Required Report - public distribution

**Date:** 3/1/2007

**GAIN Report Number:** CH7014

CH7014

**China, Peoples Republic of**

**Livestock and Products**

**Semi-Annual Report**

**2007**

**Approved by:**

![](media/image1.wmf)Maurice House

U.S. Embassy

**Prepared by:**

Casey Bean, Jianping Zhang

**Report Highlights:**

U.S. red meat exports (predominantly fresh/frozen pork, variety meat and
offal) to Mainland China via direct shipments and Hong Kong
transshipments reached \$94 million in CY 2006, an 11 percent decrease
due to higher export prices. Demand for U.S. beef remains strong and
\"indirect shipments\" to the Mainland may equal or exceed 2003 levels,
but official trade will not resume until China and the United States
reach agreement on the range of beef products and China\'s quarantine
import conditions. China\'s beef production in 2007 is forecast to
increase by 5 percent to 7.9 MMT, while pork production to increase by 4
percent to 54.4 MMT. China\'s beef imports in 2007 are forecast at only
2,000 MT due to the BSE-related trade restrictions. Pork imports are
forecast to increase by 4 percent to 55,000 MT. China\'s beef and pork
exports in 2007 are both forecast to increase by 3 percent, and
Singapore recently agreed to import beef from 2 Chinese Provinces.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Beijing \[CH1\]

\[CH\]

Table of Contents

[**Executive Summary 3**](#executive-summary)

[Cattle and Beef 3](#cattle-and-beef)

[China's beef production in 2007 forecast at 7.9 MMT, a 5 percent
increase
3](#chinas-beef-production-in-2007-forecast-at-7.9-mmt-a-5-percent-increase)

[Beef consumption in 2007 is forecast at 7.8 MMT, a 5 percent increase
from 2006
5](#beef-consumption-in-2007-is-forecast-at-7.8-mmt-a-5-percent-increase-from-2006)

[Domestic wholesales beef prices forecast steady generally in 2007
5](#domestic-wholesales-beef-prices-forecast-steady-generally-in-2007)

[Beef imports in 2007 are forecast at only 2,000 MT, officially, but
indirect trade of U.S. beef likely exceeds this figure
6](#beef-imports-in-2007-are-forecast-at-only-2000-mt-officially-but-indirect-trade-of-u.s.-beef-likely-exceeds-this-figure)

[Live cattle imports in 2007 forecast to decrease 33 percent to 100,000
head
6](#live-cattle-imports-in-2007-forecast-to-decrease-33-percent-to-100000-head)

[Beef exports in 2007 forecast to increase 3 percent to 102,000 MT
7](#beef-exports-in-2007-forecast-to-increase-3-percent-to-102000-mt)

[Live cattle exports are forecast at 54,400 head, the same level of 2006
7](#live-cattle-exports-are-forecast-at-54400-head-the-same-level-of-2006)

[PS&D tables for cattle and beef 8](#psd-tables-for-cattle-and-beef)

[Cattle and beef trade matrix 10](#cattle-and-beef-trade-matrix)

[Swine and Pork 13](#swine-and-pork)

[China's pork production in 2007 is forecast to increase 4 percent to
54.4 MMT
13](#chinas-pork-production-in-2007-is-forecast-to-increase-4-percent-to-54.4-mmt)

[Feed development benefits swine industry
13](#feed-development-benefits-swine-industry)

[Pork consumption in 2007 forecast to increase by 4 percent to 53.8 MMT
14](#pork-consumption-in-2007-forecast-to-increase-by-4-percent-to-53.8-mmt)

[Pork imports in 2007 forecast to increase by 4 percent to 55,000 MT
14](#pork-imports-in-2007-forecast-to-increase-by-4-percent-to-55000-mt)

[Electronic notification system will start on March 3, 2007, for all
U.S. meat and poultry shipments to China
15](#electronic-notification-system-will-start-on-march-3-2007-for-all-u.s.-meat-and-poultry-shipments-to-china)

[Pork exports in 2007 forecast to increase by 3 percent to 560,000 MT
16](#pork-exports-in-2007-forecast-to-increase-by-3-percent-to-560000-mt)

[PS&D table for swine and pork 17](#psd-table-for-swine-and-pork)

[Swine and pork trade matrix 19](#swine-and-pork-trade-matrix)

# Executive Summary

Total U.S. pork and pork product exports to China via direct shipments
and Hong Kong transshipments (i.e., muscle meat, variety meal, offals
and processed meat) reached \$94 million (CIF) in CY 2006, an 11 percent
decrease from last year due to higher export prices. In 2006, the
average CIF unit price for U.S. direct pork shipments to China increased
by 15 percent. U.S. pork exports to China have been interrupted by
China's "0" tolerance standard on ractopamine. Two major U.S. exporting
plants are suspended by China due to ractopamine detections at the
beginning of 2006. Demand for U.S. beef remains strong in China, but
trade resumption during 2007 remains uncertain. As evidence of the sales
potential, the trade believes the annual flow of U.S. beef into China
through "indirect channels" is probably equal to or greater than the
pre-BSE ban 2003 import levels. China and the United States continue
discussions on the range of beef products and on China's quarantine
import conditions. See CH6074 (dated September 7, 2006) for more
background on the U.S.-China beef negotiations that took place during
May to July 2006.

During December 2006, FAS Beijing organized the 2^nd^ Sino-U.S. Food
Safety Bilateral workshop in Beijing, and the ongoing objective is to
smooth U.S.-China trade in meat and poultry products. At the meeting,
agreement was reached in several areas aimed to minimize disruption of
U.S. exports to China. China agreed to accept industry e-mailed
information (i.e., dates of export certificates and the numbers) for
meat and poultry shipments, in lieu of their original request that the
U.S.-side implement complete electronic, export certification. China
also agreed to cooperate in developing microbiological risk assessment
and testing methodologies for food borne-pathogens. China did not agree
to immediately resume imports of pork from two U.S. plants de-listed due
to detections of Ractopamine residues; however, USDA, the U.S. meat
industry and the manufacturer of Ractopamine are working to resolve the
issue. Finally, as the result of USDA-AQSIQ food safety collaboration,
China has not "delisted" any meat and poultry plants since early 2006.

During 2007, FAS Beijing forecasts China's total meat production will
increase 5 percent to 84.6 MMT from 2006, with beef accounting for 9
percent, pork accounting for 64 percent, sheep and goat meat accounting
for 6 percent, and poultry meat accounting for 19 percent, based on the
National Statistic Bureau's newly announced figures for 2006.

China's beef production in 2007 is forecast to increase by 5 percent to
7.9 MMT driven by strong domestic demand and lagging supplies. China's
beef imports are forecast to remain flat in 2007 due to China's bovine
spongiform encephalopathy (BSE)-related restrictions. China's beef
exports in 2007 are forecast to increase by 3 percent to 102,000 MT.
U.S., Canadian and Brazilian export recovering in world market may
shrink China's export share. China's pork production in 2007 is forecast
to increase by 4 percent to 54.4 MMT due to slow slaughter. China's pork
imports are forecast to increase by 4 percent, not only because of slow
domestic slaughter, but also because of stronger RMB against U.S.
Dollars.

# Cattle and Beef

## China's beef production in 2007 forecast at 7.9 MMT, a 5 percent increase

FAS Beijing forecasts China's beef production in 2007 will be the same
level as reported in the 2006 livestock annual report (CH6074), 7.9 MMT,
but revised the pace of increase down from 6 to 5 percent based on new
official beef production data for 2006. Unlike pork and broiler meat,
where prices have fluctuated due to AI outbreaks, swine fever disease
and pork over-supplies, Chinese beef prices remain high due to strong
domestic demand and lagging supply. Strong cattle and beef production
will most likely continue into 2008 because the approaching 2008 Summer
Olympic Games to be held in China 2008 will stimulate beef demand.

