INTERNATIONAL AGRICULTURE AND TRADE (CHINA) June 28, 1996
Approved by the World Agricultural Outlook Board
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Economics Editor
Frederick W. Crook
(202) 219-0002
Technical Editor
Martha R. Evans
Authors
M. Christina Valdecanas
W. Hunter Colby
Frederick W. Crook
Xinshen Diao
William Lin
Zhi Wang
Word Processing
Beverly Payton
Graphics
Wilma Davis
Summary
1995's Soft Landing
Agricultural Imports Up, Agricultural Exports Down
China's Agricultural Policy Developments in 1995
Government To Boost Inputs for 1996
Good Crop Projected for 1996
Edible Oil Imports To Remain High in 1996
China's Centralized Cotton System Struggles Along
China Brings Volatility To the World Sugar Market
China's Grain Stocks: Background and Analytical Issues
The Development of China's Vegetable Markets
Hong Kong Looks Anxiously to 1997
Appendix tables
Approved by the World Agricultural Outlook Board. Summary released
June 18, 1996. Summaries and report text may be accessed electronically.
For details on electronic access, call ERS Customer Service (202) 219-0515.
Soft Landing in 1995
As the country enters the first year of the Ninth 5-Year Plan
(1996-2000), China's economic policymakers have reiterated their
commitment to continued reform. Although economic growth and
price inflation in 1995 remained in double digits, the economy
performed much closer to initial targets than in previous years.
While controlling inflation remains a top priority, the economic
leadership is likely to loosen some macroeconomic controls under
pressure to create more jobs and maintain strong economic
performance. Short-term policies and administrative measures for
the agricultural sector will likely maintain current levels of
production. Further changes in investment laws and import
regulations are also expected, and China's economy is forecast to
grow at a pace just under 10 percent annually for the rest of the
century. [M. Christina Valdecaas, (202) 501-6133]
With overall annual economic growth and inflation falling in the
range of initial targets, China's economic policymakers declared
themselves successful in attaining a "moderate" level of economic
growth of around 10 percent in 1995. Restrictions on credit and
fewer approvals for new investment projects helped prevent
economic overheating and dampened inflationary pressures.
Although China continues to make progress in reforming the
banking sector and foreign exchange rules, the leadership has
remained hesitant to take on more controversial steps such as
reform of the debt-ridden, state-owned enterprise sector. Such
underlying inconsistencies within the economy are expected to
challenge continued growth in the years ahead.
Controlling Inflation
After failing to meet their economic targets for 1994, China's
economic policymakers began 1995 with a push for greater control
of the country's credit sector. Following the policies set forth
in Vice Premier Zhu Rongji's 16-point proposal of 1993, China
embarked upon a more intensive course of controlling credit and
investment spending. These policies included caps on fixed
investment spending, restraints on existing credit, and
crackdowns on unauthorized lending.
The initial result of these programs was to temper economic
growth by lowering the rate of industrial production. The number
of approvals granted for new projects was restricted as the
country's leaders maintained a tighter grip on the money supply.
However, fearing possible unrest due to unemployment, the
government continued to aid ailing state-owned firms. The
additional credit granted to inefficient state firms led to
inflationary pressures and increased food prices, especially in
urban areas.
Nevertheless, by the end of 1995, the credit-tightening policies
for new ventures, coupled with other administrative controls,
such as grain rationing and postponing price reforms, did work to
control inflation. Having planned annual growth of 10 percent
for the year, China's economy came quite close to its target,
registering overall economic growth of 10.2 percent in 1995.
Total domestic output reached $695.6 billion and inflation was
kept at a year-on-year growth of only 14.8 percent, compared with
more than 21 percent in 1994. Official urban unemployment rose
slightly to 2.9 percent, and real per capita GDP averaged $485
throughout the country.
Although real per capita income continues to increase, the gap
between rural and urban incomes has widened (figure 1). From
1986-95, average real urban per capita income more than tripled,
while real rural per capita income only doubled. Beijing is also
concerned with the continued disparity among the country's
geographical regions.
Problems over the government's debt situation also persisted in
1995. China's government deficit (including payment on
principal) grew more than 30 percent. Assuming continued
hesitancy on the part of Beijing to take steps to reign in money-
losing state-owned enterprises, the total government deficit is
expected to rise to more than $23 billion in 1996.
External Relations Flourish
China's external account had a good year in 1995 with overall
trade rising to more than $280 billion, nearly 18 percent above
1994 levels (appendix table 9). Although imports increased to
$132 billion, exports grew by more than 23 percent to $148
billion and helped China maintain a trade surplus of $16.7
billion in 1995 (table 1). Overall, China ranked as the world's
11th largest trader, conducting trade with more than 220
countries (figure 2).
Continued industrialization and rising per capita income remained
the predominant force behind China's strong trade performance of
1995. However, some of the increase in trade levels was due to
individual policies undertaken in the past 2 years. For example,
a reduction in the value-added tax rebate from 17 percent to 14
percent in July 1995 contributed to increased exports as
exporters rushed to ship their goods before the new rates took
effect.
Capital flows into China were likewise healthy during 1995.
Direct foreign investment in China increased 11 percent and the
country accumulated foreign exchange reserves in excess of $70
billion. A total of 120,000 foreign-funded enterprises were
operating in the country by the end of 1995. China received
roughly $11.7 billion in foreign government loans or concessional
loans from countries and international financial institutions.
Growth by Sector
According to China's State Statistical Bureau, most sectors of
China's economy performed well during the past year. Partially
due to government policies restricting the levels of new
investment, industrial output for China grew more slowly in 1995,
but still showed a year-end increase of 14 percent, with total
output reaching nearly $298 billion. Consumer-oriented
industries continued to outpace the country's basic industries.
In 1995, foreign, joint, and cooperative ventures led total
industrial production, registering 19 percent growth, followed by
collective enterprises which posted 15.8 percent growth. Light
industry grew more than 16 percent while heavy industry grew 12
percent. State-owned enterprises grew approximately 7 percent.
China's State Statistical Bureau reported that agricultural
output grew by 4.5 percent in 1995, reaching a value of more than
$132 billion. Total grain output was reported to have increased
to 465 million tons, a 4.5-percent increase over 1994. Oilseeds,
cotton, and meat production increased 13.1 percent, 3.7 percent,
and 11 percent, respectively. In March, China's Ministry of
Agriculture announced that the country was the world's largest
fruit producer, harvesting approximately 39 million tons in 1995.
However, due in large part to the continued drain on the
country's credit system brought on by China's debt-ridden,
state-owned enterprises, China's banking sector failed to make as
much progress in 1995. Although the central bank law was passed
by the National People's Congress in March 1995 and stipulated
that the People's Bank of China has independent control of the
country's monetary policy, many creditors found themselves
pressured by the state to continue funding state-owned
enterprises throughout 1995. An estimated 40-percent of all
state firms were in debt, and triangular debt (debt between
banks, state firms, and state-firm suppliers) topped $84.3
billion.
Another Good Year?
The State Statistical Bureau estimates that China's economy will
grow 9.7 percent during 1996, with inflation hovering around 10
percent. China's economic policymakers hope to use the 1996
economic agenda as a springboard for the Ninth 5-Year Plan
period, focusing on those areas which need the most attention.
Many large-scale projects are slated to begin this year.
In March, Premier Li Peng laid the groundwork for the year's
economic agenda in his address to the National People's Congress.
Li declared controlling inflation as the country's "top priority"
and reiterated the government's commitment to state-owned
enterprise reform. In addition, he announced that there would be
a 32-percent increase in fixed asset investment for 1996, and on
May 1, the Central Bank lowered the interest rate by 0.75 percent
to ease some of the burden on debt-ridden firms.
Coupled with the suspension on subsidies for long-term savings
rates on April 1, the move to decrease interest rates suggest
confidence among the leadership that past policies have given
them adequate control over inflation and a greater willingness to
allow more expansion within the economy. Since the beginning of
the year, the market has determined the inter bank loan rates.
The Central Bank maintains bank regulations, and China is hoping
to introduce a floating interest rate regime.
For agriculture, Li promised further assistance to fortify crop
harvests. Agricultural investment and rural development are to
be one of the key targets in the coming years. Government
investment in agriculture during 1995 made up only 1.9 percent of
total investment in fixed assets.
In 1996, China's external trade and current account balances are
likely to fall below the record levels set in 1995. Relaxation
of trade controls have already spurred higher of imports. Import
permits and quotas on motor vehicles and engines were
discontinued on December 31, 1995. Import quotas no longer exist
for alcoholic beverages and chemical products; however the
Ministry of Foreign Trade and Economic Cooperation suggested that
quotas for cereals and vegetable oils will remain in some form.
By the first quarter of 1996, Chinas trade surplus shrunk to
$1.15 billion as imports increased by 23.3 percent over the same
period in 1994 and exports declined by 8.7 percent. Coupled with
easing credit, lower import prices resulting from a weaker
Japanese yen will further increase Chinas demand for imported
commodities. China's exporters likely will not be able to repeat
the surge of shipments experienced in 1995 to balance the
increased capital import requirements brought about by higher
allowances for fixed investment spending. The country will
likely maintain a trade surplus, but at lower levels than 1995.
During 1996 and Beyond
Whether Beijing is able to meet the targets for 1996 and beyond
will depend largely on the leadership's ability to reform the
weaker parts of the economy. Much of the success in keeping
consumer prices relatively low during 1995 was attributed to
government price controls rather than advancing price reform.
Expected reforms within the financial sector will be instrumental
in tempering the economy-wide repercussions of failing state
enterprises. Unless the growing triangular debt is addressed,
pressures for increased credit will likely result in greater
inflation, as will the need for larger budget outlays to fund the
projects called for in the Ninth 5-Year Plan and the need to
create more jobs for Chinas growing work force.
For the long-term, China's economy will be tested on its ability
to integrate the various regions and equalize levels of growth
across the entire country. Moreover, as noted in the proposal
for the Ninth 5-Year Plan, growth within different sectors of the
economy must be balanced. For China's agriculture, this will
mean continuing to modernize the country's rural base and
developing local industries to support agricultural activities.
In industry, growth in basic industry must be brought up to the
level of consumer- and export-oriented operations. Without such
broad ranging developments and strengthening of the country's
economic fundamentals, China will likely find meeting its targets
for 1996 and in future years a difficult task.
References:
1. Economic Statistics Communique for 1995. China Dailys
Business Weekly, March 10-16, 1996.
2. GDP Up 10.2 Percent, Meeting Target. China Daily, January 6,
1996.
3. Li Treads Delicate Line on Economy. South China Morning Post,
4 March 1996.
4. The Crutches Stay, The Far Eastern Economic Review, March
21, 1996, p.54.
5. Challenges Facing Asian Economies. Business Times, February
8, 1996.
6. PRC 1995 Reports $16.7 Billion Trade Surplus. Hong Kong
Standard, January 23, 1996.
7. How Fast the Economy May Grow Next Year. Jingji Ribao,
October 28, 1995.
8. Striving for a Good Start. Renmin Ribao, December 7, 1995.
Box 1
To 2000 and Beyond
In addition to setting yearly targets, China continues to be
governed by an economic 5-Year Plan (FYP), which provides a
blueprint for development within the major economic sectors of
the economy. The first year of each plan is usually marked with
broad proposals by sector for major projects and production
targets the leadership hopes to attain.
The main objective of the Ninth 5-Year Plan (1996-2000) will be
to maintain "rapid and healthy development" of the economy by
increasing its "overall quality and efficiency." The major tenets
of the plan include increasing productivity within the industrial
sector; providing needed infrastructure and investment in the
rural sector; and developing the country's tertiary industry;
modernizing the country's information distribution system;
developing science, technology and education programs; and
coordinating economic development among different regions with
the goal of forming regional economies, and balancing growth
rates among China's regions.
Plans for Agriculture
Strengthening the country's rural economy is a high priority in
the Ninth 5-Year Plan. Increasing efficiency and output will not
only raise the standard of living for China's farmers, but will
also lessen inflationary pressures by keeping food prices low.
To this end, China's government will encourage steady growth in
commodities such as grain, cotton, and edible oils. Efforts
will also be made to develop local industries to complement the
agricultural sector.
Infrastructure modernization is a key element in the rural
program. China hopes to expand the area of land under irrigation
and explore other types of water-management techniques to bring
about higher yields. In addition, China will devote resources to
upgrading low-yield farmland and to developing scientific methods
to increase yields and improve efficiency.
Source: Xinhua, Beijing, 4 October 1995.
Agricultural Imports Up, Agricultural Exports Down
China's agricultural imports jumped 75.8 percent while exports
fell 1.7 percent in 1995. China became a net importer of grains
and other land-intensive products and is beginning to export more
processed and high value-added agricultural products. U.S. farm
exports to China in 1995 reached a record US$2.63 billion,
doubled from 1994. [Wang Zhi (202)219-0993]
In 1995, China's agricultural trade (exports and imports) rose to
US$23.81 billion, an increase of 25 percent over last year. The
increase stemmed from imports, which jumped 75.8 percent to
$11.55 billion, while exports decreased for the first time in
recent years, down by 1.7 percent to $12.26 billion(1). The
boost in imports came from a sharp increase in the purchase of
grains from the international market, while the decrease in
exports was because of a dramatic drop in corn, rice, and cotton
shipments. China's agricultural net trade structure is becoming
consistent with its production resource endowments. It seems that
China is starting to export more processed and high value-added
agricultural products and import more land-intensive and semi-
processed agricultural commodities. In 1995, China shipped more
than 75 percent of its agricultural exports to Asian markets.
About 40 percent of China's agricultural imports came from the
United States and Canada. U.S. agricultural exports to China in
1995 more than doubled that of 1994, reaching a record US$2.63
billion.
Commodity Structure of China's Agricultural Trade
There were dramatic structural changes that took place in China's
agricultural trade in 1995 (appendix tables 5,6,7, and 8).
First, China shifted from a net grain exporter in 1993 and 1994
to a net grain importer. Its total cereal exports declined by 95
percent, while imports increased by more than 120 percent,
leading to a 20-million ton (all tonnage is in metric tons unless
otherwise stated) net grain import position. It was a net cereal
exporter for nearly 6 million tons in 1993 and 2 million tons in
1994. Among the net grain imports in 1995, there were 11.6
million tons of wheat, 5 million tons of corn (8.7 million tons
net exports in 1994), and 1.5 million tons of rice (1 million
tons net exports in 1994). Second, China nearly doubled its net
cotton imports (from 0.39 million tons in 1994 to 0.72 million
tons in 1995). Third, there was a dramatic increase in exports
of processed agricultural products. For instance, exports of
fresh and frozen pork increased by 50 percent (to 150,000 tons),
exports of vegetable and fruit products increased by 33 percent
(to US$1.08 billion), and exports of tobacco products increased
by 45 percent (to US$1 billion).
There are short- and long-term reasons for this shift. The short
term reason for the structural shift was the 2.5 percent decrease
of grain output in 1994, along with a vigorous grain export
position shipping out 7.94 million tons during 1993 and 1994,
which caused domestic grain shortages and price surges in early
1995. China's domestic open market grain prices exceeded
international prices by 30 to 50 percent. To stabilize the grain
market and balance the supply and demand for food, feed, and
industrial use, the state constrained grain exports and increased
imports.
However, there were profound long-term economic forces at play
as well. To better understand the overall picture of the
structural change of China's agricultural trade last year, we
aggregated agricultural trade data according to codes 1-24 in the
"Harmonized Commodity Description and Coding System" (HS) from
China's General Administration of Customs into four broad
categories based on their degree of processing and readiness for
direct consumption.
Table 2 presents China's total agricultural trade data (HS 1-
24)(2) separated into four major components: bulk commodities;
intermediate processed goods; horticultural products; and
consumer-ready goods(3). Figure 3 shows the relative size of the
four broad commodity groups for China's agricultural exports
and imports.
In 1995, half of China's agricultural exports were consumer-ready
processed goods, while nearly 90 percent of its agricultural
imports were bulk commodities and processed intermediates. The
net trade data in table 2 reveals that China is a net importer of
bulk and processed intermediate agricultural products, but a net
exporter of horticultural and consumer-ready processed
agricultural commodities. This net trade structure clearly shows
that China's agricultural trade behavior is becoming consistent
with its factor endowments and comparative advantage: a huge
population and rural labor force relative to available arable
land area, and may reflect an important shift in China's
agricultural trade policy from grain self-sufficiency to limited
self-sufficiency. By importing more land-intensive products such
as grains, oilseeds, cotton, and other bulk commodities and semi-
processed goods for further processing and re-exporting, and by
exporting more labor-intensive, highly processed, high value-
added agricultural products to the international market, China
will be able to further improve its efficiency of agricultural
production resource allocations and increase farm income. Future
domestic economic reform and foreign trade liberalization as
China implements its WTO commitments, will reinforce these market
forces and could well push China's agricultural production and
trade structure along this path for years to come.
Geographical Distribution of China's Agricultural Trade
The geographical distribution of China's total and agricultural
trade for 1995 is shown in table 3. The top five agricultural
suppliers to China were the United States, Association of South
East Asia Nations, (ASEAN7, includes Indonesia, Malaysia,
Thailand, Philippines, Singapore, Burma, and Vietnam), European
Union (EU15), Canada, and the Latin American Newly Industrialized
Countries (LNIC3, includes Argentina, Chile and Brazil). More
than 70 percent of China's agricultural exports went to Japan,
Hong Kong, Macao, and Taiwan (CH3), Korea, and ASEAN countries.
Table 4 presents the market share of China's agricultural imports
according to suppliers, while table 5 shows China's agricultural
exports by destination. In the bulk goods market, the United
States and Canada (40 and 24 percent, respectively) were dominant
players, but the EU15 and ASEAN7 also played an important role
(16 and 11 percent respectively). The United States and ASEAN7
were the two largest agricultural suppliers to China during 1995,
but were quite different in what they shipped. U.S. exports led
in the bulk and consumer-ready goods market, which were either
land intensive and/or less expensive to transport. The ASEAN7
supplied more than half of China's horticultural imports and
nearly one third of processed intermediate commodity products
because of their close proximity relative to the U.S. and Canada.
Japan, Russia, and Latin American NICs were minor suppliers in
terms of total farm products. Latin American NICs, however, were
important players in the semi-processed goods market (17
percent), while Japan and Russia were important in the consumer-
ready goods market (17 and 12 percent, respectively). Market
share data indicate that in bulk commodity markets, competition
with the United States for market share comes mainly from Canada
and the EU for wheat and corn, while ASEAN countries are China's
major suppliers for rice. In the semi-processed goods market,
ASEAN countries are major competitors with the United States. The
toughest competition is in the consumer-ready processed goods
market: the EU, Japan, Russia, and ASEAN countries all took a
large share of the market and compete with U.S. products.
On the export side China shipped different commodity groups to
different countries. Japan absorbed 44 percent of China's
consumer-ready processed exports and 39 percent of its
horticultural exports. Hong Kong, Macao, and Taiwan took 47
percent of China's semi-processed agricultural products. ASEAN7
took 37 percent of China's bulk exports while Hong Kong, Macau,
and Taiwan absorbed 22 percent, Japan 12 percent, and Korea 11
percent.
