China: the expanding market for world soybean production

1. China: the expanding market for world soybeanproduction By Qingyun Xu

2. Introduction • World soybean production and consumption • Although there are more than 50 countries cultivate soybeans in the world, the majority of soybean production is concentrated in only a few countries. • The United State, Brazil, Argentina and China are four main soybean producers which account for more than 90 percent of the total soybean production in the world

3. Table: World soybean supply and distribution[Thousand Metric Tons]

4. The world production and consumption of soybean consistently increased since 1960s

5. Overview of world soybean trade and imports boom in China • World soybean trade • International trade of soybeans and soybean products also rises dramatically in recent years. • Total world imports of soybeans in 2006/07 reached 69,126 thousand Metric Tons

6. China’s soybean imports • China became a world net importer of soybeans since 1996 • Rapid increasing in domestic demand of soybeans made China become the world largest importer of soybeans since 2003 instead of European Union. • China’s imports of soybeans achieve 31,500 thousand Metric Tons in 2006/2007 accounting for about 40% of world total imports.

8. Factor analysis of China’s soybean imports boom • Soybean production and domestic market in China • China’s soybean production is uncompetitive compared with other large producers such as U.S., Brazil and Argentina for: • the relative lower yield in soybean production • and the limitation in arable land for soybean cultivation in China

9. China’s domestic soybean market • The sharply growth in soybean domestic demand is the key driver of soybean imports boom for China. • The domestic soybean demand stimulated by the following factors: • Personal income growth, urbanization and population growth • The improvement of China’s soybean processing industry

10. China’s domestic soybean market • Both the limitation of domestic soybean supply and the increasing of domestic demand contribute to the disequilibrium of domestic soybean market in China. • Domestic demand largely surpasses the domestic supply let China’s soybean consumption largely rely on the international supply.

11. China’s political environment for soybean imports boom • The impact of China’s agricultural trade policies on soybean imports before accession to WTO: • China’s trade liberalization policy in soybean and soybean products trade in 1990s. • China allow soybean imports to enter at a tariff as low as 3% since the middle of 1990s. • China’s government lifted and re-imposed value added tax (VAT) on imported soybean meal.

12. China’s agricultural trade policies after accession to WTO and its effect on soybean imports • China joined the World Trade Organization (WTO) on November 11, 2001 and became the 143rd member of WTO. • To fulfill its commitments as a member of WTO, China’s government adjusted its agricultural trade policies in many fields. • Reduction of import tariffs on agricultural and food products.

13. China established annual import quotas (TRQ) for selected key commodities, including wheat, rice, corn, vegetable oils, cotton, sugar, and fertilizer. • China reduced or eliminated import and export monopolies of many agricultural commodities by state-owned trading enterprises to access trade liberalization.

14. the non-tariff barriers such as China’s biotechnology and food safety regulations in 2002 had extremely impacts on its soybean imports

15. Conclusion • China’s demand for soybean imports continues to look strong and provides favorable opportunities for world soybean exporters, especially for U.S.