Required Report - public distribution

**Date:** 9/26/2008

**GAIN Report Number:** CH8084

CH0000

**China, Peoples Republic of**

**Agricultural Situation**

**New Oilseed Industrial Policy**

**2008**

**Approved by:**

![](media/image1.wmf)William Westman

AgBeijing

**Prepared by:**

Mark Petry and Josh O\'Rear

**Report Highlights:**

On August 22, China's National Development and Reform Commission (NDRC)
issued a directive on the promotion and direction of the domestic
soybean industry. The directive gives guidance to Chinese ministries
about regulating the soybean industry and marketplace. While many of the
components aim to support domestic production and maintain consistent
supply, several concerning sections suggest a deepening government
involvement in the market.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Beijing \[CH1\]

\[CH\]

**Executive Summary:** On August 22, China's National Development and
Reform Commission issued a directive on the promotion of the domestic
soybean industry. The directive gives guidance to Chinese ministries
about regulating the oilseed industry and marketplace. The main message
is that vegetable oil supply is a food security issue and that NDRC
supports steady growth of domestic production at a reasonable price.
This type of directive is not direct policy, but is used and interpreted
by various ministries as they regulate this industry. While many of
these initiatives mirror various policy suggestions put forth by the
Chinese oilseed industry over the past several years, an NDRC directive
carries much more weight because regulatory and policy actions can be
taken using this framework. Thus, some of the guidance in the directive
causes serious concern about possible limitations on the freedom of the
marketplace. However, it is important to note that ministries and local
authorities have significant leeway in interpreting the policy
recommendations of this directive.

While most of the directive aims to support domestic production and
maintain consistent supply, certain sections suggest a deepening
government involvement in the market and others clearly contradict each
other or current grains policy. These include references to building or
encouraging national champions in the crushing industry, limiting
foreign companies involvement in crushing, managing certain commercial
import transactions and additional government information dissemination
about the quality and quantity of imports. While these policies have not
been implemented, future policies in the oilseed sector warrant
monitoring and study to determine if they are within China's WTO market
access or national treatment obligations.

Thanks to American Soybean Association -- International Marketing for
providing this translation.

**BEGIN TRANSLATION**

**NDRC Press Release**

**State Development and Reform Commission issues guidance notice on the
healthy development and promotion of
大豆加工业健康发展的指导意见的通知the soybean processing industry**

For
v各省、自治区、直辖市及计划单列市、副省级省会城市、新建生产建设兵团发展改革委、经贸委（经委），国务院有关部门、直属机构：arious
provinces, autonomous regions, municipalities, cities, the National
Development and Reform Commission, State Council relevant departments,
and agencies: The State Council reports for implementation
为从宏观上统一规划和科学引导大豆加工业的健康发展，确保国家食物安全，结合相关法规，我委制定了《关于促进大豆加工业健康发展的指导意见》，经报请国务院同意，现印发给你们，请认真贯彻执行。a
guide for healthy industrial development and ensuring national food
security, \"Directive on Promoting the Healthy Development of the
Soybean Processing Industry." This has been formulated under relevant
laws and regulations from a macroeconomic viewpoint for the unified
planning of the soybean processing industry.

大豆是重要的油料作物，用途广，不仅是重要的蛋白食品和食用油脂原料，而且是饲养业重要的蛋白饲料来源，在国家粮食安全中占有重要地位。Soybeans
are an important oil crop, which have broad and important usage for
protein foods, edible oil raw materials, protein feeds, and general food
security.
大豆加工业与种植养殖业、食品工业和饲料工业等紧密关联，是关系国计民生的重要产业。
The soybean planting and processing industries, aquaculture industry,
food and feed industries, and other industries are closely related.
近年来，我国大豆加工业快速增长，对满足城乡居民生活和养殖饲料业的需求、带动农业结构调整、促进农民增收等发挥了积极作用。
In recent years, China\'s soybean processing industry grew rapidly to
meet the needs of urban and rural residents, the aquaculture feed
industry, promote agricultural restructuring, increase rural income, and
to play other positive roles.
但也出现了油脂加工能力过剩、内资比重偏低、原料对外依存度过高等严重问题，影响大豆产业的健康发展。
However, excess oil processing capacity and high dependence on foreign
raw materials are serious problems affecting the healthy development of
the soybean industry.
各地区、各有关单位要把指导大豆加工业健康有序发展作为当前加强宏观调控的一项重要任务。
All localities and relevant departments should use this directive to
guide the soybean processing industry's healthy and orderly development
by strengthening macroeconomic regulation and control.