Agricultural trade was unevenly distributed among different
provinces within the country. In 1995, the largest agricultural
trading province was Guangdong, which exported US$2.7 billion
(22 percent of the national total) and imported US$2.3 billion
(20 percent of the national total). Beijing, Shandong, and
Fujian were three other provinces for which total agricultural
trade exceeded 2 billion U.S. dollars. Traditionally large
agricultural provinces in Northeast China suffered dramatic drops
in exports in 1995 because of the reduction of grain and other
bulk commodity sales.
Record U.S. Agricultural Exports to China in 1995
In 1995, U.S. agricultural exports to China more than doubled
from the previous year, reaching a record US$2.6 billion.
Sharply increased sales of wheat, corn, vegetable oil, and other
semi-processed farm products accounted for most of the U.S.
agricultural export expansion to China. Table 6 presents
bilateral agricultural trade flows between the United States and
China. U.S. imports from China were segregated into competitive
and non-competitive categories(4), while the data on U.S. exports
to China are listed in both major commodity groups and also in
the 4 broad categories used earlier. The data show that the
value of U.S. grain exports to China increased most rapidly,
rising nearly 7 times over 1994. The value of U.S. oilseeds and
animal products tripled and doubled, respectively. Because of
this rapid increase, the United States had an agricultural trade
surplus with China in excess of US$2 billion in 1995 (appendix
table 9).
Figures 4-7 plot the time path of U.S. agricultural exports to
China for the past 15 years. Figure 4 shows the value of U.S.
total agricultural exports to China measured in current year
prices. The other three charts depict major commodity shipments
measured in tons. They show that U.S. agricultural exports to
China fluctuated significantly over the period. When economic
reforms began in the late 1970s, China's government decreased
mandatory procurement of agricultural products and increased
imports to reduce the burden on China's farmers and to promote
rural development. From 1979 to 1981, China imported 40 million
tons of grains. As the sales of grains, cotton, and oilseeds and
products increased, U.S. agricultural exports to China reached
its first peak of more than US$2 billion in 1980. Trade declined
from 1981 but picked up again after 1986 as China's grain
production stagnated and as the U.S. Export Enhancement Program
targeted China to counter the EC's subsidized wheat sales there.
In the late 1980s, U.S. agricultural exports to China expanded
again and reached a second peak in 1989 mainly because of
increased wheat sales. During the early 1990's, U.S.
agricultural exports to China dropped again because of successive
good harvests and policy changes in China. From 1994, U.S.
agricultural exports to China rebounded again and reached a
record in 1995.
One cause for the surge in imports was the poor grain harvest in
1994, but if one carefully examines the structure of imports, it
is obvious that China seems to have purchased more corn than
wheat and more vegetable oil than oilseeds compared with the
previous two agricultural import peaks (Figure 5,6, and 7). This
indicates that there were more profound economic factors
underlying the recent agricultural import surge, such as rising
incomes prompting consumers to purchase more meat and processed
foods. These trends are not like the temporary recovery and
pure policy phenomena which occurred in the 1980s.
Rather they are likely a reflection of trends caused by recent
rapid economic growth and industrialization in a land-scarce
economy, which is becoming more decentralized and market-
oriented. These trends look promising for U.S. agricultural
exports to China in the coming years, especially for land
intensive bulk commodities and semi-processed intermediates.
There may be fluctuations in trade in 1996 and 1997 because of
policy changes and weather conditions, but the economic forces
underlying this structural shift are expected to be reinforced
during the course of China's economic reform and will override
other changes over the long term.
Figure 8 depicts changes in the structure of U.S. agricultural
exports to China from 1980 to 1995. It shows that although U.S.
exports of consumer-ready processed goods to China increased
steadily at more than 35 percent a year in recent decades, these
goods still accounted for less than 10 percent of U.S. farm
products sold in China. Bulk and semi-processed commodities
constituted the major portion of U.S. agricultural exports. The
proportion of bulk commodities has been declining and the portion
of semi-processed products has been steadily raising since 1989.
Figure 9 describes the trend of U.S. agricultural imports from
China. Noncompetitive imports, mainly specialty items, such as
tea, silk, Chinese herbs, and some prepared and preserved fruits,
grew steadily over the last decade at a moderate rate of 5.5
percent annually. These types of imports are expected to continue
expanding in the coming years because demand for such specialty
commodities is growing. The competitive imports from China grew
at a higher rate, despite of its significant fluctuation over the
same period.
Total Trade with Neighboring Regions Expands(5)
China has a very long border with 15 Asian countries. Trade with
these neighbors expanded dramatically from US$104 billion in 1992
to US$149 billion in 1995. Trade with Asian economies accounted
for 52 percent of China's total imports and 54 percent of its
total exports (table 7). Japan was the largest supplier of
China's imports and the second largest market for China's exports
after Hong Kong.
China's Agricultural Trade with the Region
Tables 8 and 9 depict market shares -- each neighbor's share of
China's agricultural imports and each neighbor's share of China's
exports by major commodity groups. The data clearly show that
neighboring economies took 70 percent of China's agricultural
exports, but only supplied 10 percent of China's agricultural
imports. However, those neighbors supplied China with one fourth
of its horticultural imports and more than 40 percent of
consumer-ready imports. The reason for these trade patterns is
quite obvious since most of China's neighboring countries are
land scarce like China. Considering trade dependence, China
depended on its northeastern and southeastern neighbors for most
of its local agricultural imports and exports. The economies
along its northwest and southwest borders played minor roles as
trade partners of agricultural commodities until the present.
China's agricultural trade with neighbors to the northeast
accounted for 41 percent of its total farm exports and 5 percent
of its world agricultural imports. In 1995, China shipped US$5.7
billion in agricultural products to these economies, a 40-
percent increase from 1992, while agricultural imports from
these neighbors doubled from its 1992 level, totaling $483
million. This region absorbed almost a half of China's
horticultural and consumer-ready sales and a quarter of bulk
exports.
China's agricultural trade with its northwestern and southwestern
neighbors continues to grow. In 1995, farm trade with economies
in the northwest summed to US$77 million, a little more than 4
percent of China's total trade with the region. While two-way
agricultural trade with southwestern neighbors reached nearly
US$100 million in 1995, this trade accounted for only 10 percent
of China's total trade with the region.
In 1995, China's trade with its southeast neighboring countries
summed to US$65 billion, at the 1992 level. But agricultural
trade expanded rapidly. Exports increased by more than 50
percent from 1992, reaching US$3.7 billion, and accounting for 27
percent of China's total agricultural exports. Imports increased
by 20 percent and summed to US$400 million. This region bought
nearly half of China's semi-processed product sales but also
played an important role in China's horticultural commodity
import market (13 percent of total imports).
References
1. China's Customs General Administration, China's Customs
Statistics (Monthly). Economic Information & Agency, Hong Kong.
December, 1995.
2.Crook, Frederick, "China Opens Trade Door to Neighboring Asian
Economies", Asian and Pacific Rim: Situation and Outlook Series,
RS-93-6, ERS, U.S. Department of Agriculture, September 1993.
3. Tuan, Francis, "U.S. - China Trade Relation in Perspective",
Asian and Pacific Rim: Situation and Outlook Series, RS-93-6,
ERS, U.S. Department of Agriculture, September 1993.
Notes:
1. China Customs Statistics, International Business, February 12,
1996, Ministry of Foreign Trade and Economic Cooperation,
People's Republic of China.
2. The numbers are aggregates in HS Chapter from 1 to 24, which
does not include raw hides and skins, which is part of HS Chapter
41, furskins, which is part of HS Chapter 43, and cotton, which
is part of HS Chapter 52, because detailed HS trade data for 1995
from China's Customs Statistics are not available yet.
3. Bulk commodities are unpackaged products that are inexpensive
to ship, it includes grains, oilseeds, plant-based fibers such as
cotton, raw rubber and unmanufactured tobacco. Land use accounts
for a significant share of the production costs for bulk
production, especially compared with the other commodity groups.
Processed intermediates are goods derived from bulk commodities
and need further processing for human consumption. It includes
flour, feed, live animals, animal fats and oils, as well as
animal-based fibers such as wool. Horticultural products are
consumer-ready, unprocessed fresh commodities such as fresh
fruit, vegetables, and flowers. They often require special
handling such as containerization and refrigeration. Consumer-
ready processed products are commodities that have been
significantly transformed with high value-added such as
preserved vegetables, fruits and nuts, fresh and frozen meats,
eggs, dairy products, processed meat, and beverages.
4. The noncompetitive imports are those products which the United
States usually does not produce and export (or only produces and
exports in a very small amount), such as bananas, coffee, cocoa
and products, tea, spices, natural herbs, raw silk, natural
rubber, and essential oils, etc.
5. All data used in this section are based on China's Customs
Statistics, Economic Information Agency, December 1995.
China's Agricultural Policy Developments in 1995
In 1995, authorities debated the benefits and costs of their
self-sufficiency strategy. While the central policy direction is
not certain, there are signs that China is beginning to abandon
its long held self-sufficiency policy in favor of a limited self-
sufficiency strategy. This article also discusses the new
"grain bag" and "vegetable basket" policies to support urban food
consumption priorities. [Frederick W. Crook (202)-219-0002]
Policy Discussions About Self-Sufficiency
For decades China's leaders and scholars have debated the
benefits and costs of self-sufficiency and comparative advantage
with regard to agricultural products. There has also been much
discussion of the sustainability of agricultural production
growth in China, with some scholars raising warnings for many
years about land degradation, the shortage of irrigation water in
the North China Plain, the trend of decreasing government
investment in agricultural research, and other issues. China's
recent history of switching from large exports to large imports
of grain has prompted considerable analysis of what role China
ultimately will play in the global food balance.
These discussions were renewed with great interest in 1994 and
1995 because of recent predictions that China's grain imports
could be very large in several decades, and because of China's
major lurch from large grain exports to large imports in 1995.
One manifestation of this recent concern was the initiation of
the "Grain Bag Policy" which gave provincial governors
responsibility for maintaining adequate grain supplies.
In China's policy debate on grain, one group of scholars and
leaders argued that China should rely on its own resources for
food supplies. The government should invest additional funds to
support growth in agricultural production.
A second group of scholars and officials argued that it is very
costly for China to follow a self-sufficiency policy. They noted
that China has limited arable land, a relatively poor
transportation infrastructure, relatively abundant natural
resources, and a large labor force. This endowment gives China
certain comparative advantages in producing manufactured goods
for the world market. They argued that China should use the
principle of comparative advantage--produce those goods where
there is a comparative advantage and import grains and oilseeds.
A third--and strongest--group in this policy debate seems to have
settled on "limited self-sufficiency." They argued that China
should specialize in producing labor intensive crops such as
fruits, vegetables, and specialty crops and should use natural
endowment to produce and export industrial products. It makes
good economic sense to import a limited quantity of land
intensive crops such as grains and oilseeds.
China's leaders now talk in terms of "limited self-sufficiency"
--importing from 5 to 12 percent of annual grain consumption
requirements. Whereas a few years ago, leaders would scoff at
projections that China would import 20 million tons of grain by
the year 2000, now they believe China could well import 40
million tons by 2000 or 2005.
As China moves to this new policy orientation, authorities
naturally will be concerned about sources of grain supplies. Can
it depend on world grain markets for supplies of wheat, corn, and
rice? In the summer of 1995, some leaders felt that China could
get sufficient supplies of wheat and corn from international
grain markets. But leaders were concerned about purchasing rice
supplies on the international market. A corollary to this
possible policy shift is that China is very concerned about the
resiliency of international grain markets and the reliability of
suppliers (will food exports be used against China as a tool to
meet a given country's foreign policy objectives, i.e., grain
embargoes?). Similarly, grain suppliers are interested in
whether China will be a reliable buyer of grains.
"Grain Bag" Policy
In early 1995, the central government initiated a new grain
policy in which provincial governors were given responsibility to
maintain the "grain bag." With this policy governors are to: a)
stabilize area sown to grain crops; b) guarantee investment in
agricultural inputs like chemical fertilizer to stimulate grain
production; c) guarantee that certain quantities of grain are put
into stocks; d) ensure that transfers of grain in and out of a
province are completed; e) stabilize urban resident concerns by
supplying grains and edible oils; and f) stabilize grain and
edible oil prices. If a local disaster strikes, the local
resources should be used first. If the local government cannot
handle the situation, then the State Administration for Grain
Reserves will provide assistance. The central government took
this course to reduce its financial exposure. The financial
responsibility for managing grain and edible oil has been
transferred from the central government to provincial levels.
To achieve these objectives, governors will use their provincial
Grain Bureaus which will perform both policy and commercial
operations. Policy operations consist of purchasing grains
(oilseeds) at fixed quota prices (below market prices),
transporting, storing, milling, transferring, and retailing
grain. Losses incurred by the policy divisions in the Grain
Bureau while performing these operations will be subsidized by
the central government. For 1995, the central government planned
to purchase 50 million tons of grain via this operation. With
regard to the old grain and edible oil rationing system (1953 to
1993), urban families were issued grain books which entitled them
to purchase fixed quantities of grain and edible oils at low
fixed prices in government operated grain stores. Grain coupons
were issued as a means of implementing this distribution system.
In 1993, the coupon system ended.
By 1995, various provinces used different systems such as grain
books, grain coupons, or controlled markets to help low income
families obtain low priced grains in the government owned grain
stores. In making these purchases, low income families do not
have a lot of choice--they buy whatever product is on the shelf.
Usually the grain there tends to be older and of lower quality.
Higher income urban residents purchase their grain in open
markets and this grain tends to be fresher and of higher quality.
If a governor finds that his province does not have enough grain
to meet current demand, then he can contact his counterparts in
grain surplus provinces to arrange a mutually beneficial sale.
The central government only gets involved if a province cannot
complete a deal, i.e., cannot find the supply. Presumably, the
central government has three options: lean on a grain surplus
province to sell their grain; take grain out of stocks; or import
grain.
Grain Bureaus are to separate policy operations noted above from
their commercial operations. Once a local state quota purchase
has been met, grain markets can function. Commercial firms of
the Grain Bureau are the only entities authorized to purchase
grain from farmers and participate in local village and township
grain markets. They also can participate in county, provincial,
national wholesale markets, cash, and futures markets.
This new policy has made it more difficult to generalize about
China's grain economy. Whereas before, there was one policy for
the whole country. Now, individual provinces can have different
policies, such as they can add subsidies to grain purchase price.
For example, in 1995 the fixed quota price for corn in Manchuria
was 660 RMB/ton, 820 RMB in the North China Plains area, and 920
RMB in South China. Also, provinces can use different methods to
handle grain supplies for urban poor. As an example, in 1995 the
author visited three provinces and found three different systems
to disburse grain to urban poor people. One simply allowed open
markets to function, the second used grain coupons, and the third
used grain books.
"Market Basket" Policy
The "market basket or vegetable basket" program was initiated in
1988 to boost supplies of vegetables, aquatic products, fruits,
and livestock products for urban residents. The program was
promoted on a nationwide basis in 1989. The program includes
investments to increase production and develop processing,
packaging, storage, and marketing facilities to more efficiently
move products from growing areas to urban retail markets. Funds
have been used to build water control systems (irrigation and
drainage) so that vegetables can be grown even during times of
moderate floods or droughts. Electrical lines, roads, and
wholesale marketing facilities have been built to support the
project.
Provincial governments use funds to subsidize producers and
consumers by issuing regulations governing the use of prime
suburban vegetable land; setting ceiling prices for vegetable and
meat products; providing support for vegetable production through
science and technology; and arranging for shipment of vegetables
out of and into the province. Government tax bureaus have
exempted vegetable production from the value added tax (VAT).
References
1."China's Grain Outlook and Strategy," China's Rural Economy,
No. 8, August 1995, pp. 3-18.
2.Crook, Frederick W., "1995 China Trip Report," FAS/ERS, U.S.
Department of Agriculture, September, 1995.
Government To Boost Inputs for 1996
During the Ninth 5-Year-Plan, government planners intend to boost
supplies of chemical fertilizers. The government also plans to
maintain control of the manufactured input supply system.
Government investment in the agricultural sector picked up in
1994 and 1995, but overall investment in the sector does not
match planned growth for the agricultural sector. Situation and
outlook information for China's rural economy took a giant step
forward when the Ministry of Agriculture published its Report on
China's Agricultural Development 95. [Frederick W. Crook (202)
219-0002]
Government Continues To Control Supply of Key Manufactured Inputs
Government authorities continue to control the supply and prices
for key manufactured agricultural inputs such as chemical
fertilizers, pesticides, and plastic sheeting. In 1993 and 1994,
there was some debate about the costs and benefits of allowing
open markets to supply manufactured inputs. In 1994, the State
Council (China's highest executive authority) issued special
regulations governing the production, distribution, and price of
chemical fertilizers. Chemical fertilizer manufacturers are
required to sell 90 percent of their output to agricultural
material supply companies at standard prices (average price of
US$138.50 per ton in 1996). The supply companies add
transportation and management markups so that the free market
price for urea ranges from US$253 to US$301 per ton.
The government controlled, All-China Federation of Supply and
Marketing Cooperatives, manages the distribution of manufactured
inputs. It does this by managing local supply and marketing
cooperatives' functions with regard to manufactured inputs. But
since local supply and marketing cooperatives are based on local
producers and consumers, it is not clear how the government
actually manages the supply of inputs.
Fertilizer Production and Use Up for 1996
The production target for 1996 is 118 million tons, up 4 million
from 1995. In 1995, China claimed to be the world's number two
chemical fertilizer producer, with 24.5 million tons (at nutrient
weight basis, 114 million tons at product weight basis), up 6.3
percent from the 23 million tons produced in 1994 (table 10).
Also in 1995, China became the world's largest chemical
fertilizer importer with nearly 20 million tons (product weight
basis). Chemical fertilizer application rose from 33.1 million
tons (nutrient weight) in 1994 to 35.7 million tons in 1995, a
7.8-percent increase.
Urea prices rose from 1,400 RMB/ton in 1994 to 2,300 RMB/ton by
the end of 1995. In spring 1996, chemical fertilizer prices
were reported to be 23 percent higher than in spring 1995.
Fertilizer prices rose in 1995 for three reasons. First, in 1994
and 1995, prices for raw materials such as petroleum, natural
gas, and coal used in the manufacture of chemical fertilizers
rose. Also, transportation costs and the price of electricity
increased. Second, the increase in grain prices encouraged
farmers to raise grain so that farmers in spring 1995 were
anxious to purchase extra quantities of chemical fertilizers such
that demand exceeded supply. Third, chemical fertilizer prices
on the international market rose (FB, no. 88, May 8, 1995, P
50). These price increases are a continuation of a trend going
back to the early 1980s (figure 10).
In 1995, fertilizer imports surged to a record 19.9 million tons,
up 62 percent from 1994 (figure 11). The average price China
spent for fertilizer imports rose from US$142 per ton in 1993 to
US$153 in 1994 and increased to US$188 per ton in 1995. In 1995,
the government allocated US$3.7 billion to import chemical
fertilizers compared with US$3.6 billion for imported grain.
