The only ‘crisis’ in China’s higher grains import numbers, widely reported today, is in the minds of the media. The growth in imports is small and no cause for concern from a food security perspective; it’s part of a long-term trend toward a higher volume of food imports that will be needed as Chinabecomes a wealthier country. The Financial Times reports on fears of a ‘food crisis’ following an apparent doubling of China’s grains imports: bq. The biggest changes were seen in grain imports as strategic stocks fell because of declining annual harvests every year since 1998. In the first half, China imported 4.1m tonnes of grain, or 1.8 times as much as in the same period a year ago. The level of China’s national grain reserves is a state secret. But several academics said although the total harvest this year is expected to exceed last year’s by a small margin, burgeoning demand would ensure that grain reserves continue to come under pressure this year and possibly in 2005. (“Financial Times”:http://news.ft.com/cms/s/ed89a5ea-f465-11d8-9911–00000e2511c8.html) What this story—and many others like it—doesn’t tell you is that China has been virtually self-sufficient in grain for many years with production running at 460 million tonnes last year. Even if it’s imports this year reached 8 million tonnes—three times last year’s imports of grains—they would represent less than 2 per cent of China’s annual production. In fact, China’s WTO-scheduled import quotas for rice, corn and wheat add up to about 22 million tonnes this year. China is very unlikley to need to import that much; but even if it did so, imports would be less than 5 percent of consumption (production + stocks + imports). The story is apparently being pumped-up by China’s own media. “AFP”:http://www.channelnewsasia.com/stories/afp_asiapacific_business/view/102018/1/.html quotes Chinese sources as reporting that the first half of the year saw China’s “first-ever agricultural trade deficit”. Even if this is true, the size of the reported deficit is tiny compared with China’s overall trade: the agricultural shortfall represents only three-quarters of one percent of China’s import bill last year. China remains almost self-sufficient in food production as I explained in “my paper”:http://www.inquit.com/article/312/agriculture-in-an-fta-with-china for the recent conference on the proposed free trade agreement in Sydney. It is currently the world’s ninth biggest food exporter and eighth biggest food importer. As it grows wealthier, it will demand more of the foods that other wealthier countries now consume in higher volumes, particularly high quality grains, cereal feeds for it’s own livestock (pork, poultry) and other livestock products (beef, dairy). China does not have a comparative advantage in this form of agricultural production; in order to grow wealthier, China must import more of these goods and export more of the goods for which it does have comparative advantage (manufactures). These trends are signs that China is becoming richer. They are not a matter of food security. Not even remotely. fn1. As far as I can see, it’s not: China recorded a $2billion dollar deficit in 2003 according to “data(Excel spreadsheet: about 28k)”:http://www.ers.usda.gov/Briefing/China/Data/tbl-tradeworld.xls derived from China’s own statistics by the US Agriculture Department
Peter Gallagher is student of piano and photography. He was formerly a senior trade official of the Australian government. For some years after leaving government, he consulted to international organizations, governments and business groups on trade and public policy.
He teaches graduate classes at the University of Adelaide on trade research methods and the role of firms in trade and growth and tweets trade (and other) stuff from @pwgallagher