附：
[促进大豆加工业健康发展的指导意见](http://www.ndrc.gov.cn/zcfb/zcfbtz/2008tongzhi/W020080903348646793665.pdf)
By-laws: [soybean processing industry to promote the healthy development
of
guidance](http://www.ndrc.gov.cn/zcfb/zcfbtz/2008tongzhi/W020080903348646793665.pdf)

国家发展改革委 State Development and Reform Commission:
二○○八年八月二十二日 August 22, 2008

**Directive on Promoting the Healthy Development of the Soybean
Processing Industry**

National Development and Reform Commission

August 2008

**Table of Contents**

1.  **Current Situation and Existing Problems**

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(1) Current Situation

(2) Existing Problems

**2. Future Trends**

\(1\) Demand for soybean will keep rising

\(2\) Domestic soybean production is almost unlikely to rise
significantly

\(3\) Increased import of soybean will lead to higher potential risks

\(4\) The competition among soy oil processors will increase

**3. Guidelines, Principles and Objectives**

\(1\) Guidelines

\(2\) Principles

\(3\) Objectives

**4. Industry Access**

\(1\) Project verification

(2) Enterprises' qualification

\(3\) Competition

\(4\) Foreign investment management

\(5\) Energy saving and environmental protection

**5. Industry layout**

**6. Policy Measures**

\(1\) Make a scientific plan and strengthen the policy-based guidance

\(2\) Accelerate structural adjustment and promote industry upgrades

\(3\) Promote technological progress and strengthen independent
innovation capacity

\(4\) Encourage and guide enterprises to "go out" and develop
international resources

\(5\) Establish a security system to ensure orderly soybean imports

\(6\) Establish a soybean reserve system for commercial circulation

\(7\) Establish a soybean information release system

\(8\) Develop and improve the soybean futures market

\(9\) Take various measures to develop stable soybean, peanut and other
oilseed crops

\(10\) Strengthen product-labeling management and promote the advantages
of domestic soybeans

\(11\) Formulate, amend and promulgate the relevant standards regarding
soybean processing

\(12\) Strengthen education and advocate healthy oil consumption

**Introduction**

Soybeans play an important role in national food security as it is not
only a major raw material for edible oil and protein foods, but also a
main source of protein feedstuff. Now China is the world's fourth
largest soybean producer, the second largest soybean processor and
consumer, and the largest soybean importer. Soy oil is the leading
edible oil in China, accounting for 40 percent of domestic total edible
consumption. Soymeal is an important protein source of feed, accounting
for about 60 percent of the protein raw materials used in the domestic
feedstuff industry. Soy products are a main traditional vegetable
protein for human consumption. Soybean processing is an important sector
that heavily influences the national economy as it is closely related to
many other sectors, such as crop and animal farming, food processing and
feed processing.

In recent years, there has been rapid growth of China's soybean
processing industry, which helped meet the domestic demands for foods
and feed, drive agricultural restructuring and increase farmers' income.
However, some problems occurred at the same time, such as the
overcapacity of oil processing, low domestically owned capacity versus
foreign capacity and excess reliance on imported raw materials. These
problems are impairing the healthy development of soybean industry.

In order to make a macro plan, scientifically lead the soybean
processing industry to a healthy development track and ensure national
food safety, the Directive on Promoting the Healthy Development of
Soybean Processing Industry is formulated as a part of the attempt to
improve socialist market system reform.

**1. Current Situation and Existing Problems**

(3) Current Situation

Soy oil and soymeal are being rapidly consumed in China as the rising
living standard has resulted in higher demands for vegetable oil and
meats. This trend is driving the development of soybean processing
industry. First, more and more soybeans are being crushed, as evidenced
by a 72.0 percent increase in crushing from 19.77 million tons in 2000
to 34 million tons in 2007, which means an annual average increase of
8.1 percent. In 2007, 78.7 percent of the soybean production was crushed
as compared with 73.1 percent in 2000. From 2000 to 2007, soymilk
production rose by 80.8 percent from 3.49 millions to 6.31 million tons,
representing an average year-on-year increase of 8.8 percent; soy-meal
production rose by 69.8 percent from 15.69 million tons to 26.64 million
tons, representing an average year-on-year increase of 7.9 percent.
Soybean food and its deep processing industries are also developing
rapidly.