Begin box
Peasants Irate Over High Fertilizer Prices
In the past few years, we have collected many anecdotes regarding
farmer's views of rising input costs. Here we have selected one
report featured in an article by Fu Xingyu, "Raise Grain Prices
and Lower Fertilizer Prices Is the Wish of Fertilizer Buyers,"
Beijing, Jingji Cankao, March 26, 1996.
A farmer in Heilongjiang province declared that the government
"gets you coming and going." Farmers have to respond to the
government's call to fulfill grain purchase quotas--and the
government controls the fixed quota purchase price. Meanwhile,
chemical fertilizer is necessary to grow grain, so no matter how
high the price they quote, you have to pay it. From the income
they make from selling grain, the peasants contribute one yuan to
the government, and another yuan is eaten up by a rise in
chemical fertilizer prices. "Isn't this "getting shot at with
both barrels? They get you coming and going, don't they?"
End box
The composition of imported chemical fertilizer has not changed
much in the last few years. In 1995, nitrogen fertilizers
accounted for about 40 percent of total. Very little strictly
phosphate fertilizer was imported while potassium fertilizers
accounted for 22 percent of total. Compound fertilizers (those
with two or more elements) accounted for the remaining 38
percent. The compound fertilizer, diammonium phosphate, imports
accounted for 27 percent of total fertilizer imports.
During the Eighth Five Year Plan (1991-95), 16 billion RMB were
invested to expand large chemical fertilizer plants and as a
result output jumped from 19.8 million tons in 1991 to 24.5
million in 1995, an increase of 23.7 percent. Four large urea
plants with an annual production capacity of over 500,000 tons
were built in interior provinces such as Henan. Nitrogen output
rose 10.3 percent from 17.4 million tons (nutrient weight) to
19.2 million tons in 1995. Four compound fertilizer plants were
built near phosphate deposits in Jiangxi and Yunnan provinces.
Phosphate production increased 26 percent from 5 million tons in
1994 to 6.3 million tons in 1995. Potassium fertilizer output
expanded from 321,000 tons in 1994 to 380,000 tons in 1995.
Potash production facilities were expanded in Qinghai province.
Government planners have identified chemical fertilizers as a key
factor in boosting crop yields in the Ninth Five Year Plan. The
text of the Ninth FYP called for the development of farm related
industries. Specifically, the plan called for authorities to
renovate old chemical fertilizer plants and construct new ones.
Production capacity of factories manufacturing plastic sheeting,
pesticides, and farm machinery should be expanded. The output
target for the year 2000 is 28.4 million tons (nutrient weight
basis ), a 16-percent increase over 1995.
During the Ninth FYP the government plans to expand nitrogen
fertilizer production in energy rich Hainan (natural gas),
Xinjiang (natural gas and petroleum), and Shanxi province (high
quality anthracite). China's goal is to be nitrogen fertilizer
self-sufficient by 2000. Also, authorities plan to expand
phosphate fertilizer production in Guizhou and Yunnan provinces.
The government has decided to allocate 4.3 billion RMB during the
Ninth FYP to expand the potash works in Qinghai province. The
target is to expand facilities to produce 1 million tons of
potash fertilizer per year.
Currently, China is the world's largest producer and user of
plastic sheeting. Annual output is currently above 600,000
tons. News reports indicate current inventories are sufficient
to cover demand for spring sowing for 1996.
Investment in China's Agricultural Sector
Domestic Investment
Investment in agriculture is expected to come from government
budget expenditures, bank loans, rural collectives, township and
village enterprises, foreign capital, and farm families. During
the Ninth FYP rural authorities plan to mobilize the rural labor
force to build capital projects. Rural workers will construct
water conservation projects, repair and build roads, plant trees
and forests, and reclaim waste land.
In 1995, the state invested $3.2 billion in crops, forestry,
livestock, fishery, and water conservancy sub-sectors, an
increase of 43.7 percent. Indeed, the percentage of investment
from state owned units in agriculture as a percentage of total
investment in fixed assets rose from 1.6 percent in 1994 to 1.9
percent in 1995 (figure 12).
Foreign Investment
According to the Ministry of Agriculture, China has used nearly
$9 billion of foreign investment from 1978 to 1994 to promote
development in about 4,000 different agricultural projects.
Minister Liu Jiang recently noted that China is looking to import
specific kinds of technology. His shopping list includes:
improved seed varieties, methods to control plant diseases and
insect pests, and technology to reduce losses from farm gate to
consumer. China especially needs packaging, food processing,
food transportation, and storage equipment.
"Project Seed"
During the Ninth FYP, the government plans to implement a
comprehensive seed development program by strengthening its
genetic research programs. The plan calls for developments in
seed production, processing, sales, and promotion of high
yielding wheat, rice, corn, and cottonseed.
Agricultural Situation and Outlook Work in China
In addition to physical inputs, China has taken steps to expand
information sharing regarding input prices and markets.
Market Information Becoming More Available
An increasing portion of China's agricultural products are moving
from farm to end users via open markets. For these markets to
function effectively participants in the markets need price
information. There is growing evidence that price information
is becoming more available to all users. First, many daily
newspapers in China now carry prices of major agricultural
products. Second, periodically newspapers publish urban retail
prices. Third, some open markets, such as the very large
Dazhongsi vegetable market in Beijing, now offers price and
quantity information via on-line computers, telephone banks, and
published newsletters.
China's Ministry of Agriculture Publishes Important Report
In 1995, China published its first situation and outlook report
on its agricultural economy entitled, Report on China's
Agricultural Development 95. This 200 page report was prepared
by the Ministry of Agriculture and summarizes developments in
China's agricultural economy in 1994 and makes some preliminary
forecasts for 1995. This first report provides valuable
information about China's rural economy to interested parties in
China and in the international community. We commend the efforts
of the authors and the Ministry of Agriculture in publishing this
first report and hope that they will continue to expand their
efforts in the future. The report has 4 sections: "Summary",
"Sectors", "Special Subjects", and "Information--Statistical Data"
(see box).
The "Summary" gives a broad overview of agricultural development
from 1979 to 1994 and describes connections between the general
economy and the rural economy. It also analyzes developments in
the rural economy such as per capita income, rural consumption
patterns, rural savings and investment, marketing, prices, and
input supplies. For each topic, developments since 1979 are
summarized, developments in 1994 are described, and a short
forecast is made for development for 1995.
The "Sectors" section of the report highlights developments in
crop, livestock, aquatic products, township and village
enterprises, state farms, agricultural mechanization, and the
feed industry sectors. Analysts in the Ministry of Agriculture
followed a standard format in preparing material for each sector.
First, they summarized major developments from 1979 to 1993;
next, they described developments in 1994; and finally they
outlined basic trends for 1995.
The "Special Subjects" section of the report contains five
articles on important current topics. The titles of the five
articles are as follows: "Establish a System for the Orderly
Transfer of Agricultural Land;" "Reasons for the Rise in
Agricultural Product Prices and Ideas for Controlling and
Adjusting Prices;" "Lead Rural Laborers To Migrate in an Orderly
Way;" "Industrialization of Agricultural Production (intermediate
processing, post harvest value added) and Its Development Path;"
and "Strategy and Potential To Increase Grain Production to 500
Million Tons (by the year 2000)."
Begin Box
The "Information--Statistical Data" section contains 29 appendix
tables. The titles of the 29 tables are listed as follows:
o The Position of Rural Economy in the National Economy;
o The Labor Force in Rural Areas
o Rural Gross Domestic Product and Its Composition;
o Conditions for Agricultural Inputs
o State Financial Expenditures on Agriculture and Financial
Price Indices
o Cultivated Area
o Sown Area for Various Crops
o Area Affected by Natural Disasters and Salinization
o Rural Household Per Capita Fixed Asset Values
o Basic Economic Conditions for Rural Households
o Output of Major Crops
o Animal and Aquatic Product Output
o Basic Conditions of Township and Village Enterprises
o Major Financial and Economic Efficiency Indices of Township
and Village Enterprises
o Supply and Use Tables Including Price Data for Rice, Wheat,
Corn, and Soybeans
o Production and Import-Export of Grain and Edible Oils
o Production and Import-Export of Cotton and Sugar
o Production, Consumption, Import, and Export of Pork
o Production, Import, and Prices of Chemical Fertilizers and
Pesticides
o Composition of Average Per Capita Income in Urban and Rural
Areas
o Urban and Rural Per Capita Spending Compared
o Urban and Rural Per Capita Food Consumption Patterns Compared
o Various Price Indices
o Purchase Price Indices for Various Farm Commodities, 1978-93
o Retail Price Indices for Urban and Rural Areas
o Regional Rural Labor Migration for 1994.
Transport Capacity Boosted in 1995
During the Eighth FYP, China added 112,000 kilometers of new
highway and now has over 2,000 kilometers of superhighways.
Workers constructed 283 berths, of which 100 were deep water
berths, and cargo handling capacity increased by 120 million
tons. The number of civilian transport vehicles increased from
14.8 million in 1991 to over 30 million at the end of 1995 (table 11).
In the Ninth FYP, authorities plan to expand China's
transportation system. For 1996, the Ministry of Communications
plans to build 15,000 kilometers of new roads and add 600
kilometers of superhighways. Efforts will be made to use
superhighways to link Shanghai to Hangzhou, Nanjing, and Ningbo.
Plans have been laid to construct 29 new berths, 9 of which are
to be deep water berths. Port cargo handling capacity is
scheduled to go up by 5.5 million tons.
Railway transportation capacity will be expanded. Efforts also
will be made to expand highway, waterway, air, and pipeline
capacity . Authorities want to develop integrated transportation
systems which will boost China's ability to move goods east to
west and north to south. For example, by the year 2000, Jiangsu
province plans to construct 60 new berths along the Yangzi (and
other rivers) of which 42 will be for 10,000 ton ships and 11
berths will be for containers.
Good Grain Crop Projected for 1996
China's officials are pushing farmers to increase area sown to
grain crops for 1996. With increased use of inputs and normal
weather conditions, farmers likely will reap a good grain crop
for 1996. In 1994, China had net grain exports of 2 million
tons, but the situation changed dramatically in 1995 so that
China had record net imports of 19.69 million tons. [ Frederick
W. Crook (202) 219-0002]
China's officials project that grain production for 1996 will
exceed the 1995, 467 million ton crop. Because of continued
strong consumption growth, however, China likely will be a net
grain importer in 1996 with wheat, corn, and rice imports
exceeding grain exports.
Area sown to grain for 1996 is projected to rise by about 1.1
million hectares (ha), up 1.1 percent to 111.1 million, primarily
because of government and party administrative programs. USDA
projects a total grain crop of around 470 million tons for 1996.
In 1993 and early 1994, government authorities emphasized grain
reform policies to strengthen markets. But, rising grain prices,
shifts in demand, a dip in production in 1994, and reduced
stocks, led leaders in 1995 and 1996 to re-emphasize the
government's role in monitoring grain production, consumption,
and trade (see policy section). Production of wheat, rice, corn,
sorghum, millet, barley, oats, soybeans, potatoes, and pulses
(China's definition of grain) totaled 467 million tons in 1995,
according to the State Statistical Bureau (SSB). Output was up
4.8 percent from the 1994 crop of 445.1 million tons as yields
increased by 4.5 percent and grain area increased by 0.3 percent
(appendix table 1 and 2). In 1995, grain exports totaled 820,000
tons compared with 18.2 million in imports.
The SSB's Statistical Yearbook, 1995 provides the most up-to-date
grain consumption data. Real urban living expenditures increased
from 446 RMB in 1981 to 2,281 RMB in 1994. In the same period,
data from the SSB urban household income and expenditure surveys
show that urban per capita grain consumption decreased from 145
kilos in 1981 to 102 kilos in 1994. Urban households used a
decreasing portion of their available living expenditures
(income) to purchase grains. The budget spent for food grain as
a percentage of total living expenditures fell from 13 percent in
1981 to 7 percent in 1994 (SSB, Statistical Yearbook, 1995, p.
263).
China's planners published targets for the last year of their
Ninth FYP (1996-2000). The total grain production target is 500-
515 million tons, 35-50 million tons above the 465 million ton
figure for 1995.
Through the year 2005, China's total grain output is projected to
rise primarily because of yield increases. As noted in the input
section, the rate of yield growth will largely be determined by
government action either investing in imported technology or
developing their own high yielding seeds. Grain consumption is
projected to rise faster than production so that China's grain
exports likely will decrease and imports likely will rise.
Wheat Output Forecast To Increase in 1996
Wheat Outlook for 1996
Wheat output for 1996 is projected at 104 million tons, 2 million
tons more than the 1995 crop. Preliminary reports from China
suggest that the summer grain crop for 1996 will be up 2 percent
from last year (most of this crop is winter wheat). Urban retail
standard wheat flour prices rose about 13 percent in calendar
year 1995. Higher wheat prices are projected to boost 1996 wheat
area to 29.4 million hectares, up more than 600,000 hectares from
last year. Government authorities plan to raise the fixed quota
price for wheat from about 1270 RMB per ton, to 1525 RMB per ton,
a 20-percent increase. The fixed quota price is well below the
1995 market price of 1820 RMB per ton (figure 13). Yields are
projected at 3.54 tons per ha., the same as last year. Wheat
imports for the July/June 1996/97 year are projected to decrease
by 2 million tons to 10 million because of high world prices and
a good crop in 1995. Imports will help meet consumer demand for
higher quality and specialty wheats, and to overcome domestic
transportation constraints. Real urban per capita incomes are
projected to rise 5 percent in 1996.
Wheat Outlook to 2005
Up to 2005, China's wheat output is projected by USDA to increase
at an annual rate of about 1 percent. While area is projected
to rise 0.3 percent a year, yields likely will increase at a much
faster pace of around 0.7 percent a year. Rapid economic growth
rates, rising incomes, and changes in consumer preferences for
quality wheat products, and a projected population growth of
100 million for the coming decade, will boost domestic demand
above supply. USDA projections place China's wheat imports in
2005/06 at 18.2 million tons, compared with an average of 10
million tons during the Eighth FYP (1991-95) (2).
Per capita wheat consumption rose sharply in the 1970s and early
1980s, but has leveled off since then. In figure 13, wheat
consumption in China is compared with per capita basis in Japan
and the United States. Feed wheat use has been subtracted from
total wheat consumption for each country to obtain wheat used
primarily as a food grain. On this basis, wheat consumption in
China parallels that of consumption in the United States since
the mid-1980s. Both the United States' and China's consumers eat
more wheat than citizens in Japan. For example, in 1994,
citizens in China consumed 90 kilos per capita compared with 50
kilos in Japan, and 89 kilos in the United States.
With regard to domestic wheat consumption in China, there may be
some trends which offset each other. In the major wheat
producing regions in north China, we expect residents to consume
less wheat but eat more rice, meat, vegetables, and fruit
products. In the major rice producing regions in south China, we
expect citizens to consume less rice but eat more wheat, meat,
vegetables, and fruit products. In 1991, per capita wheat
(flour) consumption of urban residents in Beijing was 27 kilos
per year compared with 2 kilos in Guangzhou (SSB, Urban Household
Income and Expenditure Surveys, 1991, p. 251).
The SSB Urban Household Income And Expenditure Survey. That
survey ranked households by per capita income such that
households in the highest decile had 3.6 times more income than
those in the lowest decile group. Consumers in the highest
decile ate about 25 kilos of flour per year compared with those
in the lowest decile, which consumed about 28 kilos of flour.
But incomes affected the kinds of flour the different income
groups consumed. Consumers in the highest decile consumed 27
percent less ordinary flour ( lower quality flour) than those in
the lowest decile and conversely they consumed 25 percent more
higher quality flour than those in the lowest decile.
Wheat Situation in 1995/96
Wheat production in 1995/96 increased to 102 million tons, up 2.7
percent from 1994, as area remained largely the same at 28.8
million hectares, but yields increased slightly from 3.43 tons
per hectare in 1994 to 3.54 tons in 1995 (appendix table 1).
Wheat imports for the July 1995/June 1996 year are estimated at
12 million tons, up from the 10.2 million tons imported in
1994/95, despite rising world wheat market prices. There are
several factors behind the increase in imports for 1995/96. In
this same period, real per capita income rose 4.9 percent.
Authorities were faced with rising urban flour prices that could
only be stabilized by stock drawdowns, purchasing domestic wheat
at higher than world prices, or importing wheat (figure 13).
The government-owned Grain Bureau purchased some wheat from
farmers at fixed quota prices which were well below the open
market price. One of the avenues they opted for was to import
wheat. For China's wheat imports and U.S. wheat exports to China
for 1994 and 1995, see appendix table 11.
Rice Production To Increase in 1996
Outlook for 1996
Rice area for 1996 will likely increase only slightly to 30.9
million hectares, according to planting surveys from China. The
tendency to decrease rice area in favor of more profitable land
use such as raising vegetables, fruits, and economic crops, will
be offset by the government's "grain bag" policy in which
provincial governors are required to maintain area sown to grain
(see section on agricultural policies). The open market price
increases should boost growers' enthusiasm for rice cultivation
in 1996. Indica open market rice prices rose from US$190 per
ton in January to US$236 per ton in December, an increase of 24
percent. The government recently announced a decision to raise
the fixed quota price from US$128 in 1995 to US$153 in 1996. The
government requires farmers to sell some of their rice crop to
the Grain Bureau at fixed quota prices which are well below the
open market price (figure 15). Japonica open market rice prices
increased from US$215 in January to US$268 in December, an
increase of 25 percent.
Yields are expected to increase slightly because government
measures will insure a rise in input supplies. Rice imports are
likely to be about the same as for the previous year and will
include both high-quality varieties from Thailand destined for
high-income urban residents and lower quality varieties for the
urban poor. For the year, exports likely will fall.
China's rice exports dropped sharply from 1.5 million in 1993/94
to 32,000 tons in 1994/95, but are expected to rebound to an
estimated 200,000 tons for 1995/96. The increase in domestic
rice prices compared with world market prices made China rice
less attractive to foreign buyers (figure 15). In China's rice
marketing year 1995/96, the first year indicates the marketing
year, e.g., 1995 represents rice output for 1995 which is
marketed in 1996. According to China's custom statistics, most
exports in 1995 went to Hong Kong, Indonesia, and Russia. It is
estimated that most of the rice exports were of the indica
variety.
China's rice imports soared from 700,000 tons in 1993/94 to 2.0
million tons in 1994/95 but are forecast to drop to 750,000 tons
in 1995/96. China's custom statistics report that Thailand and
Vietnam were China's prime rice suppliers in 1995.
Outlook for 2005
China's rice output by 2005 is projected to decrease at an annual
rate of 0.1 percent a year. Area sown to paddy likely will
decrease slightly (-0.8 percent) because returns from rice
cultivation are projected lower than other uses, but yields are
expected to increase 0.7 percent a year (figure 16). In Hunan
province (a major rice producing province), indica rice yields
are higher than those in other Asian countries but lower than
those in Arkansas. There is some room for rice yields to
increase.
China's rice exports are projected to decrease 0.1 percent a year
during the projection period because of rising domestic demand
for both indica and japonica varieties. On an annual basis
China is expected to export around 400,000 tons. Most of these
exports will be japonica rice shipments to East Asian neighbors,
but it is also possible that China could ship lower quality rice
for Asian, African, and European markets.
