China becomes a net importer of agricultural products for the first time

China's agricultural trade deficit in 2004 may be as high as $5.5 billion. Just three years after joining the World Trade Organization, China has transformed from an exporter of agricultural products to a net importer of agricultural products.

The news has attracted widespread attention. In the previous eight years, China had an average annual agricultural trade surplus of US$4.3 billion.

According to the statistics and analysis of the customs in the first 11 months of 2004, the growth of China's agricultural imports greatly exceeded the growth of exports, of which the export value was 20.68 billion US dollars, a year-on-year increase of 10.5%; the import value was 25.86 billion US dollars, a year-on-year increase of 54.1%. As a result, the trade in agricultural products changed from a surplus of US$1.94 billion in the same period of 2003 to a deficit of US$5.18 billion.

According to customs statistics, the high deficit is mainly due to the dramatic changes in the import and export of three major agricultural products: First, grains, including rice, wheat, corn, soybeans, etc. From January to November 2004, China's grain export was 4.305 million tons, a decrease of 76.2% compared with the same period of the previous year; the grain import was 8-947,000 tons, an increase of 3.7 times compared with the same period of the previous year. This rise and fall directly led to the change in grain trade from a net export of 16.159 million tons in the same period in 2003 to a net import of 4.643 million tons. The second is cotton and sugar as industrial raw materials. From January to November 2004, China's cotton exports were 11,000 tons, a decrease of 8-9.9% compared with the same period of the previous year; cotton imports were 1.92 million tons, an increase of 1.5 times compared with the same period of the previous year. During the same period, China's sugar exports fell by 36.7% compared with the previous year to 62,000 tons; sugar imports increased by 68% to 1.183 million tons. Third, among the livestock and poultry products whose export has grown rapidly in recent years, the import and export of poultry products has changed. From January to November 2004, China's export of poultry products was 560 million US dollars, down 24.9% compared with the same period of the previous year; the import of poultry products was 160 million US dollars, an increase of 62.7% compared with the same period of the previous year.

Analysts believe that the sudden huge trade deficit is the result of a combination of internal and external factors, among which changes in the supply and demand situation of domestic agricultural products are the key factor.

Dr. Sun Dongsheng of the Chinese Academy of Agricultural Sciences believes that "the trade deficit in agricultural products is directly related to the historically low level of grain inventories in China". In 2003, China's grain production fell to a 13-year low of about 430.6 million tons. In the same year, grain stocks were also at their lowest level since 1974, or even less than 30 percent of that year's consumption, about half lower than the average of 59.4 percent over the past 30 years.

Zeng Yinchu, an expert on agricultural issues at Renmin University of China and a long-term researcher on agricultural trade, said that although the decline in grain inventories in 2003 was far from threatening China's food security, it had a great impact on the domestic grain supply and demand situation. two "economic signals". First, the government implemented a series of measures to stimulate food production in early 2004, including tax relief and direct cash subsidies to farmers. At the same time, in terms of the import and export of agricultural products, the export quotas of major agricultural products have been reduced, and the incentive measures to stimulate the import of agricultural products have been increased. Second, the prices of major domestic agricultural products have rebounded, rising by as much as 30-40%, which to a certain extent aggravates people's concerns about the domestic food supply and demand situation. It is precisely under the guidance of the above-mentioned "economic signals" that the government and enterprises responded actively and imported a large amount of grain, which led to an extraordinary increase in China's grain imports in 2004.

Zeng Yinchu believes that the surge in China's cotton imports in 2004 was mainly due to the cancellation of the global textile and apparel quotas in early 2005, and domestic textile companies are optimistic about the export opportunities brought by this. Although domestic cotton production was high in 2004, driven by "good" factors, textile enterprises competed to increase cotton raw material reserves, and the domestic market was still in short supply, so enterprises had to turn their attention to the international market. As for the reversal in the import and export of poultry products, the reason is the impact of the outbreak of avian influenza early last year on China's poultry meat exports.

Many experts believe that the changes in the supply and demand situation of China's agricultural products in 2004 are mostly temporary, and the huge trade deficit in agricultural products will not last until 2005.

First of all, in 2004, China's grain production has reversed the five-year decline in grain production, and the grain production has exceeded the established target. At present, some major grain producing areas have been worried about the decline of grain prices. As the country further strengthens support for agriculture and attaches great importance to grain production, China's grain supply and demand in 2005 is expected to be balanced, and it is unlikely that there will be an extraordinary increase in imports. Secondly, the lifting of the global textile and apparel quota cancellation on China's cotton imports has been released, and domestic cotton prices are gradually tending to fall. Many textile enterprises realize that the export opportunities brought by the cancellation of quotas will actually be relatively limited, and the enthusiasm of enterprises to reserve cotton raw materials on a large scale is rapidly fading. Therefore, it is expected that China's cotton imports in 2005 will be difficult to continue to grow. Finally, a major disaster event similar to bird flu is unlikely to occur in 2005, and even if it occurs, it will hardly have a significant impact on the overall export situation of China's agricultural products.