Second, soy oil processors are expanding. The soy oil processing
industry, traditionally composed of small enterprises, now has been
dominated by large enterprises and groups. In 2007, China's soy oil
processors with the daily capacity above 5 million tons totaled 117 as
compared with 57 in 2000. Moreover, 91 of the 117 processors have a
daily capacity of over 20 million tons, as compared to only 6 processors
with such capacity. Six processors have a capacity of over 60 million
tons, accounting for 50 percent of the world's processors with such
capacity. The top 10 processors' capacity accounts for 57.5 percent of
the industry's total capacity, up from the 35.4 percent in 2000.

Third, most soy oil processors are now located not only in major soybean
producing areas, but more significantly in coastal areas, while in the
past they were located mainly in producing areas. Soybean deep
processing capacity is distributed mainly in Shangdong and Helongjiang
and partly in northern China, eastern China and central-China.

Fourth, soybean processing technologies and equipment are improving
rapidly. The rapid development of soybean processing industry rise has
improved soybean processing technologies and equipment. At present,
preliminary crushing technologies adopted by most domestic large
processors have reached the international level.

(4) Existing Problems

First, overcapacity is a serious problem. The excessive expansion of
production capacity has led to lower operating rate, as evidenced by the
decrease from over 90 percent in 2,000 to 44.2 percent in 2007. The
operating rate of the processor with daily capacity over 2,000 tons is
only 52 percent and more than half of the small processors with daily
capacity below 1,000 tons go bankrupt or stop production.

Second, the crushing capacity and actual output of domestic processors
is decreasing. In 2007, the production capacity of domestic soy oil
processors was 49.20 million tons, accounting for 63.9 percent of the
country's total capacity, down from 90.3 percent recorded in 2000;
actual crushing is 17.68 million tons, accounting for 52.0 percent, down
from the 91.0 percent recorded in 2000. During the same period, however,
the percentage of foreign-invested processors' actual percentage of
crushing jumped from 9.0 percent to 48.0 percent.

Third, reliance on imported soybeans is too heavy. Since 1996, China has
changed from a net soybean exporter to a net soybean importer. In 2007,
China imported 30.82 million tons of soybeans, which is 1.95 timers
higher than the 10.42 million tons imported in 2000, representing an
annual average growth of 16.7 percent. In 2007, China imported 40.9
percent of the world's total volume of soybean trade, up 22.0 percent
from 2000. The rate of reliance on imported soybean increased from 48.1
percent in 2000 to 78.7 percent in 2007. Foreign invested processors
have reliable supply sources from the US and South America, complete
storage and transportation chains, and worldwide distribution of
production capacity, so they can enter the oil processing market
effectively with low costs.

Fourth, the production-processing-sale chain is short. Most foreign
soybean processors strengthen their risk capacity and competitive force
by integrating the whole industrial train and diversifying products.
China's soy oil processors have a short industrial chain as they seldom
set foot in the upstream and downstream sectors, such as oil collection,
storage, logistics, trade and deep processing. As a result, they don't
have a reasonable product structure and enough ability to guard against
risks and remain competitive.

Fifth, independent innovation ability is weak. At present, key
equipment, such as DTDC, large centrifuges, meal desolventizer, refining
divider, filtering and decelerating machines, are supplied through
import. Domestic deep processing technologies are backward. Traditional
soybean product processing is far from being industrialized.

**2. Future Trend**

Looking forward, China's demand for soybeans will not weaken, the gap
between supply and demand will widen further, soybean imports will
increase and competition confronting soybean processors will become
keener.

\(1\) Demand for soybean will keep rising

With the expansion of the population, the change of urban/rural
population structure and the rise of living standard, domestic demand
for vegetable oil and soymeal will continue to grow and accordingly, the
demand for soybean will be driven upward. But the upward movement will
slow down as the oil products become more and more diversified.