Rice imports are projected to increase at an annual average rate
of 2.2 percent from 900,000 tons in 1996/97 to 1.1 million tons
in 2005/06. Demand for rice imports will increase largely
because of rising urban incomes as consumers seek diversity and
high quality rice. But these imports likely will also include
some lower quality rice to supply the requirements of lower
income consumers in big cities (2).
Consumers in urban areas are eating less rice and more meat,
fruits, vegetables, and wheat products. High income urban
residents tend to shop for their rice in open free markets where
they can purchase fresh domestic and imported rice varieties.
Poorer urban residents had more difficulties purchasing rice in
1995 because of the rapid increases in rice prices. In mid-1994
government authorities responded to surging prices by re-
instituting rationing for the urban poor. They supplied fixed
quantities of lower quality rice at fixed prices. China has been
importing both low and high quality rice to supply two very
different markets in urban areas. The 1993 SSB data shows that
households in the highest decile had 3.6 times more income than
in the lowest decile group. But the difference in rice
consumption between the two income groups was not that great.
Consumers in the highest decile ate a little more than 56 kilos
of milled rice per year (8.8 percent more) compared with those
in the lowest decile who consumed about 52 kilos.
Citizens in China consume much larger quantities of rice per
capita than do consumers in the United States (figure 17). Rice
consumption trends in China, however, parallel those in Korea and
Japan where one can observe static or falling per capita rice
consumption. China's consumers seem to be following in the foot
steps of their East Asian neighbors such that as per capita
incomes rise, and more foodstuffs are available domestically and
from foreign suppliers, families tend to reduce rice consumption
and eat more wheat products, meat, fruits, and vegetables.
Rice Situation, 1995
Rice output for 1995 was 185 million tons (paddy basis), up 5.3
percent from the 176-million-ton 1994 crop (appendix table 1).
The primary reason for the increase stemmed from a 1.8-percent
increase in area from 30.1 million hectares in 1994 to 30.7
million hectares in 1995 and a 3.4-percent increase in yields.
In mid-1995, it was thought that heavy rains in June might have
damaged the early rice crop but the damage must have either been
slight or provinces allocated more resources in the summer to
insure bumper harvests for the late crops.
Large Corn Crop for 1996
Outlook for 1996
Rising corn market prices in 1995 and the government's decision
to increase the fixed quota price by 20 percent in 1996 from
US$104 to US$125, likely will sustain grower's interest in
raising corn in 1996. For example, wholesale corn prices rose
from US$179 in January to US$200 in December 1995. Wholesale
corn prices did fall from a peak of US$204 in October to US$200
in December and fell further in spring 1996 to around US$180
(figure 18). Again we point out that the government requires
farmers to sell some of their corn crop to the government's Grain
Bureau at the fixed quota price of US$125 per ton, well below the
open market price. Sown area for 1996 is forecast at 23.5
million hectares, up 733,000 hectares from 1995. Yields are
projected at 4.85 metric tons per hectare, down slightly from the
1995 yield of 4.9 tons per hectare which is projected to make a
crop of 112 million tons, 2 million less than last year. Corn
exports for Oct/Sep 1995/96 are projected at 500,000 tons. Major
export destinations will continue to be South Korea, North Korea,
Japan, Russia, Malaysia, and other Asian ports. Imports are
projected at 2 million tons.
China has been purchasing malting barley for its rapidly
expanding beer market. Beer output increased from 690,000 tons
in 1980 to 15.5 million tons in 1995. Barley is grown in the
same areas as wheat, and like wheat, there are few possibilities
to expand production. Land and weather factors do not favor
brewing barley production in China and breweries have turned to
the international grain market to supply malting barley. As was
the case with wheat, COFCO manages the imports of barley.
Outlook to 2005
Over the next decade, China's corn output is projected to
increase at an annual rate of around 2.3 percent. Area sown to
corn is projected to increase at an annual average rate of 0.7
percent and yields at 1.7 percent. But rapid economic growth,
rising incomes with consumer preferences for livestock products,
and population growth during the decade likely will boost
domestic demand above supply. Corn imports are projected to
rise from 2.5 million tons in 1995/96 to 11.8 million tons by
2005/06. Corn exports fell from more than 12 million tons in
1992/93 to an estimated 500,000 tons in 1995/96. China's corn
exports are projected to remain at 1 million tons from 1996
through 2005. Most of these corn exports will come out of
China's northeast provinces which is China's main corn producing
area and has good transportation links to Russia, Korea, and
Japan (2).
SSB urban household income and expenditure surveys provide some
insights into coarse grain consumption trends in urban areas
(figure 19). The surveys collected three categories of grains
consumed by urban households. Fine grains include wheat, rice,
and millet. Coarse grains presumably include corn, sorghum,
barley, and oats. Starches and potatoes include sweet
potatoes, Irish potatoes, and starches and other potato
categories. Urban per capita grain consumption decreased from
134 kilos in 1987 to 113 kilos in 1993. Fine grain consumption
as a percentage of total increased from 79 percent in 1987 to 84
percent in 1993. Potato and starch consumption fell from 16
percent in 1987 to 12 percent in 1993, and coarse grain
consumption fell by more than half from 5 percent in 1987 to 2
percent in 1993.
Corn Situation, 1995
Corn output in 1995 was a record 112 million tons, up 12.8
percent from the 1994 crop. Area increased 7.6 percent to 22.8
million hectares. Large inputs of chemical fertilizer,
especially phosphate fertilizers, supported the 4.8 percent
increase in yields which reached 4.9 tons per hectare (appendix
table 1 and 2).
In 1993/94, China exported 11.8 million tons of corn with no
imports. In 1995/96, however, China's corn trade shifted
dramatically, with exports projected to fall to 500,000 tons
while imports are forecast to reach 2 million. Several factors
underlie this dramatic trade shift. First, earlier in the 1990's
the government reduced its subsidies for government grain
companies holding corn stocks. This policy change encouraged
firms to dump corn into the market which temporarily boosted
supplies for livestock feed and for export. Second, government
authorities boosted corn procurement prices in 1994 and 1995,
which set off price increases throughout the corn economy.
Domestic corn prices quickly shot above the world price (figure
18). Third, the demand for livestock products and consequently
for feed continued to rise rapidly because of increases in
population and urban incomes.
China faced the following choices: allow urban meat prices to
rise (increasing feed costs) and corn prices to remain above
world price levels, reduce prices by selling stocks, reduce
exports, or import corn. In fall 1994, foreign trade authorities
issued instructions to ban corn exports and in December, China
contracted to purchase corn on the international market. In
1995, China's state trading corporation COFCO (Cereals, Oils and
Foodstuffs Import and Export Corporation, which used to be known
as CEROILS) limited corn exports and purchased corn on the
international market. But with the record 1995/96 corn crop and
very high international corn prices, there were news accounts in
spring 1996 that China might lift its ban on corn exports which
would allow some of the exporting provinces an opportunity to
participate in the trade.
Livestock and Feed Situation
In 1995, red meat output rose 15.2 percent to 42.5 million tons
compared with a 14.5-percent increase in 1994. With a reduced
1994 corn crop and rising corn prices in 1995, one might think
that growth in meat output and livestock numbers might slow.
Yet, large animal numbers and hog inventory numbers at the end of
1995 increased by 6.8 percent and 6.5 percent, respectively
(appendix table 2 and 4).
Provincial officials noted in late 1995 that there were three
reasons for increased meat output in 1995. During 1994, many
farmers made a lot of money (the price of piglets were low and
grain prices were beginning to rise) and the price of pork rose.
At the end of 1994, farmers had a good year and many producers
kept on producing. Pork prices fell a little in the first part
of the year and corn prices rose. Some small producers went
bankrupt but the larger operations remained in the business--they
expected prices to rebound at the end of the year (and getting
ready for Chinese New Year's). Second, in pork deficit
provinces, local governments had a responsibility to purchase
pork and support pork output through the "vegetable basket"
program (see agricultural policy section).
Why Slow Growth in Grain, But Rapid Rise in Meat?
In summer 1995, officials dealing with the livestock sector in
China were asked how one could explain the contradiction between
slow growth in grain output but more rapid growth in meat output
over the past decade (figure 20). The year-to-year changes in
output are expressed in percent. Because grain and oilseeds
produced in one year are used for feed in the subsequent year,
the percentages for livestock output in figure 20 are lagged 1
year.
Some officials suggested that China's livestock increases are not
totally dependent on grain output. They noted that ruminant
animal (beef, sheep, and goat) output is up and these animals
feed mostly on grass, not grains. Secondly; they noted that
poultry production is increasing rapidly and chickens get better
feed conversions than pigs. Third, they suggested that human
grain consumption patterns are changing--per capita grain
consumption is falling which frees up more grain for livestock
feed. Finally, the introduction of technology enabled farmers to
become more efficient in the use of feed. Other officials
suggested that a possible explanation for the contradiction was
that grain output was under reported, farmers fed this under
reported grain to livestock which were slaughtered and counted in
meat output statistics.
Hog numbers at yearend totaled 441.5 million, up from 414.6
million in 1994. During the year 480 million hogs were marketed.
Pork output rose 13.8 percent to 36.5 million tons.
Cattle numbers increased to 126.7 million, up 2.7 percent from
1994. Beef output rose to 4.1 million tons. Milk production
increased by 6.4 percent to 5.6 million tons.
Goat numbers rose to 143.4 million, up 16 percent from 1994. But
sheep numbers dropped to 115.6 million, down from 117.5 million
in 1994. Goat and sheep meat production rose from 1.61 million
tons in 1994 to 1.97 million tons in 1995.
Outlook for 1996
Outlook for Ninth FYP and 2005
During the Ninth FYP, authorities plan to expand meat output.
Specifically, they plan to expand output of those kinds of meat
animals which are efficient users of grain and oilseed products,
such as poultry.
Beef production is expected to rise from 4.7 million tons in 1996
to 9 million in 2005, an average annual increase of 3.7 percent.
This would raise per capita consumption from 4.7 kilos per capita
in 1996 to 6.8 kilos in 2005.
Pork will continue as China's most important meat product, but
its percentage of total consumption will continue to fall as
grass fed animal output increases and producers turn to more
efficient meat producers such as poultry. Pork output is
projected to increase from 37 million tons in 1996 to 56 million
tons in 2005, an average annual increase of 3.5 percent. China
is not expected to import or export much pork during this period.
Per capita pork consumption is projected to rise from 29.7 kilos
in 1996 to 42.2 kilos in 2005.
Poultry output is expected to expand rapidly, from 8.8 million
tons in 1996 to 15.4 million in 2005, an average annual increase
of 6.5 percent. In 1995, China is estimated to have exported
370,000 tons of poultry (primarily chicken parts to East Asian
neighbors, Europe, and Middle Eastern countries) and by 2005
these exports are expected to rise to over 800,000 tons. Poultry
meat imports (primarily chicken parts) amounted to 446,000 tons
in 1995, and these imports are expected to increase to 1.5
million tons by 2005. Per capita poultry meat consumption is
projected to rise from 7.4 kilos in 1996 to 11.8 kilos in 2005.
References
Sources for this section come from materials collected by ERS and
Foreign Agriculture Service.
1.Foreign Agricultural Service, Beijing Ag Office, "China Grain
and Feed Annual Report," February 1, 1996.
2.USDA, World Agricultural Outlook Board, Interagency
Agricultural Projections Committee, Long-term Agricultural
Projections to 2005, Staff Report WAOB-96-1, February 1996.
Edible Oil Imports To Remain High in 1996
China imported a record 4.2-million tons of edible oil in
1994/95, and is projected to reduce its total edible oil imports
at a remaining high level in 1995/96, but oilseeds and oilseed
meal imports will increase. In calendar year 1995, China
imported 144,000 tons of soybeans from the United States, and
total soybean imports are projected to be quadrupled in 1995/96.
Total edible oil exports will remain at the previous year's level
in 1995/96, while the exports of oilseeds and oilseed meals will
fall, especially for oilseed meals, their exports will fall
significantly. [Xinshen Diao (202) 219-0690]
Oilseed production for 1995 reached 43.3 million tons, 2 percent
above 1994's record of 42.4 million tons (table 14). Soybean
production decreased significantly, while record rapeseed and
peanut crops were reaped for the second year in a row. The 31
percent increase in rapeseed production in 1995 boosted
supplies, which dampened farm prices and discouraged farmers from
increasing planted area for 1996. Area sown to soybeans will
also likely decrease because the government intends to raise
procurement prices for wheat and corn crops that compete with
soybeans for planted area. Oilseed area for 1996 likely will
decline, and total oilseed production is expected to fall in 1996
(appendix table 2 and 3).
Oilseed meal production is anticipated to rise in 1995/96 because
of an increase in rapeseed crop which has a higher crush rate
than soybeans. Domestic demand for meals continue to grow, and
meal exports are expected to decline by 34 percent in 1995/96.
With an expected decline in 1996's oilseed production, meal
production is expected to fall in 1996/97. Increases in domestic
demand for meals will likely further push exports to fall in
1996/97. Meal imports are expected to increase by 62 percent in
1995/96, and will increase further in 1996/97.
Vegetable oil demand has increased with rising household income
and rapid development in food processing industries. In 1994/95,
vegetable oil imports soared to 4.1 million tons, accounted for
41 percent of total supply for that year and hence stocks were
built up. Oil imports are expected to fall to 3 million tons in
1995/96.
Soybean Production Down, Rapeseed Up in 1995
Soybeans account for about 32 to 38 percent of total oilseed
output, while rapeseed accounts for another 17 to 22 percent.
Soybean area declined by 11 percent and production declined by
15.6 percent in 1995 from the previous year. Soybeans are
considered a grain crop in China, and farmers in the prime
producing provinces have to pay attention to government
procurement policies and prices. Most of the time, government
procurement prices are lower than market prices. As the
government is committed to maintaining "limited self-sufficiency"
in grains, many incentives to encourage the production, such as
input subsidies, low interest loans, and guaranteed purchase, are
used for rice, wheat, and corn production. But soybeans have not
been subject to the same degree of government supports. In 1996,
the central government intends to increase procurement prices by
20 percent for rice, wheat, and corn. This implies that the
incentive situation for soybeans relative to other grains will
not be improved in 1996.
Changes in market prices also discouraged farmers from raising
soybeans in 1995. After 3 years of continuous increases in
total area and output, from fall of 1994, soybean market prices
fell relative to other grains, especially corn. As corn and
other crops compete with soybeans, the soybean area, and hence
production, are expected to be lower than 1995's level.
According to China's State Statistical Bureau's projections, the
area sown to soybeans will decrease by 2.9 percent and production
will fall by 4.6 percent from last year.
Excluding 1992, China exported more than 1 million tons of
soybeans each year between 1984 and 1993. By 1994/95, soybean
exports fell to only 600,000 tons. Because of the decrease in
soybean production in 1995, soybean exports are expected to
decrease to 300,000 tons in 1995/96. Given the existing crushing
capacity, increasing feed demand for soy meal, and human demand
for soy oil, soybean imports will likely quadruple in 1995/96
compared with the previous year, and will continue to increase in
1996/97 (appendix table 12).
Responding to high market prices in 1993 and 1994, rapeseed area
in 1995 was up 28 percent over the previous year's planted area.
Most of increased areas occurred in the traditional primary
producing areas in the Yangzi River basin. Production increased
31 percent and per hectare yield reached a record 1,424-
kilograms. However, as a result of 2 consecutive years of large
harvests, farmers are having difficulty selling their crop and
have accumulated stocks. Although government owned Grain Bureaus
are purchasing some of the stocks, the prices they are offering
are much lower than the 1995 average prices. As a result,
farmers may switch to more lucrative crops. Thus, a decline in
rapeseed area is expected for 1996. Dry and cold weather during
the rapeseed transplanting period, and lack of sunshine in the
early spring, depressed the yields of the 1996 crop. A
significant decline in rapeseed production is expected in 1996.
Domestic rapeseed surpluses will likely slow imports in 1995/96
(rapeseed imports accounted for 2 percent of total supply in
1994/95). Given the increased domestic demand for oil, it is
likely that the large 1995 crop will be crushed rather than
exported.
Cottonseed production is determined by cotton area and
production. (See cotton section and Appendix table 3 for
details.)
Peanut area increased slightly in 1995, and yields increased by
4.7 percent from the previous year, so that peanut production,
accounting for 23 percent of total oilseed production, was up
from 9.7 million tons in 1994 to 10.2 million tons in 1995.
Most of the main peanut producing provinces in north China also
raise cotton, such as Hebei, Shandong, and Henan. Farmers
shifted area from cotton to peanuts after the 1992 bollworm
problem, but as the Government raised cotton procurement prices
in 1995 and 1996, farmers began to switch from peanuts back to
cotton. Peanut area is expected to continue to fall in 1996.
But, with significant improvements in peanut yields since the
early 1990's, better yields could result in output about the same
as in 1995.
China is a net exporter of peanuts and annually ships out about 5
percent of total peanut output. This situation is not expected
to change significantly in the next 2 years. But, as domestic
crush grows faster than food use, the quantity exported might
decrease slightly (appendix table 12).
Oilseed Meal Exports Fall and Imports Rise in 1995/96
Total oil meal production will be up 4.6 percent in 1995/96, and
the mix of meals will be very different. Soybean meal production
is projected down over 841,000 tons because of the decrease in
soybean production, while an increase in rapeseed meal production
will offset the decline in soy meal. Availability for feed use
meal will drop as very little rapeseed meal can be used for
feeding. Rapid increases in meal consumption, driven by rising
demand for livestock feed, and the decrease in soy meal
production, will cut total meal exports in 1995/96. China
exported 30 percent of its meal output between 1987 and 1990.
In 1994/95, meal exports were still as high as 2.6 million tons,
accounting for 16 percent of total production. With lower
production of soy meal, which accounts for almost 50 percent of
total meal exports, and increases in the feed demand for meal,
meal exports in 1995/96 are expected to fall 34 percent from the
previous year and this trend is expected to continue in 1996/97.
Meal imports, accounting for 5 percent of total oil meal
consumption in 1994/95, are expected to increase by 75 percent in
1995/96 from the previous year, and will likely continue to
increase in 1996/97. It is possible for China to become a net
meal importer in 1996/97.
Edible Oil Imports and Exports Both Fall in 1995/96
With rapid economic growth and rising living standards, China
will increase its vegetable oil consumption. Given cultivated
land constraints and the central government's concern for grain
production, increases in oilseed production will likely lag
behind increases in demand, despite possible higher yields for
main oilseeds, such as rapeseed, peanuts and soybeans.
Consequently, rising imports and decreasing exports will dominate
future trends in edible vegetable oil (table 15).
In 1994/95, China doubled its rapeseed oil imports, with its
share in total vegetable oil imports increasing to 18 percent. A
record rapeseed harvest in 1995 will push rapeseed oil imports
down in 1995/96, and quantities exported are also expected to
decline slightly.
