China: Trade

China's trade pattern in agricultural commodities follows its comparative advantage: it tends to import land-intensive commodities (soybeans, cotton, barley, rubber, and oils made from soybeans and palm kernels), and it exports labor-intensive commodities (fish, fruits, vegetables, and processed agricultural goods). China is also a major exporter of corn in most years.

In 2008, China's agricultural imports totaled an estimated US$57 billion and its agricultural exports totaled US$29 billion. The value of China's agricultural imports rose sharply in 2008 due to sharply higher oilseed prices and a surge of pork imports to alleviate a temporary shortfall in domestic supplies. Grain exports were cut back in 2008 as authorities sought to cool rising domestic prices, and other food exports were affected by safety concerns in Japan and other countries.

Historically, the United States has supplied a significant (although varying) portion of China's imports of soybeans, cotton, and wheat. Bilateral agricultural trade in 2008 consisted of US$12.2 billion in U.S. exports to China, and US$3.4 billion in imports from China. The United States is a net exporter of bulk commodities (primarily soybeans and cotton) to China. The leading markets for China's agricultural exports are Japan, the United States, Hong Kong, and South Korea. The United States imports fish and shellfish, juices, garlic, mushrooms, and various processed foods and food ingredients from China.

Major Player in World Markets

China has often been a major player in international markets. It has been a major source of growth in world demand for soybeans since the mid-1990s. Soybeans now account for more than half of the value of U.S. agricultural exports to China.

China net trade in soybeans, oil and meal, 1980-2006d

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Sudden and dramatic policy shifts, and their subsequent effect on China's international trade profile, make the country a relatively volatile player. In 1994 and 1995, China abruptly increased its grain imports and cut off corn exports as concerns about grain shortages and inflation became widespread. China stopped importing wheat and boosted grain exports from 1997 to 2003. In 2008, China cut off grain imports, temporarily cut tariffs for some products, and imported vegetable oil and pork to add to government reserves as officials sought to slow rising food prices.

China net trade of rice, wheat, and corn, 1961-2008d

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China's government exerts control over trade of grains and other key commodities through state-owned trading companies, import/export quotas and licenses, export taxes, temporary tariff reductions, sanitary and phytosanitary measures, tax waivers, and subsidies. China's accession to the World Trade Organization (WTO) in December 2001 reduced the government's control of trade. A series of WTO commitments required China to cut tariffs, reduce the monopoly power of state trading monopolies, eliminate export subsidies, give equal treatment to imported and domestic products, publish and seek comments on all trade regulations and base phytosanitary rules on science. These commitments increased the role of market forces in shaping China's agricultural trade, but policies continue to influence trade as well.

Statistics

References

See briefing room readings page for ERS reports on China agricultural trade.

For more information, contact: Fred Gale

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Updated date: March 25, 2010
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