\(2\) Domestic soybean production is unlikely to rise significantly

The low return from soybean planting in recent years has made farmers
less interested in soybean. As a result, soybean acreage went down and
soybean production fell from the record 17.40 million tons in 2004 to 15
million tons in 2006. As the downward trend continues through 2007, the
gap of demand for soybeans is widening. Soybean acreage and yield will
grow stably after relevant expansion initiatives are implemented. It is
expected that by 2010, 2012 and 2015, China's soybean production will
reach 17 million tons, 17.96 million tons and 19.50 million tons
respectively, which means a large year-on-year increase is unlikely.

\(3\) Increased import of soybean will lead to higher potential risks

The soybean supply shortage will need to be solved through imports. In
the near future, the global demand for soybean oil and meal will rise
rigidly but it is uncertain about the increase of global soybean
production, which is subject to acreage, yield and weather. As the
global biodiesel industry expands rapidly, some countries such as
Argentina, Brazil and the US are accelerating their soybean-based
biodiesel production. The world's potential demand for soybeans may rise
sharply, which will lead to a remarkable change in global soybean
supply/demand relationship. China, the largest soybean importer in the
world, will face higher market risks.

\(4\) Competition among soy oil processors will intensify

At present, more than half of the small soy oil processors with daily
capacity below 1000 tons are on the brink of bankruptcy, so it is
inevitable that these small processors will be eliminated or merged.
Despite serious overcapacity, domestic processors do not stop their
expansion. In order to realize economies of scale, some processors are
building or plan to build large soybean crushing mills. This will bring
about further overcapacity and intensify the competition.

**3. Guidelines, Principles and Objectives**

\(1\) Guidelines

Greater efforts should be made to expand domestic soybean production.
Soy oil processors should be encouraged to diversify their sources of
raw materials. Production of other oilseed crops such as rapeseed,
peanut, cottonseed, sunflower seed and camellia should be enhanced to
make the raw material supply more independent. Soy oil processors'
capacity expansion should be controlled. Soybean processing technologies
and independent innovation capacity should be improved. Soy oil
processing equipment manufacturers should be consolidated to promote
industrial restructuring and upgrade. Market regulation should be
strengthened to ensure fair competition. Leading enterprises should be
supported so that they can have stronger competitive force and gain more
market share. The soybean deep-processing industry should be promoted to
extend the industrial chain and raise the level of comprehensive use of
soybean.

\(2\) Principles

First, control scale and ensure market order. Prevent soy oil processors
from blind expansion and repeated construction; control the production
capacity within a reasonable scope.

Second, adjust industrial structure and upgrade the industry. Accelerate
soybean industrial structure adjustment. Guide the industrial
integration by merger and reorganization to raise the capacity of the
whole industry.

Third, insist on reform and opening up. Insist on the opening up to the
outside world and strengthen the regulation and management of foreign
investments. Encourage domestic enterprises to strengthen technological
development and enhance competitive force.

Fourth, optimize the industrial deployment and ensure coordinated
development. Optimize the deployment of soy oil, soybean product and
deep-processing sectors to ensure the coordination between major
producing areas and major markets as well as the coordination between
preliminary processing and deep processing.

Fifth, raise domestic production and diversify the oilseed crops.
Provide more supports to domestic soybean production. Increase soy oil
import while reduce reliance on imported soybean. Diversify the supply
of raw materials by increasing the production of rapeseed, peanut,
cottonseed, sunflower seed and camellia.

Sixth, develop recycling and comprehensive use. Try to make better use
of resources, reduce energy consumption, material consumption and waste
emission to create an environmentally friendly society.

\(3\) Objective

Raise independent innovation capacity and improve industrial
technologies and equipment. Accelerate industrial upgrade, adjust
product structure and optimize enterprise distribution to create a
highly competitive soybean processing system.

-   Compress the total soy oil processing capacity to a reasonable
    level. Maintain soy oil processing capacity to within 75 million
    tons per year until 2010 and within 65 million tons per year by
    2012.

-   Optimize industrial structure. Encourage the merger and
    reorganization of domestic enterprises to facilitate industrial
    consolidation. Foster a group of competitive soy oil processors with
    daily capacity above 2000 tons, which combine production, processing
    and sale into a whole. Ensure that a certain number of processors
    draw upon rapeseed, peanut, cottonseed, sunflower seed and camellia.

-   Distribute the soybean processors reasonably across the country.
    Reasonably deploy the soybean producing across areas Northeast
    China, Huang-Huai-Hai Plain and coastal areas, with each area having
    its own focus.