Soy oil imports increased 166 percent in 1994/95, accounting for
41 percent of total oil imports. As incomes grow, China's
consumers, especially urban dwellers, are shifting from low
quality oils, such as rapeseed and cottonseed oils to high
quality refined oil. Whereas rapeseed oil in international
markets is considered a high quality oil, in China it is
generally regarded as low quality. Poor processing capacity
causes the oil to contain impurities and a high erucic acid
content. The decrease in soybean production likely will
stimulate soy oil imports. However, the magnitude of soy oil
imports in 1994/95 pushed total soy oil supply up 69 percent from
the previous year. Hence, part of 1994/95 soy oil imports used
to restrain price increases likely led to a buildup in stocks.
Soy oil imports are expected to decline in 1995/96, but will
remain much higher than in 1993/94.
Palm oil imports comprise more than 40 percent of total vegetable
oil imports. The rapid development of fast food processing
industries, especially instant noodle production, has sharply
increased the demand for palm oil. Palm oil's low price, neutral
flavor in processed food, and low boiling point, gives it a
comparative advantage in food processing. In 1994/95, palm oil
imports increased 13 percent from the previous year, reflecting
the increase in the demand for processed foods. Palm oil imports
in 1995/96 are expected to be down slightly from last year.
The primary suppliers of soy, rapeseed, and palm oil, which are
the three main imported oils, are shown in table 16.
Long-term Outlook for Oil Consumption and Imports
China's per capita edible vegetable oil consumption of 7.5
kilograms per year is low compared with Korea (12.2 kg), Japan
(16.7 kg), Hong Kong (23.1 kg), and Taiwan (24.3 kg). There are
three main categories for vegetable oil consumption in China:
household cooking use; hotel, work place cafeteria, and
restaurant use; and use in food processing and other industries.
Urban households consume 45 percent more cooking oil per capita
than rural households. In 1994, urban dwellers consumed 8.22
kilograms of cooking oil per capita, with vegetable oil
accounting for 92 percent; while rural dwellers consumed 5.66
kilograms, with animal fats and oils accounting for 30 percent of
consumption (table 17).
As incomes grew, total demand for edible oils rose; also there
was a substitution effect as consumers switched from using animal
fats and oils to vegetable oils. But the growth rate of
household cooking oil consumption slowed after 1989. From 1977
to 1988, household per capita vegetable oil consumption increased
14 percent annually. But, from 1988 to 1994, the annual growth
rate in urban areas was reduced to 2 percent, and in rural areas
the annual increase rate was about 3 percent. The rapid growth
in edible oil consumption in the late 1970s and early 1980s was
partially the result of fast income growth and overall food
shortages. When consumers filled their basic nutritional
requirements and felt secure about their consumption
requirements, the annual rate of increase slowed substantially,
which suggests that in the future, the increase in the household
cooking oil consumption will likely not parallel income growth.
The 1995 China Statistical Yearbook reported on household income
and expenditure surveys conducted in 1994. By ranking the survey
results by per capita income, the highest decile household income
was more than three times higher than those in the lowest decile,
while per capita vegetable oil consumption in the highest decile
was only 27 percent higher than in the lowest decile (table 18).
Once consumers overcame their fears of food shortages, the
demand response for edible oil was linked more closely to price.
Beginning in 1992, government subsidies for urban edible
vegetable oil rations were eliminated province by province.
Although 1994's high inflation caused some provincial governments
to resume subsidies, only a small proportion of China's urban
dweller's consumption is covered by this policy. Hence from
1993, edible vegetable oil market prices rose dramatically
(figure 21). Even though household edible vegetable oil per
capita expenditures increased 65 percent in 1994 from the
previous year, as its price went up about 60 percent, per capita
cooking oil consumption only increased 4 percent. Thus, given
observed 4 to 7 percent annual growth rates in rural and urban
per capita income during the last 10 years, the projected annual
growth rate for household cooking oil consumption in the next 10
years could be around 3 to 4 percent.
Edible vegetable oil consumed in hotels, work place cafeterias,
and restaurants has become increasingly important for direct
human oil consumption, and this consumption is closely linked
with income growth. With this factor, human direct oil
consumption is projected to increase 4 to 5 percent annually.
Manufacturing oil use in food processing industries has become
one primary force driving vegetable oil imports. The rapid
growth of food processing industries stems from both domestic and
export demand. Recently, China imported fast food production
equipment, especially instant noodle machinery and joint venture
companies have entered China to establish food processing
industries. Manufacturing oil consumption likely will increase
faster than any other class of oil consumption. The projected
annual growth rate for manufacturing use of vegetable oil is from
7 to 10 percent. The dominant position of palm oil in fast food
industries likely will continue in the near future, and palm oil
imports should increase steadily. In sum, the demand for edible
oils (household, restaurant, and food processing) is projected to
increase 5 to 6 percent per year.
China has steadily increased its crushing facilities from both
domestic firms and joint venture enterprises. According to
1993's oil production (figure 22), its edible vegetable oil
crushing capacity is at 9.6 million tons. Current crushing
facilities with construction of new crushing capacity suggest
that China will likely import more raw oilseeds in the future.
Given the change in consumer preference for quality oil, soybean
exports will fall and imports likely will grow faster than other
seed imports. China's growing needs for protein meals in feed
industries will further affect this trend. The annual growth
rate of soybean imports will likely be about 20 percent, while
exports will fall 3 percent annually in the next 10 years.
China's decisions to import edible oils are based only partly on
supply and demand conditions. Edible oil is an important element
in consumer diets, and based on rising incomes, demand for edible
vegetable oil should rise steadily. However, we observed
serious fluctuations in China's oil imports during the last 10
years. Drastic changes in the central government's import policy
-- shifts between decentralization and re-centralization of
import rights, and changes in state edible oil stocks subsidy
policies, used to cause great changes in total imports. Any new
trade policy in regards to vegetable oils in 1996 or in the
future may affect China's oil imports or exports.
References
Almanac of China's Commerce (Zhong Guo Shang Ye Nian Jian) ,
1988-93.
China Agriculture Yearbook (Zhong Guo Nong Ye Nian Jian), 1995.
China's Customs Statistics (Zhong Guo Hai Guan Tong Ji), 1994-95.
China Price Monthly (Zhong Guo Wu Jia Yue Kan), 1995.
China Statistical Yearbook (Zhong Guo Tong Ji Nian Jian), 1995.
USDA, Economic Research Service and Foreign Agriculture Service,
Beijing Agricultural Office, "China Oilseed Annual Report", March
1, 1996.
China's Centralized Cotton System Struggles Along
China's 1995/96 cotton production rose 9.8 percent to 4.77
million tons. Relatively modest growth in cotton use reduced
cotton imports to 610,000 tons, a decline of 31 percent. Higher
domestic producer prices stabilized area, while improved weather,
crop management, and a shift in area to higher yielding regions
reduced the impact of the cotton bollworm infestation on yields.
Cotton imports are expected to decline somewhat in 1996/97 as
domestic production stabilizes and consumption growth is modest.
However, the fiscal condition of China's textile industry has
continued to deteriorate, dampening expectations of consumption
gains. [W. Hunter Colby (202) 219-0669 and Stephen MacDonald
(202) 219-1179]
China's 1995/96 (August/July) cotton imports fell 31 percent to
an estimated 610,000 tons due to higher production and modest
consumption growth. This follows a 636-percent increase in
imports over the previous 2 years. China's 1996/97 cotton trade
is expected to remain significant, though it will likely be less
than during 1995/96.
China's official plan for 1996/97 calls for 6 million hectares of
cotton area and production of 4.5 million tons. This is a 10.7-
percent increase for area sown to cotton but a 6-percent decrease
in production from 1995/96's area of 5.42 million hectares and
production of 4.765 million tons. Given that cotton yields in
1995/96 were among the best ever, yields are not expected to rise
in 1996/97. In addition, the State Statistical Bureau's spring
survey of farmer planting intentions indicated 1996/97 area will
decline 25,000 hectares to 5.46 million. The likely scenario for
1996/97 is for a reduction in both area and yield, resulting in
lower production. However, the exact level will depend on two
key unknowns in China's cotton sector--weather and the continuing
cotton bollworm infestation in the North China Plain.
China's robust import demand of 1994/95, continued during
1995/96, albeit on a smaller scale. Attempting to explain
China's import surge over the last couple of years, analysts have
noted China's modest domestic output the last 2 years, difficulty
in procuring cotton through the state purchase system at the
official government price, the siphoning of cotton away from the
state procurement and allocation system by black market dealers,
the difficulty of moving cotton from surplus to deficit regions,
and China's need to replenish usable stocks.
However, the last factor is difficult to reconcile when the
little information available concerning China's cotton stocks
suggests they are quite plentiful (cotton stock information is
still considered a state secret in China). It may be that some
portion of those stocks are of such poor quality that they cannot
be used for spinning yarn. This remains entirely speculative,
however, since so little is actually known about the quantity,
much less the quality, of China's cotton stocks.
Government Cotton Price Increase
In March 1995, China announced a government procurement price
increase of 29 percent to 14,000 RMB ($1,624) per ton. This was
up from 10,880 RMB ($1,262) during 1994/95, though black market
cotton prices that year reportedly reached 18,000 ($2,088) to
21,000 RMB ($2,436) per ton. The price increase for 1995/96 was
an attempt to raise production and to recapture some of the
cotton moving outside the state procurement and distribution
system. To date there is little indication of a government
cotton price increase for the 1996/97 season.
Agriculture officials recently announced that individual
provinces will now be responsible for their own cotton supply and
consumption. Exceptions to this provincial self-sufficiency
policy will be key national textile centers such as Shanghai,
Beijing, and Tianjin. These centers of textile production will
have cotton supplies guaranteed by the central government,
sourced either from cotton surplus provinces (for instance
Xinjiang province in the far Northwest) or from imports. The
details of this policy are not clear, so the ultimate
implications are difficult to predict. However, it is one more
sign of the government's reluctance to move towards a more
market-oriented system of cotton distribution.
Another policy change recently announced is the restructuring of
the government cotton procurement agency, the system of supply
and marketing cooperatives (SMC). Reportedly, the system of
linked provincial, prefectural, county, and local SMCs will be
reformed, with a national-level office formed to oversee all SMC
operations. The national-level office will report directly to
the State Council. Although still somewhat unclear, it appears
that this change will give the central government greater
oversight over SMC operations, or in other words, more control
over cotton procurement.
Supply Situation Improves in 1995/96
Cotton production in 1995/96 was 4.8 million tons, up 10 percent
from the 4.3-million-ton harvest in 1994/95 (table 19). Area in
1995/96 was 5.4 million hectares, a reduction of 2 percent from
1994/95, and significantly below the 6.9-million hectare record
of 1984/85 (appendix table 3).
Bollworm infestation continued to be a problem in several of the
major producing provinces, most notably Shandong and Henan.
Despite continued problems with bollworms, 1995/96 yields rose 12
percent to 879 kilograms per hectare, in part through additional
improvements in pest management techniques. Yet, this was well
below the 903 kilogram record yield of 1984/85. Farmers have
been unable to maintain fertilizer and pesticide application
rates in the face of rapidly rising input costs.
Bollworm eradication and control efforts continued in 1995/96,
though pesticide resistance, small plot size, and widespread use
of intercropping continue to hinder these efforts. Some
innovative low-cost methods to mitigate the effects of the
infestation, such as high intensity lights or use of a single row
of corn to attract the pests which can then be removed by hand,
are becoming more widespread.
Nevertheless, the most effective method of controlling the
bollworm will be to coordinate planting and pesticide application
schedules among farmers. The extremely close proximity of very
small plots allows easy migration by the pest, severely limiting
the effectiveness of chemical applications. Although extension
and research institute efforts are pushing increased local
coordination, changing and coordinating the behavior of large
numbers of small farmers will be difficult.
Following extensive government "education" of cadres and cotton
officials, state procurement improved in 1995/96. As of February
1996, procurement reached a reported 3.75 million tons (an
increase of 17 percent over the previous year). Although an
improvement over 1993/94, state procurement in 1994/95 continued
to be hindered by farmers holding back cotton for higher future
prices, or to divert to black market dealers paying significantly
higher prices than official government procurement stations (and
to avoid the problem of receiving IOUs rather than cash at the
government purchase stations). Much of the cotton purchased on
the black market found its way to rural yarn mills rather than
the larger state-run mills in the major textile producing regions
of Shanghai, Tianjin, and Beijing.
Cotton consumption is expected to rise a modest 3-percent in
1995/96 to 4.5 million tons. On a calendar year basis, yarn
production (including cotton yarn, synthetic yarn, and blended
yarn) output rose 1.7 percent from 4.895 million tons in 1994 to
4.98 million in 1995. Yarn production rose as cotton supplies
were bolstered by significant levels of imports and relatively
plentiful domestic production.
Cotton imports fell in 1995/96, though levels continued to be
relatively high on a historical basis. Imports were driven by
problems with procurement, allocation, and distribution of
domestic cotton production, as well as additional gains in
domestic and export demand for textiles and apparel. Imports are
estimated at 610,000 tons, down from 884,000 in 1994/95. Imports
for August through March of 1995/96 totaled 432,064 tons.
Exports for the same period were 1,042 tons, with total exports
forecast at 5,000 tons, substantially below the previous year.
During the previous 13 years, China had always managed to
maintain at least modest levels of cotton exports, in part to
earn needed foreign exchange.
Rising Net Imports Likely in the Long Term
China's long-term cotton trade outlook is for gradually rising
imports and consistent, but modest, exports. Cotton production
is expected to increase gradually, but fall short of the expected
growth in domestic and export demand for textiles. Although
yields in China still have room to grow, rising domestic input
prices and a relatively low government-set purchase price will
limit yield increases. Accordingly, assuming normal weather,
China is expected to become a consistent net cotton importer,
though occasional years of net exports are still possible during
the 1990's if optimal weather and policy conditions coincide
(appendix table 12).
The textile industry accounts for roughly 30 percent of China's
total export earnings. Officials in China indicate that the
importance of the textile sector to the national economy means
that the government will likely maintain more control over cotton
than other agricultural commodities. As one case in point,
recent problems with government procurement resulted in a
profusion of edicts demanding strict adherence to government
procedures for cotton marketing, grading, pricing, and
distribution.
Over the next decade, China's cotton production and consumption
are expected to increase, but with domestic and export demand for
cotton fiber rising more rapidly, China will likely become a
relatively consistent net importer by the late 1990's. However,
if China is unable to continue improving its pest management
techniques, particularly with regards to the bollworm
infestation, the shift to a permanent net import position may
already have taken place. China's cotton imports are expected to
reach nearly 835,000 tons by the year 2005, though given the most
recent domestic production and import trends, China may well need
steady imports of this magnitude even sooner. Exports are
expected to remain around a low, but relatively stable, 95,000
tons.
References
USDA, Foreign Agriculture Service, Beijing Agricultural Office,
Annual China Cotton Reports, various issues.
Textile Asia, various issues.
China Brings Volatility to the World Sugar Market
A decline in wholesale prices for refined sugar and an increased
sugar production in 1995/96 prompted a decline in sugar imports
to 2.5 million tons. This follows a surge in imports from 0.9
million tons in 1993/94 to 3.5 million in 1994/95--an increase of
300 percent. The long-term trend in China is for growing imports
of raw sugar to meet income-driven increases in consumption.
[William Lin (202)219-0850 and Hunter Colby (202) 219-0669]
Following a surge of sugar imports to 3.5 million metric tons in
1994/95, up from 0.9 million in 1993/94, China's sugar imports
for 1995/96 are expected to decline to 2.5 million tons. First,
the decline in wholesale prices for refined sugar from last
year's high of 4,800 RMB/mt to 4,100 RMB/mt this year, narrowed
the price differential between wholesale prices of refined sugar
in domestic markets and import prices of raw sugar which are
determined on the world market. Secondly, China's 1995/96 sugar
production is estimated to be up nearly 15 percent from last year
because of an increase in procurement prices paid to producers--
280 RMB/mt for sugarcane and 320 RMB/mt for sugarbeets--and good
weather (1994/95 drought in Guangxi ended this year). Thirdly,
starting from December 1995, tolling--importing raw sugar without
paying import duties for processing and then re-exporting--has
been temporarily banned by the government of China. During 1995,
tolling totaled about 1.5 million tons--0.5 million "real"
tolling and 1.0 million smuggled tolling. This institutional
factor will continue to play an important role in China's sugar
imports in the future.
China's sugar imports primarily come from Thailand, Cuba,
Australia, Brazil, and Guatemala. In 1995, imports from Thailand
and Cuba altogether accounted for about two-thirds of total
imports. The bulk of raw sugar imports were processed for use in
domestic markets while a small proportion were processed and then
re-exported.
Over the next few years, China's sugar net imports are expected
to be stabilized around 1 to 2 million tons. It will become more
difficult to achieve the national self-sufficiency goal because
sugar crops' returns lag behind competing crops. In the long
run, China will remain to be a net importer, with imports to
continue rising.
Declining Prices and Increased Production of Sugar Reduces
1995/96 Imports
Despite increased total refined sugar consumption, larger
beginning stocks and increased sugar production of nearly 1
million tons in 1995/96 caused wholesale prices of refined sugar
to decline (table 20). The larger beginning stocks reflected a
large amount of smuggling in 1994/95. In addition, to compete
for the refining market, some sugar mills were forced to lower
their sugar prices so that they could pay cane and beet producers
in cash instead of IOU's. As a result, wholesale prices of
refined sugar in 1995/96 are expected to decline by 15 percent,
and sugar imports are likely to decline. Total sugar exports are
expected to increase to about 700,000 tons.
Sugarcane production contributed about 80 percent of China's
sugar production while sugarbeet production accounted for the
remaining 20 percent. In 1995/96, sugarcane production for sugar
is expected to rise 6 percent to about 64 million tons.
Similarly, sugarbeet production is estimated to have reached
about 13.5 million tons, an increase of 9 percent over the
previous year as good weather significantly improved yields.
Cane area continues to decline in the traditional producing
provinces of Guangdong and Fujian and expand in Guangxi and
Yunnan, further to the west (table 21). In 1995/96, producers in
Guangxi planted 453,300 hectares to sugarcane. The government's
5-Year Plan (1996-2000) calls for expanding that area to 466,700
hectares by the year 2000. Similarly, the plan calls for
expanding Yunnan's cane area to more than 230,000 hectares by the
year 2010, up from 175,000 hectares planted in 1995/96.
Sugarcane production continues to yield returns lower than
grains, oilseeds, fruits, and vegetables. Beet area continues to
face increased pressure in the traditional producing area of
Heilongjiang, Jilin, and Inner Mongolia. In Heilongjiang, corn
is the primary competing crop which typically yields returns
twice as large as sugarbeets. Xinjiang, however, continued to
expand beet area as the provincial government increased price
support and input subsidies to beet producers in recent years.
However, the long-term forecast for both cane and beet area is
increasing competition from more profitable crops--particularly
vegetables and fruits in the south and corn and soybeans in the
north and northeast.