We also adjusted the pace of increase in China cattle slaughter in 2007
slightly down---58.7 million head---due to a reduced dairy cows
slaughter. Post forecasts China's end of year cattle inventory in 2007
to increase by 3 percent from an estimated 145 million head in 2006 to
149 million head. The increase in inventory is not big because of higher
slaughter rate in 2006 driven by strong demand and good prices. Our
forecast for the Chinese calf crop in 2007 remains unchanged from the
previous annual report (CH6074), which is to increase by 5 percent from
estimated 60 million head in 2006 to 63 million head.

Though China is still combating foot and mouth disease (FMD) outbreaks
(e.g., four outbreaks occurred in China during January-February 2007),
the Chinese cattle herd continues to expand bolstered by genetics and
feed improvement, as well as government-supported production practices.
The Chinese Government continues to provide farmers with subsidized
grain procurement prices and cancelled all agricultural taxes since
2004. As a result, Chinese farmers have increased acreage to grain
production in the last couple of years. When domestic feed grain demand
is strong and feed grain prices are too high, the government even
reduces corn export levels in order to reverse the increase in feed
prices. During January 2007, in response to the rising cost of
international oil prices and demand for Chinese corn for production into
ethanol, the Chinese Government took the step of controlling corn stocks
to ensure adequate feed use.

According to the industry, China now has 15,519 feed processing plants.
Feed production in 2006 was 109 MMT. Current feed shares for poultry,
pigs, fish and ruminant animals are 15:33:11:5. Ruminant feed has
increased from 3 to 5 percent in the last few years.

In order to improve the ecology and implement a policy of rotating
grazing in grasslands to improve overall vegetation, the Chinese
Government has projects to halt or reduce over-grazing on grasslands in
Xinjiang, Ningxia, Gansu and Qinghai. MOA estimates that China's natural
fresh grass production in 2006 was 943.3 MMT (equivalent to 295.9 MMT
dried grass), and the grazing capacity improved over the past year.
China's major grasslands are mainly in West and Southwest China, all
water-depleted areas, and the warmth of the past few years has caused
serious draughts in both grasslands and grain production areas. The
water levels in the four important rivers in these areas---Yellow River,
Hai River, Huai River and Liao River---have fallen by 12 percent, and
soil surface moisture in these areas has reduced by 17 percent on
average.

The government also built and improved about 325,000 km of rural roads
in 2006 and plans to build and improve another 1.2 million km by the end
of 2010. These efforts will make cattle transportation to
slaughterhouses more convenient and efficient.

MOA sends technical staff to farmers' households to demonstrate
artificial insemination skills for cattle production. Although genetics
are being improved to some circumstances, China's high quality beef
cattle only account for about 5 percent of the herd, and high quality
dairy cattle account for about 30 percent of the herd. After China
lifted its ban in 2005 on U.S. cattle genetics due to BSE, the United
States became the largest bovine semen supplier to China in 2006. This
trend is forecast to continue in 2007. Breeding cattle import rights are
no longer granted to only monopoly state-owned companies but are also
granted to other companies in order to make import practices more
competitive. The import tariff is also zero for breeding animal imports.

All the above policies have helped increase China's beef production.
Although increased domestic production may help fill the gap left due to
BSE-related import bans and/or high international beef prices, a
shortfall in high quality beef will continue due to strong domestic
demand and lagging supply.

  ------------- -------- -------- -------- -------- -------- -------- --------- ----
  China Total                                                                   
  Meat                                                                          
  Production,                                                                   
  2001-2006                                                                     
  (1,000 MT)                                                                    

                                                                      \% Change 

                2001     2002     2003     2004     2005     2006     2006/05   

  Total Meat    63,339   65,865   69,329   72,448   77,431   80,915   4.50      

  Beef          5,488    5,846    6,305    6,759    7,115    7,500    5.41      \*

  Pork          41,845   43,266   45,186   47,016   50,106   53,000   5.78      \*

  Sheep/goat    2,927    3,167    3,572    3,993    4,355    4,791    10.01     \*
  meat                                                                          

  Poultry meat  12,103   12,498   13,121   13,514   14,643   14,936   2.00      \*

  Source:                                                                       
  National                                                                      
  Statistics                                                                    
  Bureau                                                                        

  \* 2006                                                                       
  breakdown is                                                                  
  FAS Beijing's                                                                 
  estimation                                                                    
  ------------- -------- -------- -------- -------- -------- -------- --------- ----

China recently announced the 11^th^ Five-Year-Plan (2006-2010) for Food
Development. Pork will account for 60 percent, beef and sheep/goat meat
will account for 20 percent, and poultry meat will account for 20
percent (note: the beef share is already nearly 10 percent).

## Beef consumption in 2007 is forecast at 7.8 MMT, a 5 percent increase from 2006

FAS Beijing forecasts Chinese beef consumption in 2007 at the same level
as our forecast in the 2006 annual report (CH6074), which is a 5 percent
increase from 2006. More availability of beef in world markets, due to
U.S. exports markets reopening and Brazilian exports expanding, may
constrain China's beef exports and dampen domestic beef prices, in turn
stimulating domestic beef consumption.

Post adjusted the pace of increase in China's 2006 beef consumption
slightly down to 7.5 MMT due to flat imports and increased exports in
2006.

## Domestic wholesales beef prices forecast steady generally in 2007 

![](media/image2.wmf){width="3.3333333333333335in"
height="2.0694444444444446in"}

The average Chinese beef prices in 2006 increased by 5 percent from last
year driven by strong domestic demand and lagging supplies due to
consumers' shifting to beef after highly pathogenic avian influenza
(HPAI) outbreaks in the last few years and high swine fever occurrence
in 6 Chinese provinces in 2006. Tight availability of beef in world
markets due to the impacts of BSE and FMD-related trade restrictions has
pushed upwards international beef prices. As a result, China's imports
have fallen, which in turn has supported domestic beef prices at higher
levels. Nevertheless, China's wholesale beef prices are still cheaper
than imported beef.

The rising incomes of China's consumers translate to demand for
higher-priced beef. China\'s gross domestic product (GDP) totaled
RMB20.9407 trillion (\$2.7 trillion) in 2006, up 10.7 percent year on
year. Real incomes increased by 10.4 percent to RMB 11,759 (\$1,568) for
urban residents and by 7.4 percent to RMB 3,587 (\$478) for farmers.

Post forecasts that as consumer concerns about avian influenza and swine
fever fall and consumers gradually switch back to poultry and pork, beef
prices will remain stable in 2007. FAS Beijing believes that MOA's
average beef prices reflect China's ordinary or low-end products. As
domestic production costs rise, the price gap between domestic beef and
imported quality beef will narrow, thus leading to more profitable
imports and availability of higher quality beef for Chinese consumers in
the future.

## Beef imports in 2007 are forecast at only 2,000 MT, officially, but indirect trade of U.S. beef likely exceeds this figure

Post forecasts China' beef imports in 2007 at 2,000 MT due to the supply
uncertainty of BSE-related trade restrictions, particularly trade of
U.S. and Canadian beef. Demand for U.S. beef remains strong in China,
but trade resumption during 2007 remains uncertain. China and the United
States continue discussions on the range of beef products and on China's
quarantine import conditions. China requests that negotiators first
complete an import protocol for boneless beef from cattle less than 30
months of age, while the U.S. position is that China agrees to import
conditions for a full range of beef and products based on the OIE's
classification of the U.S. BSE risk level. Even after China and the
United States reach an agreement on a trade protocol for U.S. beef,
China has indicated that U.S. shipments could not start until Chinese
authorities audit (perhaps a representative sample) and register U.S.
plants that intend to export beef to China. See CH6074 (dated September
7, 2006) for more background on the U.S.-China beef negotiations that
took place during May to July 2006.

Despite the official ban on U.S. beef, the trade believes the annual
flow of U.S. beef into China through "indirect channels" is probably
equal to or greater than the 2003 import levels prior to China's
BSE-related trade suspension. China\'s borders, especially in the south,
remain porous. With U.S. beef imports still banned, the flow of beef and
beef variety meats into China over the last three years is reported to
continue, but mostly undeclared.