-   Extend the deep processing chain. Deep process meal- and soy
    oil-based products to extend the industrial chain, upgrade products
    and enrich the type of products.

-   Bring the energy-saving and waste-release capacity to international
    levels. Reduce energy consumption per unit of output value by 15
    percent, water consumed per unit industry increased value by 30
    percent and control the release of major pollutants within the
    relevant standards of the state by 2012.

  --------------------------------- ---------------------- --------------
  Column 1:　Main objectives of the                        
  soybean processing industry for                          
  2012                                                     

  Item                              Index                  Remark

  Soybean processing capacity       ≤ 65 million tons/year Controllable

  Energy consumption per unit of    Down by 15 percent     Controllable
  output value                                             

  Water consumed per unit industry  Down by 30 percent     Controllable
  increased value                                          
  --------------------------------- ---------------------- --------------

**4. Industry Access**

Based on soybean production prospects in China and in the world for the
next five years, a threshold for assess to the soy oil processing
industry will be set in terms of production scale, industrial monopoly,
foreign investment management, energy saving, environmental requirement
and recycling.

\(1\) Project verification

To be implemented as per the regulations of the State Council on fixed
asset investment.

(3) Enterprises' qualification

Enterprises that engage in soy oil processing must have adequate
economic capacity and risk-resisting ability. Their net assets shall not
be less than two times the finds for proposed project, total assets
shall not be less than 2.5 times the funds for proposed project and
asset-liability ratio shall be no more than 60 percent. Their project
capital shall be in conformity with relevant regulations of the state
and the credit rating, if given by a financial agency at province level,
shall be not lower than grade AA.

\(3\) Competition

Enterprises shall comply with relevant laws and regulations, and shall
not disturb the market order by abusing their dominant status in the
market or entering into a monopoly agreement.

\(4\) Foreign investment management

Soy oil processing projects shall be carried out in accordance with
Catalogue for the Guidance of Foreign Investment Industries. Merger and
reorganization of domestic oil processors by foreign enterprises shall
comply strictly with relevant laws and regulations of the state on
foreign investment and industrial policies for foreign investment
industries.

\(5\) Energy saving and environmental protection

Energy and water consumption of green-field projects and expansion
projects shall meet the requirements as specified in the following
Column 2 and 3. Release of soot, waster water and other wastes shall
meet state or local relevant standards.

  ----------------- ------------- ----------- ------------------ ---------- -------------------
  Column 2:                                                                 
  Criteria for the                                                          
  energy                                                                    
  consumption of                                                            
  soybean and soy                                                           
  oil processing                                                            

                    Item                      Index                         Unit
                                              (consumption/ton              

  Preliminary       Water                     ≤ 0.35                        Ton (recycling
  crushing                                                                  water)

                    Electricity               ≤ 30.00                       Kilowatt-hour

                    Coal                      ≤ 90.00                       Kg
                    (standard)                                              

                    Solution                  ≤ 1.4                         Kg
                    (industrial                                             
                    ethane)                                                 

  Refining of       Water                     ≤ 0.80                        Ton (recycling
  grease                                                                    water)

                    Electricity               ≤ 21.00                       Kilowatt-hour

                    Coal                      ≤ 46                          Kg
                    (standard)                                              

                    White earth               ≤ 18.00                       Kg

                    Diesel                    ≤ 4.00                        Kg

  Isolation of      Electricity               ≤ 1400                        Kilowatt-hour/ton
  soybean protein                                                           

                    Coal                      ≤ 2500                        Kg/ton

  Column 3:                                                                 
  Criteria for                                                              
  pollutants from                                                           
  soybean                                                                   
  processing                                                                

                                  Release                        Unit       
                                  index                                     

  COD                             ≤ 100                          mg/liter   

  BOD                             ≤ 20                           mg/liter   

  pH                              7-8                                       

  NH3-N                           ≤ 15                           mg/liter   

  Vegetable oil and               ≤ 10                           mg/liter   
  animal fat                                                                

  Suspended solids                ≤ 150                          mg/liter   

  Fuse                            ≤ 190                          mg/sqm     

  Soot density                                                              

  Note: data in                                                             
  this column are                                                           
  from                                                                      
  GB13271-2001,                                                             
  BG16297-1996 and                                                          
  BG8978-1996                                                               
  ----------------- ------------- ----------- ------------------ ---------- -------------------

**5. Industrial layout**

In the future, the geographic structure and product structure of soybean
processing industry should be laid out in such a manner as to ensure
that processing mills are near to soybean producing areas or markets and
the transportation to and from the mills shall be convenient.