Higher Producer Prices and Lower Mill Prices Caught Sugar Mills
in Cost-Price Squeeze
The increases in sugarcane production and sugarbeet production in
1995/96 was caused by higher procurement prices paid to producers
and good weather. In 1995/96, the State Planning Commission
raised guidance prices for sugarcane, sugarbeets, and refined
sugar. However, actual procurement prices, which were based on
market conditions, differ from guidance prices. Actual
procurement prices paid to producers in 1995/96 averaged 280
RMB/mt for sugarcane, up 70 RMB/mt over the last year. In
Guangxi, actual procurement prices paid to producers during
1995/96 ranged between 230 RMB and 300 RMB, with an average of
256 RMB/mt, which was higher than the 230 RMB/mt guidance price
set by the State Planning Commission. In addition, fertilizer
prices paid by producers were about two-thirds of the market
price, since the remaining one-third was subsidized by sugar
mills. Similarly, actual procurement prices paid to producers
averaged 320 RMB/mt nationwide for beets, up 50 RMB/mt. The
increase in procurement prices for beets were even more
pronounced in Heilongjiang--up 50 percent.
While actual procurement prices paid to producers were up, mill
(ex-factory) prices of refined sugar declined in 1995/96, and
were lower than guidance prices set by the State Planning
Commission. Mill prices for refined cane sugar averaged 4,100
RMB/mt, down from 4,700 RMB/mt last year, a decrease of 13
percent. Similarly, mill prices for refined beet sugar averaged
4,000 RMB/mt, down from 5,000 RMB/mt last year, a decrease of 17
percent. Despite the guidance price of 4,500 RMB/mt for refined
sugar set by the Commission, mill prices received by sugar
millers turned out to be 8 to 11 percent lower. As a result,
many sugar mills ran into serious cash flow problems because they
not only have to pay higher procurement prices to producers, but
also receive lower mill prices for refined sugar. Some sugar
mills are reluctant to sell their sugar because they cannot break
even at the current low mill price and, as a result, accumulated
high stocks and were forced to pay producers by IOU's. At least
a third of the sugarcane in Guangxi and the sugarbeets in
Heilongjiang were procured with IOU's. The government adopts
various measures to alleviate these problems, such as urging
commercial banks to provide loans to sugar mills and increasing
purchases for government stocks; however, these actions were not
adequate to raise refined sugar prices.
Per Capita Sugar Consumption Remains Low
China's per capita sugar consumption averaged 6.2 kilograms,
refined value, in 1995/96. This level of per capita consumption
is much lower than those in other countries: 18.4 kilograms in
Japan, 21.6 kilograms in Republic of Korea, 24.9 kilograms in
Thailand, and 29.7 kilograms in the United States (figure 23).
The low level of per capita consumption in China has a lot to do
with traditional eating habits. Per capita sugar consumption in
the north, in general, is lower than in the south because the
northerners tend to eat salty rather than sweet foods. In rural
areas, the per capita consumption level is even lower than their
urban counterparts, only 1.34 kilograms.
China's low per capita consumption of sugar also is related to
its low per capita GDP level. In 1994, per capita GDP was less
than $476 (in $1990), compared with $25,149 in Japan, $7,491 in
South Korea, $1,981 in Thailand, and $23,213 in the United
States. As per capita GDP in China continues to grow rapidly,
sugar consumption is expected to expand.
Finally, China's low per capita sugar consumption is partly
caused by the replacement of sugar with saccharine, a high-
intensity sweetener which is 300 times as sweet as sugar. The
amount of saccharine consumed as a sweetener in China is
estimated at 2,000 to 4,000 tons per year in recent years. At
this level of consumption, saccharine replaced between 600,000
and 1.2 million tons of sugar.
Long-Term Supply and Demand Projections
Projecting out more than 5 years, China is expected to remain as
a net importer and will import growing amounts of raw sugar to
fill the shortfall of domestic production.
Increased competition from other crops is expected to reduce area
in traditional growing regions. Area planted to sugarcane in
Guangdong declined nearly 30 percent over the last 3 years, from
321,700 hectares in 1992 to 230,200 hectares in 1995. In
addition, sugar yield also declined from 73.9 mt/ha to 69.1
mt/ha. Much of the sugar land was diverted to planting of
vegetables, fruits, and grains. Similarly, due to competition
from corn, area planted to sugarbeets in Heilongjiang also
slightly declined from 331,800 hectares to 328,500 hectares. Net
returns for corn averaged about 30 RMB/ha, which is double the 13
RMB/ha average net return for sugarbeets. Despite the guidance
price set for sugar crops, producers frequently found procurement
prices for grains to be more profitable. In addition,
procurement prices for grains are guaranteed by the central
government, which is more assuring than procurement prices
offered by sugar mills. In cases where sugar mills are unable to
pay producers in cash, payment with IOU's dampen producers'
intentions to grow sugar crops.
In addition, because of sugar crops' relatively low returns,
growth of area planted to sugar crops in expanding regions may be
limited. For example, the government's 5-Year Plan in Guangxi
calls for an expansion of sugarcane area from 453,300 hectares in
1995 to 466,700 hectares by the year 2000. Even if the
government's plan is fulfilled, the annual growth rate of
sugarcane area would amount to only 0.5 percent. The increase in
sugarcane yields has an annual rate of about 1 to 2 percent.
Although area is expected to continue to rise in the newer,
central growing regions, available supply is not expected to keep
pace with consumption growth.
China's sugar consumption over the last few years averaged an
annual growth rate of nearly 2.5 percent. Much of this expansion
was attributed to China's population growth, which is about 1.4
percent. Some analysts believe the growth rate could be as high
as 8 percent between now and 2000. In addition, ongoing income
growth will likely continue to increase consumer demand for
sugar-based processed foods, beverages, snacks, and desserts.
Although a concerted (and expensive) central government effort to
support domestic production could slow growth in imports, China
will likely still need to import growing amounts of raw sugar.
China's Grain Stocks: Background and Analytical Issues:
In fall 1992, an academician at the Chinese Academy of Social
Sciences reported that China's grain stocks for 1990 were 491
million tons. The new estimate raised several important issues:
How do China's statisticians define stocks? How do stocks relate
to grain imports and exports. Why does China import grain when
it has large stocks? On-farm grain stocks are very large. Why
do farmers hold such large stocks? What factors influence stock
holding? In the coming decades on-farm stocks likely will
decrease as local grain markets become more efficient,
transportation lines are improved, and as financial markets
become established. Grain coming out of stocks could well
temporarily affect China's grain import requirements. [Frederick
W. Crook (202) 219-0002]
Introduction
This paper examines the roots of China's legacy of storing grain
which goes back more than 2,000 years. Clearly China has had
long experience in building granaries and organizing
bureaucracies to manage grain storage and distribution. A second
section reviews entities holding stocks in the 1990s. Currently,
China does not release grain stock numbers. But household
surveys indicating per capita holdings were used to indicate the
size of on-farm stocks. Especially interesting is the fact that
farm families were encouraged to store grain long before the land
contract system in the 1980s gave households considerable power
to control their own grain resources. The third section
assesses the relationships between grain stocks and production,
consumption, marketing, and trade. How do stocks relate to
grain imports and exports--for example why did China have net
grain imports of over 10 million tons in 1988 when stocks were
reported to be 380 million tons? More recently, do large grain
imports in 1995 mean that stocks have been drawn down?
China's statistical authorities define grain as wheat, rice
(paddy basis), coarse grains, soybeans, potatoes (grain-weight
equivalent using a 1:5 ratio of grain to raw weight), and pulses.
USDA stock numbers include wheat, rice, coarse grains, and
soybeans. The Ministry of Internal Trade, Grain Bureau, functions
on an April 1st to a March 31st year. There is importance to the
definition because usually the ending year date denotes the
quantity of grain in bins just before the new crop is harvested.
Farmers in tropical Guangdong and Hainan provinces begin
harvesting their first rice crop after April 1st, which means
that crop is the first grain crop reaped in the whole country.
Presumably China's authorities defined their grain year from
April 1 through March 31 to segregate old from new crop grains.
For grain stored by the state, ending stocks are defined as the
quantity of grain in bins at the end of the grain year or March
31st(1). Beginning and ending dates for grain stored by farmers
have not been specified, but could well be January/December
because stock data are collected through rural household survey
teams which normally operate on a January through December year.
Grain Storage Experience of 2000 Years
Contemporary grain storage programs in China rest on 2,000 years
of tradition. From this long tradition current government
leaders feel they have a civic responsibility to store grain.
Likewise, because of this cultural heritage, citizens believe
grain storage is a proper function of good government. In
periods of stability, it is China's historical norm to hold grain
stocks.
During the late Qing period (1644-1911), domestic and foreign
problems diverted vital bureaucratic energy from running their
very complex granary system. Supplies in granaries were
commandeered by Qing officials to maintain a military force to
contend with various rebellions (White Lotus and Taiping) and
foreign incursions. From 1781 to 1850, the quantity of grain in
stocks declined. The Qing state recovered, but the Qing granary
system did not return to its former structure. Even during the
steady decline in the system, however, the Qing state still had
the capacity to mobilize, transport, and distribute large
quantities of grain around the empire to regulate markets and
provide welfare services for some of its citizens (4).
Grain Stock Holders in the Mid-1990s
State Stocks
In 1990, the State Council established the State Administration
for Grain Reserves (SAGR). The stocks they control are referred
to as (houbei --reserves) or long term or strategic stocks. The
Ministry of Finance provides loans and subsidies for these
stocks. They rotate their stocks on a 1- to-2 year basis. The
old grain is moved out to consumers and the new grain is placed
in stocks. SAGR officials reported that they do not lose much
grain from spoilage or pest damage. Their biggest losses stem
from weight loss as the grain in storage bins dries out.
At provincial, prefectural, and county levels, these entities
still refer to themselves as the Grain Bureau, but in fact they
report to the SAGR.
Commercial Stocks
Commercial grain companies within the Grain Bureau (i.e., they
are government-owned businesses) have to provide for their own
financing of commercial grain stocks. The current policy seems
to be that whoever purchases and stores grain, that entity
arranges finances for the grain storage, and has control over its
use. For example, the city of Dalian, Liaoning province
allocated funds to stock up grain (wheat, rice, corn, and
soybeans) such that the city kept a 6- to-8 month stock of grain
to meet consumption requirements.
Mill and Private Grain Stocks
In the 1990s, the Grain Bureau owned feed and flour mills and
held grain stocks to support their milling operations. Joint
ventures and private millers also held grain stocks. Some
private grain firms also held stocks (5).
On-Farm Grain Stocks
The quantity of grain in on-farm stocks were estimated by USDA
based on a number of State Statistical Bureau sources, including
data from rural income and expenditure surveys. Notes on survey
procedures are ambiguous with regard to the precise timing of the
"yearend" date. The Ministry of Internal Trade, Grain Bureau,
functions on an April 1st to a March 31st year which includes
this concept. But we think the rural surveys are completed on a
calendar year basis. A calendar year stock number would give
higher stock numbers because many fall grain crops are harvested
late in the year--which means that bins are full of new grain
with 7 or 8 months to go before any new crop grain is harvested
(figure A-1).
In general, per capita rural stocks are much larger in north than
south China. For example, in 1991, Jilin province had a high of
1,427 kilos per capita in Jilin province and Hainan had a low of
161 kilos in the south. Farmers in north China keep more stocks
because the probability of crop failure there is much higher.
The altitude is higher, the climate is cooler, the growing season
is shorter, and climatic conditions are better for grain storage.
In contrast, in the south, altitudes are lower, the climate is
warmer and precipitation greater, and the growing season is
longer which means that farmers can grow more than one grain crop
a year and the probability of crop failure is lower. Also,
climatic conditions are less favorable for grain storage in south
China.
On-farm per capita stocks rose from 357 kilos in 1990 to 550
kilos in 1995 (table A-1). There is a difference between the
ending stocks and beginning stocks for some years. At the moment
we are at a loss to explain the difference except to note that
the data comes from the surveys which typically drop a certain
number of households out of their sample frame each year and add
additional households. Under these circumstances it would be odd
if ending stocks were exactly the same as beginning ones.
Stocks for all of rural China for 1991 are estimated at 344
million tons, which is the result of multiplying appropriate
provincial agricultural population numbers by the average
provincial per capita stock estimate. This large stock number
supports the 491-million-ton stock number reported from China in
late 1992 (table A-2).
If one makes some assumptions about the proportion of actual
carryover stocks for the various provinces, one can then gain a
clearer picture of the size of actual carryover stocks in the
system. Carryover stocks are defined as the quantity of grain in
a bin just before a new grain crop is harvested. For provinces
in the northeast and northwest, we assumed that 60 percent of the
reported stock numbers were actual carryover stocks because
farmers face greater potentials for crop failures (early frosts
and drought). For provinces in north, east, and central China,
we assumed that 40 percent of the reported stock numbers were
actual carryover stock numbers because farmers face less risk of
crop failure and because markets and transportation systems are
better developed. For provinces in south and southwest China we
assumed that 20 percent of the reported stock numbers were actual
carryover stocks because farmers can raise two to three grain
crops a year and because the probabilities of crop failure is
much less than in the north.
By applying these percentages to the appropriate province, the
total carryover on-farm grain stocks were 143 million tons. Of
491 million tons of stocks, 344 could be classified as on-farm
stocks (of which 143 million tons can be categorized as true
carryover stocks and 201 million tons as grain stored for
insurance, store of wealth, etc.); 120 million tons as state
stocks; 20 million tons of Grain Bureau stocks; and 7 million
tons of private stocks.
Effect of Stocks on Foreign Grain Trade
The buildup of stocks over the 1980s, along with Beijing's policy
to disband the centrally planned grain purchase and distribution
system, to transform various parts of the Grain Bureau into
separate enterprises competing against each other in open grain
markets, and to cut subsidies supporting locally held grain
stocks, affected grain imports and exports in 1992-93.
In 1991-92 the central government decided to limit the quantity
of stocks that it was willing to subsidize, which forced local
grain bureaus to recalculate the benefits and costs of holding
their own stocks. In 1992, units of the Grain Bureau found that
to store 1 ton of grain for 1 year cost them 140 RMB (US$25).
Many local Grain Bureaus found that their stock holdings were
unprofitable and took measures to reduce stocks. With abundant
wheat supplies, flour mills requested that CEROILS purchase less
wheat from foreign countries (figure A-2). Wheat imports fell
from 15.9 million tons in 1991/92 to 6.7 million in 1992/93 and
4.3 million in 1993/94 before rebounding to 10 million tons in
1994/95. In 1993/94, China was able to ship 150,000 tons of feed
wheat to South Korea.
Because of changes in financial subsidies, Grain Bureaus released
rice stocks into markets. China's rice exports rose from 933,000
tons in 1991/92, to 1.4 million tons in 1992/93, and 1.5 million
tons in 1993/94, before falling to 250,000 tons in 1994/95. Some
of the released stocks were low-quality rice and aging grains
which were dumped into the distribution system to supply China's
demand for feed. With domestic demand for feed grains partially
filled by reducing domestic stocks, China's grain traders could
continue to ship corn into the international market. Partially
because of changes in stock policies, China's corn exports
increased from 10 million tons in 1991/92, to 12.5 million in
1992/93, and 11.6 million in 1993/94 before crashing to 1.5
million tons in 1994/95.
The lesson which can be learned from this experience is that
analysts interested in international grain trade should pay close
attention to changes in China's domestic grain management and
financial practices.
With Large Stocks, Why Import Grain?
From 1986 to 1990, grain stocks averaged 397 million tons and in
the same period grain imports averaged 13.7 million tons a year.
Why would China's leaders import grain when stocks were so large?
First, one should understand China's grain management policies.
As noted above, China's leaders have long had a tradition of
grain storage to stabilize markets and to use reserves to combat
natural disasters and for strategic considerations. China's
leaders could well import some grains to meet largely urban
requirements rather than drawdown stocks. Imports would improve
the variety and quality of grain products available for urban
residents.
Second, one should consider the composition of China's grain
stocks. Presumably a large portion of the total stock number is
composed of on-farm stocks. In the 1980s and early 1990s, farm
households probably had a bias against selling off their grain
stocks (even if prices rose sharply). For farm families, grain
stocks provided insurance against inflation, illness, death, poor
harvests, and disruptions in normal market supplies because of
policy adjustments and because of poor transportation and
communication systems. From the point of view of grain managers
in urban areas, the fact that farmers were holding large grain
stocks was of little assistance when they needed wheat and rice
to satisfy urban requirements. If urban wheat demand exceeded
domestic supplies, the importing of wheat compared favorably with
options such as squeezing more wheat out of government controlled
stocks, and offering higher prices for domestic wheat.
Benefits/Costs of China's Grain Storage Program
There are substantial benefits for holding grain stocks in China
as in many Asian countries. Grain stocks provide a cushion of
food security against domestic crop failures. Stocks can also be
used as a buffer to dampen disruptions in domestic and
international grain markets. China has 1.2 billion consumers who
have a cultural heritage which sustains grain storage in part to
maintain social order.
There are also substantial costs. Grain is a perishable product
such that there are physical losses and deterioration in quality
the longer the grain is stored and the more it is handled. Some
grain is lost through water, insect, and mildew damage. Some
kernels are damaged each time grain is moved from one bin to
another. Bins are costly to build and maintain. There are
variable costs associated with managing the grain stocks--
handling, fumigating, drying, and guarding stocks. Finally,
there is the financial cost of holding grain stocks.
The Grain Bureau reported in 1992 that it cost them 140 Renminbi
(RMB) to store a ton of grain for 1 year. The free market price
for a ton of wheat in 1992 was 612 RMB. After 1 year the net
value of the ton of wheat decreased by 23 percent.
Assuming that non-farm stocks were 147 million tons in 1991 and
that the storage costs were 140 RMB per ton, the storage costs
then were 20.58 billion RMB. Total government revenues in 1991
were 331.3 billion RMB. This means that 6.2 percent of total
government revenues are used to pay for non-on-farm grain stocks
for 1 year.
A number of forces could reduce China's grain stocks in the
coming decades. First, a change in the land tenure system could
encourage farmers to reduce grain stocks. At present, farmers do
not own their land. Currently, the life cycle of saving strategy
does not operate fully in China. Farmers cannot invest in their
land, and then recoup their investment when they retire and
cannot work anymore. The development of an effective social
security system would help reduce stocks. Second, the
development of financial markets would have a tendency to reduce
on-farm stocks. Farmers currently hold grain because financial
markets have not been well developed. If they could store wealth
in stocks, bonds, savings accounts, or in gold, then they would
not have to hold so much grain.
Third, farmers hold large grain stocks because they cannot rely
on grain markets to supply them with grain when there is a crop
disaster, a disruption in the transportation system, and when
there are political disturbances. A well functioning grain
market, and an improvement in the transportation and
communication systems will work to reduce stock holding.
What is not likely to change for several decades is the attitudes
of farmers. The fear of famine is deeply embedded in the
memories of China's citizens. Older citizens suffered greatly
before 1949 and nearly all adult citizens can remember the hunger
pains resulting from food deficits during the Great Leap Forward
(1958-1961).