Second, China's beef exports could be constrained as more and more
international beef markets reopen to U.S. and Brazilian beef. This will
translate into more domestic low-end beef supplies, which will in turn
further limit import demand for low-end beef products.

Third, China mainly imports two categories of beef products, frozen
quality beef and beef variety meat, including offals. Domestic products
can substitute beef variety meat, but not quality beef. The price of
imported quality beef tripled in 2006, thus has constrained imports.
Nonetheless, FAS Beijing believes that once the United States finishes
its negotiations with China on a U.S. beef export protocol, U.S. exports
will recover quickly because of consumers' popularity in China,
especially high quality beef. U.S. beef re-entering China will also help
relax China's domestic beef prices.

China's year-on-year beef offal imports via direct shipments in 2006
decrease by 42 percent to 4,172 MT valued at \$7.58 million. Australia,
Uruguay, New Zealand and Argentine in sum had a 95 percent market share.
China's indirect imports through Hong Kong were 5,838 MT valued at
\$7.93 million. Brazil dominated 83 percent supplies valued at \$6.9
million taking over U.S. lost market.

## Live cattle imports in 2007 forecast to decrease 33 percent to 100,000 head

China's live cattle imports decreased 70 percent in 2006 because of the
ban on U.S. and Canadian breeding stock and because of the lower quality
of available Australian and New Zealand breeding cattle. Another
explanation is the government's focus on promoting artificial
insemination as a means to improve genetics. As evidence, the U.S.
became China's leading supplier of bovine semen in 2006.

During 2007, FAS Beijing forecasts China's imports will decrease by
another 33 percent to 100,000 head. Most of them are dairy breeding
cows. The Chinese government is determined to curb malpractices in
importing lower quality cows that cannot be used for breeding (please
see the previous annual report CH6074). However, world breeding cow
prices are too high after the ban on imported U.S. and Canadian live
cattle.

## Beef exports in 2007 forecast to increase 3 percent to 102,000 MT

During 2006, China exported only 1 percent of its total beef production.
However, since China has not started importing U.S. and Canadian beef,
China's beef trade surplus is 97,000 MT. Post forecasts the pace of
increase in China's beef exports in 2007 5 percent smaller because
increased global beef exports from other countries will weaken China's
export competitiveness. Year-on-year exports to Russia fell by 67
percent due to FMD. Both Russia and Japan are China's traditional export
markets. The resumption of U.S. beef exports to Japan already impacted
China's exports to Japan in 2006. However, Post forecasts China's
exports will continue expanding by 3 percent in 2007 due to
non-traditional market share increases. China has been trying to explore
nontraditional export markets such as the Middle East and Africa. Market
promotions in Kuwait and Lebanon have been successful. Recently,
Singapore announced import approval for beef from two Chinese provinces.

## Live cattle exports are forecast at 54,400 head, the same level of 2006

Hong Kong and Macau are China's traditional live cattle export markets.
The Ministry of Commerce (MOFCOM) announces export quota for various
provinces at the end of each year. China's 2007 live cattle export quota
for Hong Kong and Macau are 50,000 head and 6,500 head respectively.
Post forecasts the quota may not be filled as Hong Kong has reduced live
cattle slaughter due to environmental protection and increased beef
imports. As an evidence, China's live cattle exports to Hong Kong
decreased by 4 percent to 45,957 head in 2006.

## PS&D tables for cattle and beef

<table>
<colgroup>
<col style="width: 20%" />
<col style="width: 7%" />
<col style="width: 9%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 7%" />
<col style="width: 8%" />
<col style="width: 9%" />
</colgroup>
<tbody>
<tr class="odd">
<td><strong>PSD Table</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><strong>Country</strong></td>
<td colspan="3"><strong>China, Peoples Republic of</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Commodity</strong></td>
<td colspan="3"><strong>Animal Numbers, Swine</strong></td>
<td></td>
<td></td>
<td></td>
<td colspan="3">(1000 HEAD)(PERCENT)</td>
</tr>
<tr class="even">
<td></td>
<td>2005</td>
<td>Revised</td>
<td></td>
<td>2006</td>
<td>Estimate</td>
<td></td>
<td>2007</td>
<td>Forecast</td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
</tr>
<tr class="even">
<td><strong>Market Year Begin</strong></td>
<td></td>
<td>01/2005</td>
<td>01/2005</td>
<td></td>
<td>01/2006</td>
<td>01/2006</td>
<td></td>
<td>01/2007</td>
<td>01/2007</td>
</tr>
<tr class="odd">
<td>Total Beginning Stocks</td>
<td>481891</td>
<td>481891</td>
<td>481891</td>
<td>503348</td>
<td>500324</td>
<td>503348</td>
<td>519052</td>
<td>519052</td>
<td>523752</td>
</tr>
<tr class="even">
<td>Sow Beginning Stocks</td>
<td>42900</td>
<td>42200</td>
<td>45000</td>
<td>44900</td>
<td>43800</td>
<td>48930</td>
<td>46600</td>
<td>0</td>
<td>48000</td>
</tr>
<tr class="odd">
<td>Production (Pig Crop)</td>
<td>685399</td>
<td>675000</td>
<td>685399</td>
<td>720000</td>
<td>700000</td>
<td>735000</td>
<td>750000</td>
<td>0</td>
<td>750000</td>
</tr>
<tr class="even">
<td>Intra-EU Imports</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Other Imports</td>
<td>3</td>
<td>3</td>
<td>3</td>
<td>3</td>
<td>3</td>
<td>2</td>
<td>3</td>
<td>0</td>
<td>2</td>
</tr>
<tr class="even">
<td>Total Imports</td>
<td>3</td>
<td>3</td>
<td>3</td>
<td>3</td>
<td>3</td>
<td>2</td>
<td>3</td>
<td>0</td>
<td>2</td>
</tr>
<tr class="odd">
<td>Total Supply</td>
<td>1E+06</td>
<td>1156894</td>
<td>1167293</td>
<td>1223351</td>
<td>1200327</td>
<td>1238350</td>
<td>1E+06</td>
<td>519052</td>
<td>1273754</td>
</tr>
<tr class="even">
<td>Intra EU Exports</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Other Exports</td>
<td>1769</td>
<td>1730</td>
<td>1769</td>
<td>1700</td>
<td>2000</td>
<td>1723</td>
<td>1600</td>
<td>0</td>
<td>1690</td>
</tr>
<tr class="even">
<td>Total Exports</td>
<td>1769</td>
<td>1730</td>
<td>1769</td>
<td>1700</td>
<td>2000</td>
<td>1723</td>
<td>1600</td>
<td>0</td>
<td>1690</td>
</tr>
<tr class="odd">
<td>Sow Slaughter</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Other Slaughter</td>
<td>660986</td>
<td>653670</td>
<td>660986</td>
<td>701399</td>
<td>678475</td>
<td>711375</td>
<td>740201</td>
<td>0</td>
<td>740201</td>
</tr>
<tr class="odd">
<td>Total Slaughter</td>
<td>660986</td>
<td>653670</td>
<td>660986</td>
<td>701399</td>
<td>678475</td>
<td>711375</td>
<td>740201</td>
<td>0</td>
<td>740201</td>
</tr>
<tr class="even">
<td>Loss</td>
<td>1190</td>
<td>1170</td>
<td>1190</td>
<td>1200</td>
<td>800</td>
<td>1500</td>
<td>800</td>
<td>0</td>
<td>1000</td>
</tr>
<tr class="odd">
<td>Ending Inventories</td>
<td>503348</td>
<td>500324</td>
<td>503348</td>
<td>519052</td>
<td>519052</td>
<td>523752</td>
<td>526454</td>
<td>0</td>
<td>530863</td>
</tr>
<tr class="even">
<td>Total Distribution</td>
<td>1E+06</td>
<td>1156894</td>
<td>1167293</td>
<td>1223351</td>
<td>1200327</td>
<td>1238350</td>
<td>1E+06</td>
<td>0</td>
<td>1273754</td>
</tr>
<tr class="odd">
<td>CY Imp. from U.S.</td>
<td>2</td>
<td>2</td>
<td>2</td>
<td>2</td>
<td>2</td>
<td>1</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>CY. Exp. to U.S.</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Balance</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>-519052</td>
<td>0</td>
</tr>
<tr class="even">
<td>Inventory Balance</td>
<td>21457</td>
<td>18433</td>
<td>21457</td>
<td>15704</td>
<td>18728</td>
<td>20404</td>
<td>7402</td>
<td>-519052</td>
<td>7111</td>
</tr>
<tr class="odd">
<td>Inventory Change</td>
<td>3</td>
<td>0</td>
<td>3</td>
<td>4</td>
<td>4</td>
<td>4</td>
<td>3</td>
<td>4</td>
<td>4</td>
</tr>
<tr class="even">
<td>Sow Change</td>
<td>7</td>
<td>0</td>
<td>7</td>
<td>5</td>
<td>4</td>
<td>9</td>
<td>4</td>
<td>-100</td>
<td>-2</td>
</tr>
<tr class="odd">
<td>Production Change</td>
<td>8</td>
<td>0</td>
<td>8</td>
<td>5</td>
<td>4</td>
<td>7</td>
<td>4</td>
<td>-100</td>
<td>2</td>
</tr>
<tr class="even">
<td>Production to Sows</td>
<td>16</td>
<td>16</td>
<td>15.2</td>
<td>16</td>
<td>16</td>
<td>15</td>
<td>16.1</td>
<td>0</td>
<td>15.6</td>
</tr>
<tr class="odd">
<td>Trade Balance</td>
<td>1766</td>
<td>1727</td>
<td>1766</td>
<td>1697</td>
<td>1997</td>
<td>1721</td>
<td>1597</td>
<td>0</td>
<td>1688</td>
</tr>
<tr class="even">
<td>Slaughter to Inventory</td>
<td>137</td>
<td>136</td>
<td>137</td>
<td>139</td>
<td>136</td>
<td>141</td>
<td>143</td>
<td>0</td>
<td>141</td>
</tr>
</tbody>
</table>