Northeast China and Inner Mongolia. Encourage the merger and
reorganization among domestic enterprises to form several highly
competitive enterprises or groups. Eliminate some technologically
backward and poorly operating enterprises. Make Northeast China and
Inner Mongolia one of China's key soy oil processing bases by
technologically upgrading the traditional oil processing industry and
optimizing the product structure. Develop soybean deep-processing
industry, encourage and support soybean deep-processing enterprises to
introduce advanced technologies or carry out independent R&D, strengthen
R&D in soybean powder, soybean milk and soybean protein, promote the
mass-production of soybean phospholipids, soybean isoflavones,
oligosaccharides and vitamin E, improve the technological contents of
products, extend the industrial chain, and enhance the proportion of
high value added products.

North China. Rely on the existing leading enterprises and foster some
large soy oil processors by encouraging the merger and reorganization of
poorly operated enterprises by capable ones. Support the soybean deep
processing in the soybean producing areas of Hebei, Shandong and Henan.
Encourage the industrialization of protein products and traditional
soybean products used for milk, meat and flour products. Require
environmentally unqualified soybean protein processors to transform
themselves. Shut down those enterprises which consume lots of energy and
release lots of waste and encourage those leading enterprises, which
need small investment, consume little energy and water and expand the
production scale of functional milk protein and other deep processed
products.

Coastal areas. Encourage mergers, acquisitions and restructuring among
domestic enterprises. Foster soybean and feed processors that have the
complete industrial chain. Have poorly operated oil processors closed
down, suspended, merged with other plants or transformed so as to reduce
idle capacity and enhance production efficiency. Encourage those
technologically and financially advanced enterprises to develop the deep
processing of by-products. Build some coastal areas into the production
bases and export bases of feed protein, fatty acid and phospholipids.

Other areas. Develop peanut, rapeseed, cottonseed and soybean processing
projects and soybean food processing industry to meet the demand from
local demand and animal farming.

**6. Policy Measures**

Soybean processing is a key point along the soybean industrial train, so
macro control and industrial guidance must be put to the strategic
height to ensure the healthy development of soybean processing industry.

\(1\) Make a scientific plan and strengthen the policy-based guidance

Particularly in the major soybean producing areas and coastal soybean
processing areas, policy-based guidance and plan should be strengthened
to prevent soy oil processors from blindly expanding and chaotically
competing. When a soy oil processing enterprise's (group's) soybean
production reaches 15 percent of China's total production, then, in
principle, such enterprise shall not newly build or expand any soy oil
processing project.

\(2\) Accelerate structural adjustment and promote industrial upgrade

Strictly implement the *Regulations on the Promotion of Industrial
Structure Adjustment* and the *Catalogue for the Guidance of Foreign
Investment Industries*. By means of consolidation, merger and
reorganization, give supports to some trans-regional soy oil processing
enterprises (groups) which have a capacity of over 2000 tons per day and
combine production, processing and sale into a whole. Encourage
enterprises to purchase domestic soybeans.

\(3\) Promote technological progress and strengthen independent
innovation capacity

Invest more in soybean processing technologies and strengthen
technological research and development to promote independent innovation
capacity and industrial upgrade.

Improve soybean processing technologies. The soy oil processing industry
should eliminate normal pressure evaporation technology and some small
soy oil processing plants that are technologically backward,
energy-consuming, pollution-creating, not in conformity with the
fire-control requirement and without sewage treatment facilities;
encourage the use of soybean dehulling technology and soybean puffing
extraction technology to raise oil yield and produce high-protein meal;
encourage the combination of crushing and refining and strengthen the
development of new products based on soy oil and meal (yeasted meal,
healthy nutritious oil, etc.); encourage the use of PLC control
automated production technology; and research deep into and extend the
use of waster water recycling technologies.