Presumably one of the major driving forces behind the interest in
China's grain stocks is that if one knew what the supply and
demand conditions were, stock numbers and changes in stock
numbers would provide important tools for estimating grain
imports and exports. While this paradigm may work well for some
countries, there are several reasons why it is not likely to work
well for China. First, the publication of total stock numbers is
not sufficient. China does not import "total grain"--rather it
imports wheat, corn, rice, and barley and therefore the most
useful stock numbers would be by grain type. Second, the
publication of total stock numbers does not reveal much about
which entities actually holds the stocks or where the stocks are
stored. The publication of data on wheat stocks held by farmers
who are not likely to give them up is not as valuable as the
wheat stock levels in urban Grain Bureaus who have a mandate to
supply flour to urban residents.
What will be the effect of these stock reductions? The reduction
of non-farm and on-farm stocks will temporarily make additional
grains available in domestic markets and thereby reduce
requirements to import grains. If stock reductions occur
gradually through time, the effect on international grain markets
likely will not be great. The rapid reduction of stock levels
likely would shock international grain markets. These matters
certainly will deserve attention in the next few decades.
References
1.State Council, Office of Grain Problems Study Group, "Basic
Estimate of the Nation's Grain Situation," Zhongguo Nongcun
Jingji (China's Rural Economy), No. 5, May 20, 1993, pp. 21-25;
translated in JPRS, CAR, No. 60, August 17, 1993, pp. 20-25.
2.State Statistical Bureau. Zhongguo Nongcun Juhu Diaocha
Nianjian, 1992 (China's Rural Household Survey Yearbook, 1992),
Beijing, Zhongguo Tongji Chubanshe, January 1993.
3.Wen Gui-fang. "Intensification of Grain Circulation and Price
Reform in Accordance with the Needs of a Socialist Market
Economy," Caimao Jingji (Finance and Trade Economics), No. 11,
November 1992, pp. 43-48; translated in JPRS, No. 13, February
23, 1993, pp. 21-27.
4.Will, Pierre-Etienne and R. Bin Wong. Nourish the People: The
State Civilian Granary System in China, 1650-1850. Center for
Chinese Studies, The University of Michigan, 1991
5.Zhao Zhongchen. "Zhengzhou Private Grain Firms Engaged in Full
Range Operations," Nongmin Ribao (Peasant News), July 2, 1993;
translated in JPRS, CAR, No. 71, September 23, 1993, pp. 38
The Development of China's Vegetable Markets
In the past 20 years, revolutionary changes occurred in Chinas
rural marketing system which shifted from centralized marketing
where government institutions purchased, transported, stored,
processed, and retailed food products mostly for urban
consumption to greater use of open markets. The number of open
markets proliferated, and the quantity of goods moving through
these markets expanded rapidly. China already is a major
participant in world vegetable markets and likely will become a
fierce competitor in the coming decades as it begins to improve
links between farm gate and export docks. [Frederick W. Crook
(202)-219-0002]
Introduction
The first half of this article deals with the development of
domestic vegetable markets. Vegetable market developments before
1949 are described briefly. As central planning took root,
government institutions were organized to transfer vegetables
from communes to urban consumers. Open markets were an integral
part of the rural reforms initiated in the early 1980s. What
role have these markets played in vegetable marketing? The
article notes important changes in vegetable consumption patterns
during the reform period. The second half of the article
examines China's marketing of vegetables in foreign trade. The
article describes and analyzes China's foreign vegetable trade
with regard to the size and destination of exports. As incomes
rise, phyto-sanitary barriers are resolved, internal
transportation, cold storage, packaging, and processing improve,
what is the potential for China to export vegetables and what is
the potential for U.S. vegetable exports to China?
This report is based on interviews with central government,
provincial, and vegetable market officials in 1995 and published
materials provided by these officials, including statistical data
published in provincial statistical yearbooks.
China's Domestic Vegetable Markets
China's Vegetable Markets
Over the past half century, many changes have occurred in China's
vegetable markets. In pre-1949 China, vegetable producers were
farm households who owned their own land or rented their land
from local landlords. They responded to market conditions to
supply vegetables to local periodic markets for rural and urban
consumers. Traditional economic (self-sufficiency) factors also
pushed these farmers to produce vegetables for self-consumption.
By 1958, most farm families were mobilized into economic
collectives (communes). Farm families produced vegetables on
their own private plots for their own consumption. Free market
operations were limited and the state organized specialized
vegetable production units (production teams) on the outskirts of
urban areas. The Ministry of Commerce's Second Bureau formed
state-owned vegetable companies to purchase, transport, store,
and retail vegetables to urban residents.
During the Great Leap Forward, free markets in both rural and
urban areas were closed. State-owned vegetable companies
performed wholesale and retail functions to bring vegetable
supplies to urban residents.
Begin box
China's Vegetables Defined
Leafy vegetables:
Bai-cai, Da bai-cai, cabbage, spinach, cauliflower, rape, mustard
greens, and broccoli.
Roots and stems:
Irish potatoes*, sweet potatoes*, yams, carrots, celery, beets,
radish, kohlrabi, turnips, taro, onions, leeks, and garlic.
Fruiting crops:
Sweet corn, peppers, soybeans, many varieties of beans,
cucumbers, peppers, eggplant, melons, squash, and tomatoes .
* Potatoes are often considered a grain crop in China, but in
fact some are consumed as vegetables.
End of box
By the early 1980s, local rural free markets were re-opened and
began to provide vegetables to town residents in rural areas and
to farm families. Production teams produced vegetables for
state-owned vegetable companies until teams were disbanded after
1984. Farm families and rural economic cooperatives raised
vegetables for their own consumption, and for the local rural
open markets. Direct marketing began as farm families were
permitted to bring their produce to urban areas for direct sales.
Families and cooperatives also produced vegetables for state-
owned vegetable companies which continued to act as wholesalers
and retailers. After 1985, however, the amount of vegetables
moving through open markets increased. By 1995, perhaps 80
percent of vegetables marketed in the country went through local
open markets while the remaining 20 percent passed through state-
owned channels.
The Number of Open Markets Increase Dramatically
Between 1979 and 1994, the number of rural open markets nearly
doubled from 36,767 to 66,580 (figure B-1). These markets
handled a wide variety of agricultural products, including
vegetables and manufactured goods. The total value of goods
moving through these markets increased from 17 RMB billion in
1979 to 441 RMB billion in 1994. The increase in open market
activity in urban areas was even more rapid, rising from 2,226
markets in 1979 to 17,880 in 1994. The value of goods moving
through those markets increased from 1.2 RMB billion in 1979 to
456 RMB billion in 1994.
Vegetable output rose dramatically with the beginning of reforms
in 1979. Area sown to vegetables rose from 3.3 million hectares
in 1978 to 8.9 million hectares in 1994. There was a
commensurate rise in production with vegetable output (excluding
melons) reaching 166 million tons in 1994. The growth of open
markets effectively communicated consumer demand for vegetables
to farmers, and farmers responded. Vegetable output rose
because of rising per capita incomes and because old marketing
mechanisms failed to link producers with consumer demand.
Since 1979, the proportion of vegetables marketed through
government-owned vegetable companies decreased sharply while the
proportion of product moving through open markets increased
dramatically. For example, vegetable sales by the Anhui
Vegetable Company fell by two-thirds from 85,000 tons in 1985 to
30,000 tons in 1994 (figure B-2).
On the other hand, open markets such as the Dazhongxi market in
Beijing (one of five major vegetable markets in the city) had a
dramatic increase in sale of vegetables, which rose from 13,300
tons in 1986 to 500,000 tons in 1994.
Clearly a large proportion of vegetables are now being marketed
both through open wholesale and retail markets. Compared with a
decade ago, farmers are producing more vegetables and are earning
better returns from their efforts. Rural and urban consumers
also are better off than before. More vegetables are available
than a decade ago, they are available for a longer period of
time, and there is more variety. Profit motives have encouraged
farmers to plant improved vegetable varieties. Producers have
responded to market incentives by investing in greenhouse
technology which has made it profitable for farmers to deliver
product to markets earlier and later than before. Also
entrepreneurs have found it profitable to transport vegetables
from more southern producing provinces to consuming northern
provinces.
Competition in the market place encouraged wholesalers and
retailers to improve the quality of products. Retailers found
that there was profit in delivering a fresh, wholesome, clean,
appetizing product to customers. In the past decade, the variety
and quality of vegetables available in the market place improved
substantially.
Government Leaders Fear Market Growth
In the early 1990s, open markets for vegetables, fruits, meats,
grains, edible oils, and other food stuffs expanded very rapidly
so that they began to market a larger share of total food
supplies than state-owned stores. This general trend worried
government and party officials--the government should control and
manage institutions which affect the vital interests of the
country. With the upsurge in rates of inflation came renewed
interest in building institutions to control food prices.
Li Lanqing, a Politburo member and a member of the Central
Committee of CPC, noted that some people believe vegetable
markets should be regulated by market forces. Li said in a
socialist market economy, "...the government exercises effective
regulation and control through economic, legal, and necessary
administrative means, while state cooperative commercial
enterprises play the role of the main channels in the
distribution system(3). The Ministry of Internal Trade is
vigorously promoting government-owned chain stores as a means to
recapture a larger share of food retailing.
Various jurisdictions in 1995 set ceiling prices for vegetables.
For example, Beijing municipality published ceiling prices based
on transactions in its five major wholesale markets. Wholesale
prices for various vegetable varieties were collected from the
city's six largest wholesale markets. Then a committee composed
of representatives from the Price Bureau, the Industrial and
Commercial Management Bureau, the Agricultural Bureau, and the
Vegetable Company, Second Division of the Commerce Bureau, meet
to set a guiding price (zhidao jiage). The committee takes into
account transport, packaging, grading (culling out unsuitable
products) and selling costs in determining the ceiling price.
In the long-run, the government efforts to use ceiling prices to
constrain inflation likely will not succeed. The efforts to
control prices will distort the functioning of the market and
probably injure the interests of both producers and consumers.
The use of political power to force more vegetables through state
marketing channels likely will mean higher cost vegetables in the
market place, less variety, and less attention paid to quality.
The central government's efforts to use the Ministry of Internal
Trade retail system (store locations and warehouses) to introduce
supermarket shopping centers may have some positive effects for
the overall marketing of vegetables.
Changing Consumption Patterns
In the early 1980s, China's consumers ate large quantities of in-
season vegetables because of poor storage, transportation,
packaging, and marketing systems. As weaknesses in the marketing
system were overcome, consumers began to eat higher quality
vegetables and buy off-season products delivered from other
growing regions.
Rural per capita vegetable consumption fell from 142 kilos in
1978 to 108 kilos in 1994, while urban consumption fell from 144
kilos in 1985 to 121 kilos in 1994 (figure B-3). Perhaps per
capita vegetable consumption fell in part in this period because
with higher incomes residents shifted from relatively heavy root
crops, such as turnips, to more light weight leafy vegetables,
such as spinach and lettuce.
Urban per capita incomes rose from 749 RMB in 1985 to 3,500 RMB
in 1994. Urban consumer spending on fresh vegetables rose from
41 RMB in 1985 to 152 RMB in 1994, but their spending on fresh
vegetables as a share of annual living expenditures remained
fairly constant at about 6 percent. It seems urban residents
spent more yuan each year to purchase less vegetables. Note that
the average vegetable price rose from 0.29 RMB per kilo in 1985
to 1.26 RMB in 1994 (table B-1).
Low income residents tend to consume vegetables such as Chinese
cabbage, spinach (Kong in cai), green peppers, bean sprouts, and
ginger. High income residents are reported to purchase round
(head) lettuce, spinach, cauliflower, romaine lettuce, garlic
shoots, cucumbers, silk melon, rapeseed, and garlic.
Urban household per capita fresh vegetable consumption survey
data suggest that wealthy residents consume more vegetables than
poorer ones (table B-2).
China's Vegetable Economy: A Big Market or A Major Competitor for
U.S. Producers?
China is a major exporter of fresh and preserved vegetables.
Exports rose from 2.2 million tons ($721 million) in 1986 to 3.1
million tons ($2.4 billion) in 1995.
About 75 percent of China's vegetable exports go to neighboring
economies with large urban populations. For example, in 1995,
China shipped about $730 million dollars worth of vegetables to
Japan, $309 million to Hong Kong, $43 million to Singapore, and
$62 million to the Republic of Korea. Vegetable exports to Asian
markets were largely specialty products like mushrooms, special
beans, canned bamboo shoots, asparagus, and edible ferns and
fungi.
In 1995, China shipped the remaining 25 percent of its vegetable
exports to countries in the European Union and other countries in
the Middle East, Africa, and North and South America. Here the
commodity mix was dominated by the shipment of dried potatoes for
use as livestock feed, dried peas and beans, and specialty
vegetables such as preserved mushrooms and bamboo shoots.
China Custom Administration's vegetable export data depict China
as a major player in selected vegetable markets. We selected 28
items for which China exported more than 10 million U.S. dollars
of product (table B-3). In 1995, China imported vegetables worth
$71 million. Major import items were dried legumes and dried
cassava (probably used as a feed ingredient and not as a
vegetable). U.S. vegetable exports to China in 1995 totaled
US$4.8 million. Major items were frozen potatoes, canned
vegetables, dried beans, fresh peppers, and hops. In addition,
significant quantities of U.S. vegetables are transshipped from
Hong Kong to China.
U.S. vegetable imports from China in 1995 totaled US$136 million.
Major items included fresh or frozen peas, bamboo shoots, canned
mushrooms, water chestnuts, and dried mushrooms. By 1989, U.S.
mushroom imports from China reached 26,000 tons, but imports fell
sharply from 1990 to 1994 because of sanitary conditions in
canneries in China. Imports recovered to 30,000 tons in 1995 as
factory conditions improved and FDA certifications allowed more
product to be shipped.
China To Become Both a Vegetable Importer and Exporter in the
Coming Decades
In the next decade (1996-2005), there likely will be good
prospects for U.S. vegetable exports to China and East Asian
countries because of the expected economic growth in the region
and because the production, processing, packaging, storage, and
transportation system is in place in the United States, and U.S.
shippers can respond quickly to changes in market conditions. As
noted above, China already is a major vegetable exporter in East
Asian markets, but currently its exports are limited by weak
links between farm gate and shipping ports.
In the decades beyond 2005, we expect China will have a
comparative advantage in producing vegetables for export
primarily because of its abundant rural labor resources. As
China invests in transportation and storage infrastructure and as
firms improve grading and packaging standards, China is likely to
become a fierce competitor in world vegetable markets.
References
1.China's Customs General Administration, Summary Surveys of
China's Customs Statistics. Knowledge Publishing House, Beijing,
1986-1992 issues.
2.China State Statistical Bureau. Zhongguo Tongji Nianjian, 1991
(China Statistical Yearbook, 1991). Beijing, Zhongguo Tongji
Chubanshe, Aug. 1991.
3.Li Qinglu and Wang Yongliang, "Li Lanqing Inspects Tianjin
Market," Beijing Xinhua, Domestic Broadcast, May 8, 1995.
Hong Kong Looks Anxiously to 1997
In the year before China regains sovereignty of the Territory,
Hong Kong is bracing itself for the changes to come. However,
compared to the political sphere, changes within Hong Kong's
agricultural sector and agriculture trade will not be as far
reaching. Rather, under the stipulations of the Basic Law which
will govern Hong Kong after 1997, the Territory will maintain its
commercial autonomy, and trade flows should be undisturbed. [M.
Christina Valdecaas (202) 501-6133]
With less than 6,000 ha of arable land and very little domestic
agriculture, Hong Kong is reliant on trade for almost 95 percent
of its food supplies. In 1995, the Territory imported more than
$7.9 billion of foodstuffs. Over the past several years, imports
from the United States have made up approximately 11 percent of
Hong Kong's total agricultural imports, with major commodities
including poultry, grapes, cotton, oranges, apples, and
pistachios. Other major suppliers to the Hong Kong agricultural
market include China and Australia.
Because Hong Kong acts as a transshipment center, the Territory
imports a disproportionately high level of agricultural products.
In 1994, Hong Kong re-exported approximately $5 billion worth of
agricultural products. The vast majority of these products were
sent to China. Because large amounts of unofficial re-exports
also occur, the true extent of trade flows of U.S. agricultural
products to and from China is difficult to determine.
As per capita GDP continues to rise, Hong Kong's demand for food
imports is projected to remain strong. Increasing preferences
for consumer-ready goods and greater storage and shipping
capacity have led to higher demand for high-value product
imports. Although the Territory will revert to the sovereignty
of the People's Republic of China in July 1997, under the
stipulations of the Basic Law, Hong Kong will maintain its free-
port status, and the Territory's import volume will likely
continue.
Wary, But Still Growing
Hong Kong's GDP grew approximately 5 percent in 1995. This
reflects a slight slowing of past trends, which many analysts
attribute to the Territory's imminent reversion to China's
sovereignty and the maturation of the economy. Although the
Basic Law stipulates that Hong Kong will maintain commercial
autonomy for 50 years from 1997-2047, the terms of the agreement
leave much room for interpretation and have caused concern within
the Territory's business community. As a result of this and
other uncertainties, the real estate market remained sluggish,
and consumer confidence decreased throughout the past year.
Despite the precarious economic climate and the first stages of
government-funded construction of the new airport at Chek Lap
Kok, Hong Kong maintained total foreign exchange assets of
approximately $57 billion in 1995. Per capita income in 1995 was
estimated to be $23,200, up 6.4 percent over the previous year.
Foreign investment continued to flow into the Territory, with an
estimated total of $50 billion in projects invested in the
Territory by mid-1994. Hong Kong's inflation rate fell to 8.7
percent in 1995, due in large part to adjustments within the
property market and a strengthening of the U.S. dollar. (The
Hong Kong dollar is pegged to the U.S. dollar and stood at an
average 7.728 HK$ to US$ in 1995.)
Throughout the past few decades, Hong Kong has become an
increasingly service-oriented economy. By 1994, an estimated 77
percent of the economy was involved in service activities,
employing more than 20 percent of the 3 million-strong workforce.
Manufacturing is the second largest sector. Major industries in
Hong Kong include textile manufacturing, light-industry, and
consumer-goods processing. Conversely, agriculture has never
been a substantial part of Hong Kong's economy, and its share of
the economy has been decreasing steadily over the past several
years. In 1984, agriculture comprised 0.6 percent of total GDP;
by 1994 it dropped to only 0.2 percent.
Reliance on World Markets
Because of the large amount of international trade flowing into
and out of Hong Kong, events in international markets heavily
influence the Territory's economy. In 1994, Hong Kong ranked as
the world's eighth largest trading entity, exporting
approximately $172 billion worth of goods (including re-exports)
and importing more than $191 billion. During 1995, total exports
increased 12 percent while imports increased by 14 percent.
Despite the growth of other ports in Asia and the uncertainties
over the transition to PRC sovereignty, Hong Kong remains a major
hub of activity for regional trade. Three-fourths of all imports
and more than half of all domestic exports were to other Asian
countries.
In recent years, budget constraints in China and the general
slowing of the world economy have tempered Hong Kong's export
earnings. Continuing bilateral frictions between the United
States and China and tensions between Beijing and Taipei have
also had a negative impact on the Hong Kong economy. Because of
Hong Kong's role as a regional entrepot, any disruption of U.S.-
China or China-Taiwan trade ties has a noticeable effect on the
Territory.