<table style="width:100%;">
<colgroup>
<col style="width: 20%" />
<col style="width: 7%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 7%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 8%" />
<col style="width: 9%" />
<col style="width: 9%" />
</colgroup>
<tbody>
<tr class="odd">
<td><strong>PSD Table</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><strong>Country</strong></td>
<td colspan="3"><strong>China, Peoples Republic of</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Commodity</strong></td>
<td colspan="3"><strong>Meat, Beef and Veal</strong></td>
<td></td>
<td></td>
<td></td>
<td colspan="3">(1000 HEAD)(1000 MT CWE)(PERCENT)</td>
</tr>
<tr class="even">
<td></td>
<td>2005</td>
<td>Revised</td>
<td></td>
<td>2006</td>
<td>Estimate</td>
<td></td>
<td>2007</td>
<td>Forecast</td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
</tr>
<tr class="even">
<td><strong>Market Year Begin</strong></td>
<td></td>
<td>01/2005</td>
<td>01/2005</td>
<td></td>
<td>01/2006</td>
<td>01/2006</td>
<td></td>
<td>01/2007</td>
<td>01/2007</td>
</tr>
<tr class="odd">
<td>Slaughter (Reference)</td>
<td>52876</td>
<td>53618</td>
<td>52876</td>
<td>55800</td>
<td>57311</td>
<td>55800</td>
<td>58800</td>
<td>0</td>
<td>58772</td>
</tr>
<tr class="even">
<td>Beginning Stocks</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Production</td>
<td>7115</td>
<td>7222</td>
<td>7115</td>
<td>7500</td>
<td>7718</td>
<td>7492</td>
<td>7910</td>
<td>0</td>
<td>7900</td>
</tr>
<tr class="even">
<td>Intra-EU Imports</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Other Imports</td>
<td>2</td>
<td>3</td>
<td>2</td>
<td>3</td>
<td>3</td>
<td>2</td>
<td>4</td>
<td>0</td>
<td>2</td>
</tr>
<tr class="even">
<td>Total Imports</td>
<td>2</td>
<td>3</td>
<td>2</td>
<td>3</td>
<td>3</td>
<td>2</td>
<td>4</td>
<td>0</td>
<td>2</td>
</tr>
<tr class="odd">
<td>Total Supply</td>
<td>7117</td>
<td>7225</td>
<td>7117</td>
<td>7503</td>
<td>7721</td>
<td>7494</td>
<td>7914</td>
<td>0</td>
<td>7902</td>
</tr>
<tr class="even">
<td>Intra EU Exports</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Other Exports</td>
<td>91</td>
<td>87</td>
<td>91</td>
<td>90</td>
<td>100</td>
<td>99</td>
<td>85</td>
<td>0</td>
<td>102</td>
</tr>
<tr class="even">
<td>Total Exports</td>
<td>91</td>
<td>87</td>
<td>91</td>
<td>90</td>
<td>100</td>
<td>99</td>
<td>85</td>
<td>0</td>
<td>102</td>
</tr>
<tr class="odd">
<td>Human Dom. Consumption</td>
<td>7026</td>
<td>7138</td>
<td>7026</td>
<td>7413</td>
<td>7621</td>
<td>7395</td>
<td>7829</td>
<td>0</td>
<td>7800</td>
</tr>
<tr class="even">
<td>Other Use, Losses</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Total Dom. Consumption</td>
<td>7026</td>
<td>7138</td>
<td>7026</td>
<td>7413</td>
<td>7621</td>
<td>7395</td>
<td>7829</td>
<td>0</td>
<td>7800</td>
</tr>
<tr class="even">
<td>Ending Stocks</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Total Distribution</td>
<td>7117</td>
<td>7225</td>
<td>7117</td>
<td>7503</td>
<td>7721</td>
<td>7494</td>
<td>7914</td>
<td>0</td>
<td>7902</td>
</tr>
<tr class="even">
<td>CY Imp. from U.S.</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>CY. Exp. to U.S.</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Balance</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Inventory Balance</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Weights</td>
<td>135</td>
<td>135</td>
<td>135</td>
<td>134</td>
<td>135</td>
<td>134</td>
<td>135</td>
<td>0</td>
<td>134</td>
</tr>
<tr class="odd">
<td>Production Change</td>
<td>5</td>
<td>0</td>
<td>5</td>
<td>5</td>
<td>7</td>
<td>5</td>
<td>5</td>
<td>-100</td>
<td>5</td>
</tr>
<tr class="even">
<td>Import Change</td>
<td>-60</td>
<td>0</td>
<td>-60</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>33</td>
<td>-100</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Export Change</td>
<td>49</td>
<td>0</td>
<td>49</td>
<td>-1</td>
<td>15</td>
<td>9</td>
<td>-6</td>
<td>-100</td>
<td>3</td>
</tr>
<tr class="even">
<td>Trade Balance</td>
<td>89</td>
<td>84</td>
<td>89</td>
<td>87</td>
<td>97</td>
<td>97</td>
<td>81</td>
<td>0</td>
<td>100</td>
</tr>
<tr class="odd">
<td>Consumption Change</td>
<td>5</td>
<td>0</td>
<td>5</td>
<td>5</td>
<td>7</td>
<td>5</td>
<td>6</td>
<td>-100</td>
<td>5</td>
</tr>
</tbody>
</table>

## Cattle and beef trade matrix

  ---------------- ------------- ------------- ------------- --------------
  China Live                                                 
  Cattle Imports,                                            
  2004-2006                                                  

  (Number of Head)                                           