The soybean deep-processing industry should focus on the development of
waster water recycling technologies, soybean protein enzymatic
hydrolysis technology, technology of extracting soybean fiber from
soybean residues, technology of extracting oligosaccharide and
isoflavone from waste soy water, soybean peptide production and
debitterness technologies, soybean protein surface modifying technology,
milk protein production technology, the technologies of improving
protein yield, protein gelatin, separateness and dissolution and the
technologies of reducing soybean protein odor and viscosity; promote the
use of soybean protein in foods; promote the industrialization of
traditional soybean processing craftwork; eliminate energy consuming,
water consuming, pollution-creating, costly and low-return soybean
protein production lines.

Develop soybean processing equipment, with focus on advanced facilities
such as high-efficiency oil extractor, large-scale protein drier, etc.
Consolidate some grain and oil processing equipment manufacturers to
pool together their power and raise the R &D capacity and equipment
manufacturing capacity.

\(4\) Encourage and guide enterprises to "go out" and develop
international resources

Encourage domestic enterprises to establish a stable soybean import
system. The proposal is to: target soybean-export countries to purchase
soybean locally, and then rent port terminal, establish warehouse and
transportation system, or purchase stakes of local agricultural
enterprises and rent land to grow crops. Encourage domestic enterprises
to build soybean processing plants in foreign countries.

\(5\) Establish a security system to ensure orderly soybean import

Scientifically evaluate domestic total demand and total supply and
establish an early warning system regarding soybean import volume, price
and quality to ensure orderly soybean import. When the gap between the
soybean import and expected demand is higher or lower than the monthly
crush, the government will release warning information through
authoritative departments; when monthly soybean wholesale prices rise by
more than 10 percent, price warnings will be released; and when serious
soybean quality problems occur, quality warnings will be released.

Guide, arrange, organize and coordinate external purchases, while
gradually improving domestic enterprises' international influence and
bargaining power and reduce the cost of purchasing.

\(6\) Establish a soybean reserve system for commercial circulation

In accordance with the Opinions of the State Council on the Promotion of
Oilseed Crop Production (Guo Ban Fa ［2007］No. 59), encourage large
state-owned grain and oil processors to raise the commercial reserves of
soybean.

\(7\) Establish a soybean information release system

Establish and improve a complete, systematic and accurate soybean
industry information reporting regime and release platform, including a
system of monitoring and evaluating the soybean production situations of
China and other major soybean-producing countries, a system of
monitoring and evaluating domestic soybean consumption and import, and a
system of monitoring the production and sales activities of domestic oil
processors with capacity above 5 million tons. The findings will be made
public through authoritative grain and oil information agency of the
state.

\(8\) Develop and improve the soybean futures market

Establish effective futures information channels and encourage and guide
soybean producers, traders and processors to hedge themselves in the
futures market. Formulate policies on the hedging trade of state-owned
grain enterprises to provide them with a fair competitive environment.
Support the development of soybean futures. Adjust the regulations on
the circulation and consumption of genetically modified soybeans.
Enhance and promote the liquidity of imported GM soybeans.

\(9\) Take various measures to stably develop soybean, peanut and other
oilseed crops

Strictly implement the Opinions of the State Council on the Promotion of
Oilseed Crop Production (Guo Ban Fa ［2007］No. 59) and strengthen the
construction of soybean production bases. Cultivate a quality soybean
belt in north China and Inner Mongolia. Expand soybean acreage.
Modernize the soybean production Industry and improve soybean yield to
enhance soybean production and quality.

\(10\) Strengthen product-labeling management and give rise to the
advantages of domestic soybean

Strengthen the education regarding GM food, non-GM soybean and GM
soybean. Allow people the right to information and choice. Strictly
implement the Regulations on GM Crop Management, the Regulations on
Labeling of GM Crops and the Measures on GM Crop Label Management. Guide
and encourage soybean processors to use domestic soybean.

\(11\) Formulate, amend and promulgate the relevant standards regarding
soybean processing

Formulate standards on deep-processed soybean products such soybean
protein, soybean fiber, oligosaccharide, isoflavone, etc.; formulate
standards on the design, energy consumption and waste release of oil
processing plants; and create standards on edible oil and meal testing
methods.

\(12\) Strengthen education and advocate healthy oil consumption

Inhibit unreasonable rise of domestic edible oil consumption. Educate
people to consume edible oil in a scientific way. Guide restaurants to
develop a scientific oil-consumption practices.