In 1995, trade with China accounted for almost 35 percent of all
Hong Kong trade, while trade with the United States comprised 14
percent. Japan is Hong Kong's third largest trade partner,
accounting for nearly 11 percent of total trade. Hong Kong's
other major trade partners include the United Kingdom, Germany,
and Taiwan.
As a free port, Hong Kong does not impose customs duties on most
imported products (alcoholic beverages, some hydrocarbon oils,
methyl alcohol, and tobacco are the only exceptions). Products
entering the Territory are assessed a 0.0035-percent trade
declaration charge. The Hong Kong government offers no export or
import incentives to local industries. Textiles, machinery,
electronics, and equipment parts and components were among Hong
Kong's top domestic exports in 1995.
In recent years, industrialization and lower labor costs in the
southern provinces of China have caused a shift in much of Hong
Kong's manufacturing activity outside the Territory. However,
such nearby processing activities have added to the growth in
Hong Kong's re-exports. In 1995, approximately 56 percent of
Hong Kong's re-exports originated in China, while 36 percent of
re-exports went to China.
Diminishing Role for Agriculture
With a total population of 6.1 million and little domestic food
production, Hong Kong is heavily reliant on food imports. Only 7
percent of the Territory's land is used for agricultural
production. Vegetables are the main agricultural crops within
the Territory. Livestock production has decreased substantially
in recent years because of waste disposal laws. The government
has attempted to decrease the Territory's dependency on food
imports by converting fallow land in the New Territories into
arable land, but has not achieved much success due to land
encroachment from other sources, including expanding
infrastructure projects and residential areas.
In 1995, Hong Kong's agricultural imports consisted mainly of
meat and fruit products. In 1994, food imports increased more
than 20 percent over 1993 levels. Hong Kong's agricultural
exports (including re-exported commodities) also increased,
growing 12 percent in 1995 to a total of $2.7 billion. Major
agricultural exports included processed foods and preparations.
During the coming years, better refrigeration techniques and
greater container capacity are expected to increase demand for
meat and fruit products and Hong Kong's ability to process them.
After several years of debate with China's officials over the
awarding of the contract to a non-China entity, Container
Terminal 9 is scheduled to open within the next 2 years. The
Hong Kong government will also upgrade the capacity of existing
ports and plans to dredge the main approach to the channel
leading to the older ports in an attempt to maintain its role as
the world's second busiest port.
U.S.-Hong Kong Agricultural Trade
Total U.S. agricultural exports (including re-exports) to Hong
Kong increased more than 15 percent annually between 1990-95,
making Hong Kong the seventh largest market for U.S. agricultural
exports in 1995. Although U.S. agricultural exports increased
more than 24 percent in 1995, this is slightly lower than the
growth rate experienced in 1994. For the past several years, the
best-selling U.S. exports to Hong Kong have been meat and fruit
products. In 1994, Hong Kong ranked second only to Japan as the
leading destination for U.S. high-value agricultural exports to
Asia.
The increase in U.S. exports of high-value products reflects the
Territory's changing dietary tastes, increased income, and
greater demand for re-exports through Hong Kong. As the
Territory's standard of living has increased, Hong Kong's
population has demanded more consumer-ready products and more
Western-style restaurants and fast-food chains. In 1995,
consumer-oriented agricultural products comprised more than 73
percent of all U.S. agricultural exports to Hong Kong. Growing
tourism of more than 8 percent in 1995 also fueled demand for
high quality U.S. meat, vegetables, and fruits, as did the
emergence of Western-style supermarkets.
In 1995, poultry products were the largest U.S. export to Hong
Kong, increasing almost 60 percent over 1994 levels. Of this
amount, approximately 70 percent was re-exported to China. U.S.
exports of cotton, fresh fruit, fresh red meats, and hides and
skins also did well in the Hong Kong market, posting increases of
13 percent, 9.3 percent, 77 percent, and 21 percent,
respectively, over 1994 levels.
Because Hong Kong re-exports a large quantity of agricultural
products to other countries of the region, the total amount of
U.S. agricultural exports consumed by Hong Kong's citizens is
difficult to determine. Unofficial transactions create an added
difficulty in calculating actual flows. The largest destination
for Hong Kong's agricultural re-exports is China, and many U.S.
exports find their way to consumers in China via this channel.
The tightening of trade in and out of China's special economic
zones (SEZ) in southern China has created added motivation for
using unofficial routes to transport goods into China.
Previously, each SEZ enjoyed lower import tariffs relative to
those faced by the rest of China.
What's Ahead for Trade?
In the months leading up to the Territory's reversion of
sovereignty, Beijing has tried to assure Hong Kong of its
intentions to allow economic freedom after 1997. Press reports
from China's official news organization have emphasized the
Territory's role as a regional financial hub and the great
importance Hong Kong commands in the commercial transactions of
the region. As a commercially autonomous entity, Hong Kong will
maintain its own customs system and will face the same barriers
to the China market as faced by other economies (see box).
Assuming that the Basic Law is upheld, few changes to Hong Kongs
current import regime and demand for agricultural commodities
are expected. The Territory's overall free port status will be
upheld, and U.S. agricultural exporters will continue to face
Hong Kong's existing phyto-sanitary barriers and import duties
placed upon tobacco products and beverages. Although
administrative personnel within the different agencies will
change, the overall structure of Hong Kong's commercial and trade
activities assumably will remain in place until 2047.
Given increased income and a continued reliance on outside
sources for food products, the level of Hong Kong's imports of
agricultural products is expected to rise in the coming years.
The Hong Kong Financial Secretary estimates that GDP will
continue to grow at around 5 percent during 1996 and 1997 and
that consumer spending growth will rebound to 4 percent.
Domestic agriculture will continue to decline as a percent of GDP
as industrialization and greater demand for housing continue to
impinge upon potential arable land. However, the increased
import levels will probably not reach the magnitudes experienced
during the 1980s since income and population increases are not
expected to be as strong.
Changing dietary patterns and a continued shift toward higher
value, consumer-oriented goods, will likely lead the increased
demand for U.S. goods. U.S. exports of bulk products, such as
rice and wheat, will continue to find markets in Hong Kong,
however the potential for growth in these areas is limited.
Large increases in exports of U.S. bulk commodities will likely
occur only if other major suppliers experience shortages, as was
the case with U.S. exports of cotton to Hong Kong in 1994.
Although U.S. exporters enjoy a large share of the current
markets for fruit and meat, increased competition from Australia
and Latin America is likely to temper growth in U.S. market
shares for these goods.
Meats
Demand for meat imports will be especially high as domestic
livestock production activities continue to decline and as better
refrigeration techniques allow more meat imports to reach the
Hong Kong market at lower prices. Although domestic meat
consumption for the Territory is expected to remain relatively
stable in the upcoming years, hovering around 1 percent growth
annually, the continually strong tourist industry, increased
demand for re-exports, and the emergence of more Western style
restaurants and eating habits, will likely add to overall demand
for meat. Moreover, as acceptance of chilled or frozen meat
products becomes more widespread, not only in restaurants but also
for home use, import levels from distant suppliers, including the
United States, are expected to climb.
In 1995, imports of U.S. animal products made up about two-thirds
of all U.S. agricultural exports to the Territory (poultry
products made up more than 96 percent of that amount). Hong
Kong's imports of fresh and frozen U.S. poultry products grew
more than 47 percent in 1995 over 1994. U.S. exports of red meat
products also fared well. In 1995, U.S. exports of red meat
products to Hong Kong increased nearly 77 percent above 1994.
During the same time period, prepared and processed red meat
exports experienced 27 percent growth.
Fruits and Vegetables
Fresh fruit exports are also expected to do well in the Hong Kong
market. Although new entrants into the Territory's horticultural
market have affected total U.S. market shares, due to the
different growing seasons of the other suppliers, U.S. exporters
face little direct competition, at least in the fruit market, and
are still the top foreign supplier of fruits in the Territory.
In 1995, fresh fruit imports from the United States increased 9.3
percent while processed fruits and vegetable imports grew 11
percent. Fresh vegetable imports from the United States declined
slightly, facing increased competition from China and other Asian
suppliers. Imports of grapes accounted for the largest fruit
imports from the United States, followed by oranges and apples.
Vegetable imports from the United States increased by 4.4 percent
over the same period. The strongest growth of vegetable exports
was with frozen products, although exports of fresh celery and
cauliflower also did well.
Hong Kong is second only to Japan as the largest Asian importer
of U.S. horticultural products. Though domestic consumption
makes up the majority of demand, re-exports of U.S. fresh fruits
from Hong Kong is also increasing. As Western-style restaurants
continue to proliferate throughout the Territory, demand for
frozen vegetables, especially potatoes, will also continue to
rise.
Grains
Hong Kong's imports of grain commodities as a whole have been
relatively flat or declining over recent years. Import demand
for such products is expected to rise very slowly in the short-
to medium-term, with the Territory importing only 778,000 metric
tons of rice and wheat in 1996. According to USDA baseline
estimates, domestic consumption of rice is expected to continue
to fall by almost 1 percent annually, while domestic consumption
of wheat will increase only slightly, averaging 0.5 percent
yearly growth until the end of the century.
Although imports of wheat flour more than doubled between 1994
and 1995, imports of unmilled wheat fell sharply by more than 36
percent during the same period. U.S. rice exports to Hong Kong
also declined, falling 50 percent below 1994 levels.
Other commodities
U.S. exports of nuts and oilseeds continued to sell well in Hong
Kong's market. Led by pistachios, with a 28-percent increase
over 1994, exports of nuts are expected to continue to grow.
Likewise, U.S. exports of oilseeds are expected to increase,
especially given a lack of regional suppliers. In 1994/95, U.S.
oilseed exports to Hong Kong grew by nearly 57 percent. U.S.
exports made up more than 11 percent of total Hong Kong oilseeds
imports. Sales of U.S. processed oils also expanded in 1995.
U.S. exports of cotton increased more than 13 percent in 1995,
and made up nearly 67 percent of Hong Kong's imports of U.S. bulk
commodities. The continued relocation of textile and garment
manufacturers from Hong Kong into southern China is likely to
temper the Territory's direct cotton import demand. Demand for
cotton as a re-export commodity, however, will likely increase to
supply Hong Kong-run factories in southern China.
Due to a 9-percent increase of the tariffs placed on tobacco
products imported into Hong Kong, U.S. exports of tobacco, both
raw and manufactured, fell sharply in 1995. Assuming continued
vigilance on the part of the Hong Kong government to decrease the
amount of tobacco entering the Territory, U.S. exports of tobacco
to Hong Kong are expected to continue to decline.
Whither Hong Kong?
With all the uncertainty surrounding the handover of Hong Kong's
sovereignty to China and the implications for the Territory's
future, it is difficult to discern the scope of U.S.-Hong Kong
trade after 1997. Several scenarios exist.
Decreased trade
In the unlikely event that Beijing reneges on its promises of
continued commercial autonomy in Hong Kong, U.S. exports to Hong
Kong and China will suffer as a result. If Beijing were to
impose its customs regime on the Territory, drastically fewer
U.S. agricultural exports would make their way to the Hong Kong
market. Moreover, the volume of U.S. exports that currently
transit through Hong Kong en route to other destinations,
including China, would likely shrink.
No change
Despite lingering doubts about China's intentions and because
restricting Hong Kong's commercial activities would not be in
China's best interest, a more likely outcome after 1997 is a
continuation of the status quo. U.S. exporters will continue to
enjoy Hong Kong's relatively open trade regime and Hong Kong will
continue to demand U.S.-produced goods. Changes in
administrative personnel may affect the day-to-day functioning
and trade mechanisms through the Territory to some degree, and
corruption may become a problem. However, the legal procedures
of trade with Hong Kong will remain intact.
Conversely, because China's tariff structure vis-a-vis Hong Kong
is not expected to change in the short-term, all exports to China
through Hong Kong, including re-exports originating from the
United States, will continue to face the same trade barriers as
before 1997. Exports to China will not experience the more
lenient regulations of Hong Kong's Customs, even if the goods
transit through the Territory.
Increased Trade
A final scenario is that as Hong Kong becomes a part of China and
as closer political ties result in increased interaction between
PRC and Hong Kong business concerns, relations between the two
will strengthen. Problems such as distribution and marketing
within China will probably become less taxing for Hong Kong-based
businessmen as they become more accustomed to doing business in
China. Unofficial trade will likely also increase. For U.S.
exporters, the closer ties will likely translate into increased
levels of re-exports of U.S. goods to China's market as Hong Kong
entities are better able to supply China's food import demands.
In whatever way China-Hong Kong relations evolve after 1997, the
short- to medium-term prospects for U.S.-Hong Kong trade appear
good. Increased per capita income and changing dietary patterns
will likely bode well for U.S. agricultural exports, and better
refrigeration and more storage capacity on both sides of the
Pacific should help facilitate greater trade of more high-value
products from the United States.
References:
1. Asian Development Bank. Outlook 1995-96, pp. 61-64.
2. DRI/McGraw Hill. World Market Reports, March 1996.
3. Hong Kong Digest, various issues.
4. FAS Agriculture Post Annual and Voluntary Reports, various
issues.
5. "Hong Kong." The Asian Wall Street Journal, October 9, 1995.
6. "The Battle for Business as Usual." The Financial Times,
March 19, 1996.
Box 1:
Imports, Exports, and Re-exports
The Hong Kong government defines "imports" as all goods "imported
for domestic consumption and subsequent re-export." "Domestic
exports" are considered to be those goods naturally produced in
Hong Kong or the product of manufacturing processes in Hong Kong
whose "shape, nature, form, or utility" has been "changed
permanently." The term "re-export" applies to those goods
previously imported into Hong Kong and exported without
undergoing any type of manufacturing process. According to the
Hong Kong government "diluting, packaging, bottling, drying,
assembling, and sorting" do not constitute manufacturing
processes. Most agricultural products imported into Hong Kong
and later exported are considered re-export products
Box 2:
Basic Law
According to the Sino-British Joint Declaration on the Question
of Hong Kong (1984) and the subsequently ratified Basic Law of
the Hong Kong Special Administrative Region (SAR) of the People's
Republic of China which will govern the Territory after 1997,
Hong Kong will maintain commercial autonomy until at least 2047.
As such, the government of Hong Kong will be responsible for
protecting the rights of individuals and legal persons and
setting its own budget and tax structure. Hong Kong will not
have to remit taxes to Beijing. In addition, the Hong Kong
government will be responsible for formulating monetary and
fiscal policies, and regulating such activities within the SAR.
Under the stipulations of the Basic Law, Hong Kong will maintain
its "status of a free port and shall not impose any tariff unless
otherwise prescribed by law." Hong Kong will also be allowed to
continue its "participation in international organizations and
international trade agreements (including preferential trade
arrangements), such as the World Trade Organization and
arrangements regarding international trade in textiles. Export
quotas, tariff preferences, and other similar arrangements, which
were made by the Hong Kong government prior to July 1, 1997, will
remain valid." However, these arrangements will only apply to the
Hong Kong SAR, not to other provinces within China. After 1997,
Hong Kong will continue to face China's import regime. Hong Kong
exports to China will not receive special consideration.
List of Tables and Figures
1. China's macroeconomic indicators, 1994-95
2. Total and agricultural trade of China, 1995
3. Geographical distribution of China's agricultural trade, 1995
4. Market share of China's agricultural imports, 1995
5. China's agricultural export share by destination, 1995
6. Agricultural trade between the United States and China, 1980-
1995
7. China's total trade with neighboring counties, 1995
8. Agricultural import share in China, by neighboring country,
1995
9. China's agricultural export share in neighboring countries,
1995
10. China's major manufactured farm inputs, 1993-95
11. China's transportation situation, 1993-95
12. China's grain production, trade, and stocks, for 1994/95,
1995/96 and 1996/97
13. China meat production
14. China's oilseed output and trade
15. China's main vegetable oil output and trade
16. China's calendar year edible oil imports by country, 1994-95
17. Per capita edible oil consumption in China
18. China urban per capita edible oil consumption by different
income levels, 1994
19. Provincial cotton production, 1991-95
20. China's refined sugar statistics
21. China's sugar crop statistics
Feature Article Tables
A-1. National average on-farm stocks, per capita
A-2. Estimated on-farm grain stocks, by province, 1991-94
B-1. Urban vegetable consumption data, 1985-94
B-2. Urban resident per capita fresh vegetable purchases, by
income class, 1994
B-3. Selected vegetable exports, 1992-1994
C-1. Hong Kong's macroeconomic indicators
Text Figures
1. Gap Between Urban and Rural Income Widens
2. Total Trade Continues To Rise
3. Structure of China_s Agricultural Trade, 1995
4a. U.S. Agricultural Exports to China, 1980-1995
4b. U.S. Cotton Exports to China, 1980-1995
4c. U.S. Exports of Grain and Feed to China, 1980-1995
4d. U.S. Oilseed and Oilseed Product Exports to China, 1980-1995
5. Structure of US Agricultural Exports to China, 1980-1995
6. U.S. Agricultural Imports from China, 1980-1995
7. Real Chemical Fertilizer Prices, 1978-92
8. China's Chemical Fertilizer Imports, 1993-95
9. State Investment in Fixed Assets in the Agricultural Sector, 1981-1995
10. Per Capita East Asian Non-feed Wheat Consumption
11. China's Domestic Prices Compared with US HRW FOB Gulf
12. China's Domestic Prices Compared with Thai 35 Percent Broken
13. Hunan Indica Rice Yields Compared with Those from Arkansas and Thailand
14. Per Capita East Asian Rice Consumption
15. China's Domestic Prices Compared with U.S. #3 Yellow Corn FOB Gulf
16. Per Capita Urban Grain Consumption
17. Annual Percentage Change in China's Grain and Red Meat
18. China's Domestic Prices Compared with U.S. #3 Yellow Corn FOB Gulf
19. Per Capita Urban Grain Consumption
20. Annual Percentage Change in China's Grain and Red Meat Production,
1980-95
21. China's Domestic Soybean Prices Compared with World Market Prices22. China Edible Vegetable Oil Production
23. Per Capita Sugar Consumption, 1974-94.
Feature Article Figure
A-1. On-farm Grain Stocks
A-2. China's Wheat Imports
B-1. Number of Rural and Urban Open Markets, 1950-94
B-2. Anhui Vegetable Company's Sales Fell
B-3. Urban and Rural Per Capita Vegetable Consumption
Appendix Tables
1. China's grain area, yield, and production, 1990-95
2. China's 1995 provincial grain, cotton, oilseed crop, sugar
crop, and red meat production
3. China's oilseeds and cotton area, yield, and production, 1990-95
4. China's yearend livestock inventory and product output, 1990-95
5. China's major agricultural exports, by volume, 1991-95
6. China's major agricultural exports, by value, 1991-95
7. China's major agricultural imports, by volume, 1991-95
8. China's major agricultural imports, by value, 1990-95
9. U.S. agricultural exports to China, 1991-95
10. Major U.S. agricultural imports from China, by calendar year,
1990-95
11. China's calendar year grain trade, by country, 1989-95
12. China's calendar year trade in other agricultural commodities,
by country, 1990-95
13. China's other agriculture output, 1989-95
14. China's average US$ exchange rate, 1987-95
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