                   Jan-Dec       Jan-Dec       Jan-Dec       Jan - Dec

                   Quantity      Quantity      Quantity      \% Change

  Origin           2004          2005          2006          2006/2005

  World            132,446       49,586        15,072        -69.60

  Australia        69,406        35,517        12,265        -65.47

  New Zealand      63,032        14,069        2,802         -80.08

  United States    0             0             0             0

  Canada           0             0             0             0

  Mexico           8             0             0             0

  HS Code: 010210,                                           
  010290                                                     

  Source: WTA/GRA                                            
  China Statistics                                           
  ---------------- ------------- ------------- ------------- --------------

  ---------------- ------------- ------------- ------------- --------------
  China Beef and                                             
  Veal Imports,                                              
  2004-2006                                                  

  (Metric Tons)                                              

                   Jan-Dec       Jan-Dec       Jan-Dec       Jan - Dec

                   Quantity      Quantity      Quantity      \% Change

  Origin           2004          2005          2006          2006/2005

  World            3,451         1,252         1,388         10.86

  Australia        2,159         1,132         1,034         -8.66

  New Zealand      825           10            234           2,240.00

  Uruguay          2             25            110           340.00

  Brazil           422           0             7             0.00

  Argentina        0             83            0             -100.00

  United States    41            0             0             0.00

  Other            2             2             0             -100.00

  HS Code: 020110,                                           
  020120, 020130,                                            
  020210, 020220,                                            
  020230, 021020                                             
  160250                                                     

  Source: WTA/GTA                                            
  China Statistics                                           
  ---------------- ------------- ------------- ------------- --------------

+---------------+------------+-------------+------------+-------------+
| Hong Kong     |            |             |            |             |
| Re-Exports of |            |             |            |             |
| Beef and Veal |            |             |            |             |
| to China,     |            |             |            |             |
| 2004-2006     |            |             |            |             |
+---------------+------------+-------------+------------+-------------+
| (Metric Tons) |            |             |            |             |
+---------------+------------+-------------+------------+-------------+
|               | Jan-Dec    | Jan-Dec     | Jan-Dec    | Jan - Dec   |
+---------------+------------+-------------+------------+-------------+
|               | Quantity   | Quantity    | Quantity   | \% Change   |
+---------------+------------+-------------+------------+-------------+
| Origin        | 2004       | 2005        | 2006       | 2006/2005   |
+---------------+------------+-------------+------------+-------------+
| World         | 3,718      | 729         | 114        | -84.36      |
+---------------+------------+-------------+------------+-------------+
| Brazil        | 1,193      | 138         | 60         | -56.52      |
+---------------+------------+-------------+------------+-------------+
| Canada        | 194        | 98          | 30         | -69.39      |
+---------------+------------+-------------+------------+-------------+
| New Zealand   | 1,020      | 168         | 0          | -100.00     |
+---------------+------------+-------------+------------+-------------+
| Australia     | 27         | 144         | 0          | -100.00     |
+---------------+------------+-------------+------------+-------------+
| Argentina     | 159        | 109         | 0          | -100.00     |
+---------------+------------+-------------+------------+-------------+
| India         | 309        | 25          | 0          | -100.00     |
+---------------+------------+-------------+------------+-------------+
| Ireland       | 244        | 25          | 0          | -100.00     |
+---------------+------------+-------------+------------+-------------+
| Austria       | 0          | 14          | 0          | -100.00     |
+---------------+------------+-------------+------------+-------------+
| United States | 263        | 1           | 0          | -100.00     |
+---------------+------------+-------------+------------+-------------+
| Other         | 309        | 11          | 24         | 118.18      |
+---------------+------------+-------------+------------+-------------+
| HS Code:      |            |             |            |             |
| 020110,       |            |             |            |             |
| 020120,       |            |             |            |             |
| 020130,       |            |             |            |             |
| 020210,       |            |             |            |             |
| 020220,       |            |             |            |             |
| 020230,       |            |             |            |             |
| 021020 and    |            |             |            |             |
| 160250        |            |             |            |             |
|               |            |             |            |             |
| 'Source:      |            |             |            |             |
| WTA/GTA China |            |             |            |             |
| Statistics    |            |             |            |             |
+---------------+------------+-------------+------------+-------------+

+---------------+------------+-------------+------------+-------------+
| China Live    |            |             |            |             |
| Cattle        |            |             |            |             |
| Exports,      |            |             |            |             |
| 2004-2006     |            |             |            |             |
+---------------+------------+-------------+------------+-------------+
| (Number of    |            |             |            |             |
| Head)         |            |             |            |             |
+---------------+------------+-------------+------------+-------------+
|               | Jan-Dec    | Jan-Dec     | Jan-Dec    | Jan - Dec   |
+---------------+------------+-------------+------------+-------------+
|               | Quantity   | Quantity    | Quantity   | \% Change   |
+---------------+------------+-------------+------------+-------------+
| Destination   | 2004       | 2005        | 2006       | 2006/2005   |
+---------------+------------+-------------+------------+-------------+
| World         | 59,009     | 54,129      | 54,389     | 0.48        |
+---------------+------------+-------------+------------+-------------+
| Hong Kong     | 47,377     | 48,003      | 45,957     | -4.26       |
+---------------+------------+-------------+------------+-------------+
| Macau         | 5,278      | 5,746       | 5,898      | 2.65        |
+---------------+------------+-------------+------------+-------------+
| Saudi Arabia  | 0          | 0           | 2,217      | 0.00        |
+---------------+------------+-------------+------------+-------------+
| Mongolia      | 0          | 0           | 167        | 0.00        |
+---------------+------------+-------------+------------+-------------+
| Laos          | 0          | 0           | 126        | 0.00        |
+---------------+------------+-------------+------------+-------------+
| Korea North   | 330        | 380         | 20         | -94.74      |
+---------------+------------+-------------+------------+-------------+
| Jordan        | 6,000      | 0           | 4          | 0.00        |
+---------------+------------+-------------+------------+-------------+
| Other         | 24         | 0           | 54,389     | 0.00        |
+---------------+------------+-------------+------------+-------------+
| HS Code:      |            |             |            |             |
| 010210,       |            |             |            |             |
| 010290        |            |             |            |             |
|               |            |             |            |             |
| Source:       |            |             |            |             |
| WTA/GTA China |            |             |            |             |
| Statistics    |            |             |            |             |
+---------------+------------+-------------+------------+-------------+

  ---------------- ------------- ------------- ------------- --------------
  China Beef and                                             
  Veal Exports,                                              
  2004-2006                                                  

  (Metric Tons)                                              

                   Jan-Dec       Jan-Dec       Jan-Dec       Jan - Dec

                   Quantity      Quantity      Quantity      \% Change

  Destination      2004          2005          2006          2006/2005

  World            37,171        54,586        60,849        11.47

  Hong Kong        15,876        14,862        15,051        1.27

  Korea South      3,638         12,139        14,080        15.99

  Japan            9,062         14,747        10,439        -29.21

  Jordan           739           4,558         4,558         0.00

  Kuwait           1,657         2,606         3,668         40.75

  Malaysia         1,293         1,186         2,371         99.92

  Lebanon          403           571           2,269         297.37

  Indonesia        943           1,345         1,502         11.67

  Korea North      492           1,142         1,602         40.28

  Macau            124           193           297           53.89

  Singapore        172           154           88            -42.86

  Russia           1,435         219           73            -66.67

  United Arab      783           270           169           -37.41
  Emirates                                                   

  Other            554           594           4,682         688.22

  HS Code: 020110,                                           
  020120, 020130,                                            
  020210, 020220,                                            
  020230, 021020                                             
  and 160250                                                 

  Source: WTA/GTA                                            
  China Statistics                                           
  ---------------- ------------- ------------- ------------- --------------

  ------------------- ------------------------ --------- -------- -------- -----------
  Import Tariffs on                                                        
  Cattle and Beef,                                                         
  Effective                                                                
  January-December,                                                        
  2007                                                                     

                                                                           Effective

                                               General   MFN      V.A.T.   Rate
                                                                  1/       

                                                                           (mfn+vat)

