Wed, Dec 24, 2003 - Page 11 News List

China's soybean move seen as goodwill gesture


China's decision to approve imports of genetically modified soybeans from the US is a goodwill gesture that will help trim a record bilateral trade deficit but won't significantly ease tensions.

China will soon offer life-long approval for US soybean imports worth US$2 billion annually, a senior US official said Monday, weeks after Premier Wen Jiabao (溫家寶) visited the US.

But the move will not silence US complaints that the Asian economic juggernaut, with its yuan currency pegged to the ailing dollar, is costing manufacturing jobs back home, triggering spats over everything from bras to televisions.

The US bilateral trade deficit is expected to hit a record US$125 billion this year.

"It's a good sign that China is trying to be more conciliatory," said Hong Liang, Goldman Sachs' chief economist for China.

"But I don't see this as China giving way to quiet down trade disputes ... The US is losing more manufacturing jobs because it is no longer competitive in labor-intensive manufacturing."

If it goes ahead, the decision should stop a tiresome process of having to re-apply for import permits every time China extends interim measures to allow suppliers to bring in the oilseed.

Wen said during a successful visit to Washington this month that his government took the trade gap seriously and presented a proposal aimed at addressing US concerns, which called for increasing US exports to China.

But while traders view China's latest decision on its volatile soybean import policy as positive, they warn that Beijing could employ other well-worn means to restrict arrivals, such as delaying quarantine papers needed to unload cargoes.

"Basically, China's latest move on soybeans is a way to please the United States, especially after Wen met the US president," said a trader with a global firm in China.

Beijing has offered similar goodwill gestures. The US government earlier announced that a visiting delegation signed deals to buy 2.5 million tonnes of US soybeans -- despite high prices.

But analysts said those moves were mostly self-serving -- China, the world's largest soybean importer, has an acute need for the oilseed that is crushed to make edible oils and animal feed.

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