiency in grains while further consolidating China's fragmented agricultural sector to increase productivity.

"Keeping a high self-sufficiency rate in grains accords with China's situation, and is also a contribution to the world's grain security," he said.

China doesn't include soybeans in its 5% import rule. The country buys 60% of the world's traded soybeans.

"If we exclude soybeans, the 95% self-sufficiency target can be maintained for quite a long time," Tang Renjian, Mr. Chen's deputy told reporters.

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