  HS Codes                                                                 

  0102.1000           Cattle, breeding         0%        0%       13%      13.0%

  0102.9000           Cattle, other            30%       10%      13%      24.3%

                                                                           

                      Beef, Fresh or Chilled                               

  0201.1000           Carcass & half-carcass   70%       20.0%    13%      35.6%

  0201.2000           Other cuts with bones    70%       12.0%    13%      26.6%

  0201.3000           Cuts, boneless           70%       12.0%    13%      26.6%

                                                                           

                      Beef, Frozen                                         

  0202.1000           Carcass & half-carcass   70%       25%      13%      41.3%

  0202.2000           Other cuts with bones    70%       12.0%    13%      26.6%

  0202.3000           Cuts, boneless           70%       12.0%    13%      26.6%

  Source: China                                                            
  Customs                                                                  
  ------------------- ------------------------ --------- -------- -------- -----------

  ------------------- ----------------------- --------- --------- --------- -----------
  Import Tariffs on                                                         
  Beef Offal                                                                
  Effective                                                                 
  January-December,                                                         
  2007                                                                      

                                                                            Effective

  HS Code                                     General   MFN       V.A.T.    Rate

                                                                            (mfn+vat)

  0206.1000           Beef offal, fresh or    70%       12%       13%       26.6%
                      chilled                                               

  0206.2100           Beef tongues, frozen    70%       12%       13%       26.6%

  0206.2200           Beef liver, frozen      70%       12%       13%       26.6%

  0206.2900           Other beef offal,       70%       20%       13%       35.6%
                      frozen                                                

  Source: China                                                             
  Customs                                                                   
  ------------------- ----------------------- --------- --------- --------- -----------

  ------------- ----------- --------- ---------- --------- ----------------
  CHINA                                                    
  WHOLESALE                                                
  BEEF PRICES                                              
  ON AVERAGE,                                              
  2004-2006                                                
  (\$/KG)                                                  

                2004        2005      2006       2007      \% Change
                                                           \'2006/05

  January       1.84        1.81      2.10       1.99      -5.24

  February      1.79        1.98      2.08       2.23      7.21

  March         1.82        1.93      1.94                 

  April         1.79        1.88      2.06                 

  May           1.86        1.99      2.01                 

  June          1.84        1.96      2.00                 

  July          1.83        1.92      1.99                 

  August        1.83        1.98      2.11                 

  September     1.77        1.88      2.12                 

  October       1.83        1.96      1.99                 

  November      1.80        1.92      2.00                 

  December      1.78        2.04      2.03                 

  Source: The                                              
  Ministry of                                              
  Agriculture                                              
  ------------- ----------- --------- ---------- --------- ----------------

# Swine and Pork

## China's pork production in 2007 is forecast to increase 4 percent to 54.4 MMT

Post adjusted China's pork production in 2007 slightly down to 54.4 MMT
from the previous estimation of 55.8 MMT in the last livestock annual
report (CH6074) due to estimated slower slaughters in 2007.

China's swine and pork production in 2006 experienced low prices in the
first 3 quarters and high prices in the last quarter. Farmers expanded
placements fast when swine and pork profits increased during 2003-2004
due to consumers' switch from poultry to red meats due to fears of
highly pathogenic avian influenza (HPAI). As a result, sow inventory
beginning stocks in 2005 increased by 12 percent to 45 million head,
higher than previously estimated. As a result, year-on-year pig crop
production increased by nearly 8 percent to 685.4 million head. Over hog
supplies led to low pork prices from September 2005 to September 2006.
Swine fever occurrence in Anhui, Jiangxi, Zhejiang, Hunan, Hubei and
Jiangsu Provinces in 2006 resulted in reduced pork consumption, which in
turn further pushed down pork prices.

China's swine production costs have been going up due to price increases
in corn, soybean, soybean product, and petrol prices. According to the
industry, general pork production costs during the low pork price period
were \$0.28-0.29 (RMB 2.1-2.16) per kilogram. Under such prices, swine
and grain conversion was 1:4.6-4.81, lower than the 1:5.5 critical
profit point. Feed ingredients mainly include corn, soy meal and wheat
bran, and corn accounts for 60-70 percent. Corn prices significantly
impact China's swine production.

During the low pork price period in 2006 due to over pork supplies and
less consumption in fear of swine fever disease, farmers quickened swine
and sow slaughters at the cost of lighter average carcass weights. Sow
inventory dropped 3 percent in 2006. As the swine disease came under
control, pork consumption started picking up in October 2006. Slow
slaughter combined with strong demand during the October holidays in
2006, the New Year holidays and the traditional Chinese Spring Festival
(February 2007) have pushed pork prices up quickly since October. The
current swine and grain conversion is 1:5.72. Pork production is
currently profitable.

![](media/image3.wmf){width="2.9166666666666665in"
height="2.542361111111111in"}Post forecasts China's year-on-year pig
crop production in 2007 to increase by 2 percent to 750 million head due
to reduced sow stocks. However, the sow stocks are still higher than the
normal 8 percent of China's total pig stocks. As China's beef, sheep and
goat meat production increases steadily, and consumers gradually shift
back to poultry meat after they become accustomed to HPAI outbreak news,
pork demand will be relaxed. However, if farmers expand pig placements
quickly again when seeing good profit, pork prices will be constrained.

## 

## 

## 

## Feed development benefits swine industry

China's swine production has benefited significantly from feed
development. The total feed production in 2006 was estimated at 109 MMT,
about 2 percent increase from 2005. While compound feed develops
steadily, concentrated feed and additive premixed feed have developed
fast. Large commercial farms usually use compound feeds, and small or
backyard farms mainly use the other two feeds to mix with their own
grain stuffs. According to the feed industry, feed quality improvement
has increased the efficiency of swine production. Compared with the
objectives of the 8^th^ Five-Year-Plan (1990-1995), the current swine
fattening period has been shortened about 40 days on average, reflecting
that more and more small and back yard farms are using concentrated feed
and premixed feeds. China's 11^th^ Five-Year-Plan for Feed Development
(2006-2010), which targets feed production capability at 170 MMT,
stresses safety, high quality, high efficiency and sustainable
development. This will not doubt continue to benefit China's swine
industry.

  ------------- ------------ -------------- ------------------ ----------------
  China Feed                                                   
  Production,                                                  
  1996-2006,                                                   
  (1,000 MT)                                                   

  Year          Compound     Concentrated   Additive Premixed  Total Production

  1996          51,180       4,190          730                56,100

  1997          54,740       7,010          1,250              62,990

  1998          55,730       8,870          1,380              65,990

  1999          55,530       10,970         2,230              68,730

  2000          59,120       12,490         2,530              74,290

  2001          60,870       14,190         3,010              78,060

  2002          62,390       17,640         3,160              83,190

  2003          64,280       19,580         3,260              87,120

  2004          70,310       22,240         4,060              96,600

  2005          77,570       24,980         4,720              107,270

  2006          n/a          n/a            n/a                109,000

  Source: China                                                
  Feed                                                         
  Association                                                  
  ------------- ------------ -------------- ------------------ ----------------

## Pork consumption in 2007 forecast to increase by 4 percent to 53.8 MMT 

Post adjusted China's pork consumption number in 2007 slightly down to
53.8 MMT from the previous forecast of 55.3 MMT in the last livestock
annual report (CH6074) due to estimated slow slaughters. Pork is still
the most important animal protein for Chinese consumers though the trend
is going down due to availability of other meats, milk and aquatic
products. Pork share in China's total meat production is forecast to
drop 4 percent to 60 percent by 2010 based on China's 11^th^
Five-Year-Plan for Food Development (2006-2010). Although China is a
large pork producing country, 99 percent of its total pork is consumed
in China due to export constraints caused by animal diseases such as FMD
and swine fever.

