Special Report: NPC, CPPCC Annual Sessions 2008
BEIJING, March 6 (Xinhua) -- The National Development and Reform Commission
(NDRC), China's top economic planning agency, has decided to prolong
implementation of interim import duty on soybeans from March 31 to September 30,
a NDRC source confirmed Thursday.
To reduce the cost of soybean imports and curb price rises for grain on the
domestic market, on Oct. 1, 2007 China slashed import duty on soybeans from
three percent to one percent.
The country's consumer price index, a barometer of inflation, jumped to an
11-year high of 7.1 percent in January on the back of rocketing food prices.
As the aforesaid move pointed to more soybean arrivals, however, the
increasing reliance on imports of this sort of foodstuffs has triggered off
worries about China's grain security.
Before 1995, China had been a major producer and net exporter of soybeans.
But it became a net importer in the five years thereafter. In 2000, the country
bought approximately 10 million tons of soybeans from abroad, an equivalent to
177 percent of the annual production at home. Since then, soybean imports kept
increasing and, in 2006 the volume reached 28.27 million tons, and in 2007 it
was estimated at 31 million tons.
According to Liu Chaoyang, an analyst with the Southern Fund Management Co.
Ltd., taking into account imported edible oil made from soybeans, China's gross
soybean imports were estimated at 50 million tons or so.
Such big imports helped reduce China's grain self-sufficiency to 90
percent, which was already lower than the government-set ratio of 95 percent. In
other words, substantial soybean imports tend to threaten China's grain
security, Liu commented.
Worse, China National Grain and Oil Information Center estimated soybean
production nationwide at 14 million tons for 2007, down 12.32 percent from the
previous year. The center said areas sown with soybeans shrank 6.25 percent,
which would point to more imports.
The reason why China's domestic soybean output declined drastically lay in
the impact from genetically modified produce from abroad.
In comparison with genetically modified produce, China's soybeans suffer
from disadvantage in cost. The oil extraction ratio of domestically-yielded
soybeans is only 17 percent to 18 percent, whereas that of imported soybeans is
22 percent or so.
Along with an improvement in diet structure, soybean is playing an
increasingly important role in foodstuffs.
China's edible oil imports soared more than 200 times from the 1986 level,
and imports amounted to 8.38 million tons in 2007. Most of the imports were made
from soybeans. On the basis of a 20-percent oil extraction ratio, soybean oil
imports will translate into an increase of 45 percent to the soybean imports,
according to Wan Xiaoxi, another analyst with the Southern Fund Management Co.,
Ltd.
Industry insiders have already begun to describe the situation as a
"soybean crisis." The description might become more sensational when it came to
the monopoly of soybean processing sector by foreign-funded companies.
State media reported earlier that 70 percent of China's edible oil plants
were invested in by foreigners and that 80 percent of soybean extraction
capacities nationwide were controlled by foreign-invested companies.
The foreign monopoly has weakened the Chinese government's capabilities of
regulating the foodstuff market at home.
Besides, the high dependence on imports made the domestic grain market more
vulnerable to volatility of grain prices abroad, Liu pointed out.
On Nov. 22, 2007 the International Grains Council estimated that grain
stockpiles worldwide had reduced to a 30-year low of 255 million tons, which was
ready to spur price rises.
Given the high reliance on imports, experts suggested that the Chinese
government should keep a soybean stockpile of at least one year's consumption,
i.e. 50 million tons. Meanwhile, more than five million tons of edible oil
should be in stock. Futures market should be made use of to hedge price
fluctuations on global grain markets.
