China will not increase its annual low-tariff import quotas for corn, wheat and rice to accommodate stepped-up purchases of farm goods from the US, local media group Caixin quoted Chinese Vice Minister of Agriculture and Rural Affairs Han Jun (韓俊) as saying yesterday.
The report underlines China’s desire to protect its domestic producers and raises further questions about how it will meet a target of spending billions of dollars more on US agricultural goods as the two countries look to calm an extended trade dispute.
US President Donald Trump last month said that China had agreed to double its pre-trade dispute purchases of US agricultural products over the next two years as part of a Phase 1 trade deal to be signed this month.
Photo: Reuters
Han, part of the negotiating team, last month said that China would buy more US wheat, rice and corn to meet demands for higher imports.
His comments led to speculation that Beijing could increase the quotas that it issues each year to grain buyers, setting the amount of wheat, corn and rice that can be imported at a tariff rate of 1 percent.
The amounts for this year were issued in September last year and were steady in previous years. Imports outside the quotas are rare because of tariffs of 65 percent.
Han was quoted by Caixin yesterday as saying the quota is offered to global markets and “we won’t adjust it for one country.”
“This is soothing market nerves here,” said Meng Jinhui (孟金輝), a corn analyst with Shengda Futures Co Ltd (盛達期貨).
“I think the market is worried about a blow from the possible increase of grain imports, and that [message] has gone to the high leadership,” Meng added.
Increasing sales of meat, ethanol, distillers grains and soybeans are likely to be more important for reaching the US target for doubling farm exports to China, Meng said.
US Trade Representative Robert Lighthizer last month said Beijing had committed to buy an additional US$32 billion of US agricultural products over two years, or about US$16 billion a year more than the 2017 baseline of US$24 billion.
China’s annual quotas are 9.64 million tonnes for wheat, 7.2 million tonnes for corn and 5.32 million tonnes for rice, but large portions go unused each year as China relies on domestic production.
“This is about national food security, so it won’t be opened up,” said a Chinese wheat trader, who declined to be identified as he is not allowed to talk to media.
The quota system has been heavily criticized by the US, which last year won a WTO ruling that China violated its obligation to administer the quota on a fair basis.
China has not bought large volumes of US wheat, corn and rice in recent years.
“Although there are certain types of high-quality wheat that China would look to import, maxing out the tariff rate quota would also weigh on domestic producers,” INTL FCStone Financial Inc senior Asia analyst Darin Friedrichs said in a note late on Monday.
“China will be facing a tough balancing act of trying to satisfy the US demands for large agriculture purchases, while also not hurting the rural population,” he said.
The agriculture ministry did not immediately respond to a request for comment.
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