## Pork imports in 2007 forecast to increase by 4 percent to 55,000 MT 

As of this report, China's import and export numbers in the PS&D table
for pork will include the tariff line HS Code (HSC) 160249 for China,
which was not included in the past. If this HSC is excluded, China's
imports through Hong Kong or exports to other countries will be impacted
significantly.

Post forecasts China's pork imports in 2007 continue growing because of
slow domestic slaughters. However, the pace of growth in 2007 is
forecast smaller compared with that in 2006, because China's increasing
poultry and pork offal imports are expected to replace part of pork
imports. China's poultry imports in 2006 increased by 57 percent to
343,000 MT due to recovering domestic poultry demand and slow increase
in China's poultry production. China's pork offal imports in 2006 via
direct shipments and Hong Kong transshipments increased by 7 percent to
269,386 MT and 197 percent to 59,274 MT respectively due to traditional
Chinese eating habit, slow domestic swine slaughters and considerably
reduced international unit prices for pork offal. This trend is expected
to continue in 2007 as poultry and pork offal import demands are strong.
Further, if China lifts its ban on U.S. and Canadian beef in 2007, which
was shut off in 2003 due to BSE, part of pork imports could be replaced
by beef imports.

Although China's direct pork imports in 2006 decreased by 23 percent to
23,911 MT,

China's indirect imports via Hong Kong increased by 186 percent to
17,136 MT due to stronger RMB against Hong Kong Dollars. As a result,
China's total pork imports in 2006 ended up increasing 10 percent.

U.S. pork exports to China in 2007 are forecast to increase by 5 percent
to 44,000 MT from a previous year's 12 percent decrease including direct
shipments and Hong Kong transshipments based on U.S. and Hong Kong trade
data. Although the Chinese customs data shows that Chinese pork import
from the United States in 2006 decreased by 69 percent to 2,111 MT, the
U.S. export data shows that U.S. pork exports to China in 2006 were
32,358 MT, a 13 percent decrease from last year. FAS Beijing believes
that beside one-month lag in China's customs import reports compared
with U.S. export reports, "grey channel" trade in South China driven by
higher U.S. export prices explains this difference. The average CIF unit
price for U.S. pork exports to China increased by 15 percent in 2006
while the average CIF unit prices for U.S. exports to Hong Kong
decreased by 8 percent during the same period according to the U.S.
data. Increased U.S. exports via Hong Kong transshipments to China, not
only due to low priced shipments to Hong Kong but also due to stronger
RMB against Hong Kong Dollars, setoff decreased U.S. direct shipments to
the mainland. U.S. direct shipments to China are expected to improve in
2007 with an expectation of strong U.S. pork growth and exports,
continuing appreciated RMB against U.S. Dollars, as well as China's
strengthening against smuggling.

U.S. pork offal exports to China are similar to pork exports. Although
U.S. pork offal direct shipments to China in 2006 decreased by 13
percent to 80,397 MT, U.S. exports via Hong Kong transshipments
increased by 36 percent to 5,871 MT due to considerably reduced price.

U.S. pork exports to China have also been interrupted by China's
strengthened tests on ractopamine residues. China suspended two major
U.S. exporting plants at the beginning of 2006 due to ractopamine
detections. China forbids ractopamine for both imported and domestic
pork products, while the United States allows using it with a curtain
safety withdraw period. FSIS, FAS Beijing, the U.S. pork industry and a
U.S. ractopamine plant are working with AQSIQ to try to resolve this
issue.

## Electronic notification system will start on March 3, 2007, for all U.S. meat and poultry shipments to China

China's AQSIQ requested 14 foreign embassies in Beijing in August 2006
to start an electronic certificate confirmation system (ECC) on January
1, 2007 for meat imports, in order to crack down smuggling. At FAS
Beijing's request, AQSIQ agreed to give two-month grace period, starting
on March 3, 2007 and to accept e-mail confirmation from the U.S. export
facilities. In the first stage, AQSIQ only requests U.S. plants to
confirm the FSIS meat export health certificate numbers and the dates.
It may request more information later. All meat products are subject to
this system except casing. Many U.S. plants have already started trying
to use the system to gain experience. U.S. meat plants should forward
accurate information in order to minimize delays in AQSIQ's quarantine
inspections.

## Pork exports in 2007 forecast to increase by 3 percent to 560,000 MT

FAS Beijing forecasts China's pork exports in 2007 to increase by 3
percent to 560,000 MT (CEW) from the estimated 543,000 MT in 2006.
Although China is the world's largest pork producing country, it is not
a significant player in world pork export markets. Its pork exports only
account for 1 percent of China's total pork production. Animal diseases
in China such as FMD and swine fever have constrained China's pork
exports. FAS Beijing forecasts the pace of increase in China's pork
exports in 2007 is 5 percent smaller compared with that in 2006, not
only due to slow domestic slaughters but also due to stronger RMB
against the U.S. Dollars and Hong Kong Dollars. The RMB has appreciated
4.5 percent against U.S. Dollars and it is for the first time equivalent
to Hong Kong Dollars since China and Hong Kong reunited in 1997.

Russia used to be one of China's largest export markets, but after
Russia implemented an import quota system in 2003, China's quota fell to
only several thousand MT a year due to food safety concerns. This quota
will not likely change in 2007.

Another reason for a slow increase in China's exports is the crackdown
on illegal exports. Some EU countries reported that they found illegal
meat exported to or transshipped via their countries from China. As a
result, AQSIQ, MOFCOM, and China's General Customs Administration
jointly issued a notification requiring CIQ offices to strengthen export
inspection and quarantine to stop illegal exports. Additionally, Japan,
a key export market for China, is forecast to reduce imports due to its
high-level pork stocks.

China's live swine exports to Hong Kong and Macau are forecast to
decline by nearly 3 percent to 1.7 million head due to their pork import
increases from the mainland. The two markets account nearly all of
China's live swine exports. This trade pattern will continue in 2007.

There is some positive news for China's pork exports. Hong Kong and
Macau, for the first time, opened their fresh and chilled pork market
for China in August and November 2006 respectively. China has already
exported 17,000 MT to Macau. On October 18, 2006, Singapore reopened its
market for boneless pork from China's Jiangsu and Shandong Provinces
(previously closed due to FMD concerns). This may gradually change
China's export product pattern in the future.

## PS&D table for swine and pork

<table>
<colgroup>
<col style="width: 19%" />
<col style="width: 8%" />
<col style="width: 9%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
</colgroup>
<tbody>
<tr class="odd">
<td><strong>PSD Table</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><strong>Country</strong></td>
<td colspan="3"><strong>China, Peoples Republic of</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Commodity</strong></td>
<td colspan="3"><strong>Animal Numbers, Swine</strong></td>
<td></td>
<td></td>
<td></td>
<td colspan="3">(1000 HEAD)(PERCENT)</td>
</tr>
<tr class="even">
<td></td>
<td>2005</td>
<td>Revised</td>
<td></td>
<td>2006</td>
<td>Estimate</td>
<td></td>
<td>2007</td>
<td>Forecast</td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
</tr>
<tr class="even">
<td><strong>Market Year Begin</strong></td>
<td></td>
<td>01/2005</td>
<td>01/2005</td>
<td></td>
<td>01/2006</td>
<td>01/2006</td>
<td></td>
<td>01/2007</td>
<td>01/2007</td>
</tr>
<tr class="odd">
<td>Total Beginning Stocks</td>
<td>481891</td>
<td>481891</td>
<td>481891</td>
<td>503348</td>
<td>500324</td>
<td>503348</td>
<td>519052</td>
<td>519052</td>
<td>523752</td>
</tr>
<tr class="even">
<td>Sow Beginning Stocks</td>
<td>42900</td>
<td>42200</td>
<td>45000</td>
<td>44900</td>
<td>43800</td>
<td>48930</td>
<td>46600</td>
<td>0</td>
<td>48000</td>
</tr>
<tr class="odd">
<td>Production (Pig Crop)</td>
<td>685399</td>
<td>675000</td>
<td>685399</td>
<td>720000</td>
<td>700000</td>
<td>735000</td>
<td>750000</td>
<td>0</td>
<td>750000</td>
</tr>
<tr class="even">
<td>Intra-EU Imports</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Other Imports</td>
<td>3</td>
<td>3</td>
<td>3</td>
<td>3</td>
<td>3</td>
<td>2</td>
<td>3</td>
<td>0</td>
<td>2</td>
</tr>
<tr class="even">
<td>Total Imports</td>
<td>3</td>
<td>3</td>
<td>3</td>
<td>3</td>
<td>3</td>
<td>2</td>
<td>3</td>
<td>0</td>
<td>2</td>
</tr>
<tr class="odd">
<td>Total Supply</td>
<td>1167293</td>
<td>1156894</td>
<td>1167293</td>
<td>1223351</td>
<td>1200327</td>
<td>1238350</td>
<td>1269055</td>
<td>519052</td>
<td>1273754</td>
</tr>
<tr class="even">
<td>Intra EU Exports</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Other Exports</td>
<td>1769</td>
<td>1730</td>
<td>1769</td>
<td>1700</td>
<td>2000</td>
<td>1723</td>
<td>1600</td>
<td>0</td>
<td>1690</td>
</tr>
<tr class="even">
<td>Total Exports</td>
<td>1769</td>
<td>1730</td>
<td>1769</td>
<td>1700</td>
<td>2000</td>
<td>1723</td>
<td>1600</td>
<td>0</td>
<td>1690</td>
</tr>
<tr class="odd">
<td>Sow Slaughter</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Other Slaughter</td>
<td>660986</td>
<td>653670</td>
<td>660986</td>
<td>701399</td>
<td>678475</td>
<td>711375</td>
<td>740201</td>
<td>0</td>
<td>740201</td>
</tr>
<tr class="odd">
<td>Total Slaughter</td>
<td>660986</td>
<td>653670</td>
<td>660986</td>
<td>701399</td>
<td>678475</td>
<td>711375</td>
<td>740201</td>
<td>0</td>
<td>740201</td>
</tr>
<tr class="even">
<td>Loss</td>
<td>1190</td>
<td>1170</td>
<td>1190</td>
<td>1200</td>
<td>800</td>
<td>1500</td>
<td>800</td>
<td>0</td>
<td>1000</td>
</tr>
<tr class="odd">
<td>Ending Inventories</td>
<td>503348</td>
<td>500324</td>
<td>503348</td>
<td>519052</td>
<td>519052</td>
<td>523752</td>
<td>526454</td>
<td>0</td>
<td>530863</td>
</tr>
<tr class="even">
<td>Total Distribution</td>
<td>1167293</td>
<td>1156894</td>
<td>1167293</td>
<td>1223351</td>
<td>1200327</td>
<td>1238350</td>
<td>1269055</td>
<td>0</td>
<td>1273754</td>
</tr>
<tr class="odd">
<td>CY Imp. from U.S.</td>
<td>2</td>
<td>2</td>
<td>2</td>
<td>2</td>
<td>2</td>
<td>1</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>CY. Exp. to U.S.</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Balance</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>-519052</td>
<td>0</td>
</tr>
<tr class="even">
<td>Inventory Balance</td>
<td>21457</td>
<td>18433</td>
<td>21457</td>
<td>15704</td>
<td>18728</td>
<td>20404</td>
<td>7402</td>
<td>-519052</td>
<td>7111</td>
</tr>
<tr class="odd">
<td>Inventory Change</td>
<td>3</td>
<td>0</td>
<td>3</td>
<td>4</td>
<td>4</td>
<td>4</td>
<td>3</td>
<td>4</td>
<td>4</td>
</tr>
<tr class="even">
<td>Sow Change</td>
<td>7</td>
<td>0</td>
<td>7</td>
<td>5</td>
<td>4</td>
<td>9</td>
<td>4</td>
<td>-100</td>
<td>-2</td>
</tr>
<tr class="odd">
<td>Production Change</td>
<td>8</td>
<td>0</td>
<td>8</td>
<td>5</td>
<td>4</td>
<td>7</td>
<td>4</td>
<td>-100</td>
<td>2</td>
</tr>
<tr class="even">
<td>Production to Sows</td>
<td>16</td>
<td>16</td>
<td>15.2</td>
<td>16</td>
<td>16</td>
<td>15</td>
<td>16.1</td>
<td>0</td>
<td>15.6</td>
</tr>
<tr class="odd">
<td>Trade Balance</td>
<td>1766</td>
<td>1727</td>
<td>1766</td>
<td>1697</td>
<td>1997</td>
<td>1721</td>
<td>1597</td>
<td>0</td>
<td>1688</td>
</tr>
<tr class="even">
<td>Slaughter to Inventory</td>
<td>137</td>
<td>136</td>
<td>137</td>
<td>139</td>
<td>136</td>
<td>141</td>
<td>143</td>
<td>0</td>
<td>141</td>
</tr>
</tbody>
</table>

<table>
<colgroup>
<col style="width: 22%" />
<col style="width: 7%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 7%" />
<col style="width: 9%" />
<col style="width: 8%" />
<col style="width: 7%" />
<col style="width: 8%" />
<col style="width: 9%" />
</colgroup>
<tbody>
<tr class="odd">
<td><strong>PSD Table</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><strong>Country</strong></td>
<td colspan="3"><strong>China, Peoples Republic of</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Commodity</strong></td>
<td colspan="2"><strong>Meat, Swine</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3">(1000 HEAD)(1000 MT CWE)(PERCENT)</td>
</tr>
<tr class="even">
<td></td>
<td>2005</td>
<td>Revised</td>
<td></td>
<td>2006</td>
<td>Estimate</td>
<td></td>
<td>2007</td>
<td>Forecast</td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
</tr>
<tr class="even">
<td><strong>Market Year Begin</strong></td>
<td></td>
<td>01/2005</td>
<td>01/2005</td>
<td></td>
<td>01/2006</td>
<td>01/2006</td>
<td></td>
<td>01/2007</td>
<td>01/2007</td>
</tr>
<tr class="odd">
<td>Slaughter (Reference)</td>
<td>660986</td>
<td>653670</td>
<td>660986</td>
<td>7E+05</td>
<td>678475</td>
<td>711375</td>
<td>740201</td>
<td>0</td>
<td>740201</td>
</tr>
<tr class="even">
<td>Beginning Stocks</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Production</td>
<td>50106</td>
<td>49685</td>
<td>50106</td>
<td>53000</td>
<td>52000</td>
<td>52261</td>
<td>55800</td>
<td>0</td>
<td>54352</td>
</tr>
<tr class="even">
<td>Intra-EU Imports</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Other Imports</td>
<td>48</td>
<td>50</td>
<td>48</td>
<td>36</td>
<td>48</td>
<td>53</td>
<td>34</td>
<td>0</td>
<td>55</td>
</tr>
<tr class="even">
<td>Total Imports</td>
<td>48</td>
<td>50</td>
<td>48</td>
<td>36</td>
<td>48</td>
<td>53</td>
<td>34</td>
<td>0</td>
<td>55</td>
</tr>
<tr class="odd">
<td>Total Supply</td>
<td>50154</td>
<td>49735</td>
<td>50154</td>
<td>53036</td>
<td>52048</td>
<td>52314</td>
<td>55834</td>
<td>0</td>
<td>54407</td>
</tr>
<tr class="even">
<td>Intra EU Exports</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Other Exports</td>
<td>502</td>
<td>255</td>
<td>502</td>
<td>500</td>
<td>300</td>
<td>543</td>
<td>510</td>
<td>0</td>
<td>560</td>
</tr>
<tr class="even">
<td>Total Exports</td>
<td>502</td>
<td>255</td>
<td>502</td>
<td>500</td>
<td>300</td>
<td>543</td>
<td>510</td>
<td>0</td>
<td>560</td>
</tr>
<tr class="odd">
<td>Human Dom. Consumption</td>
<td>49652</td>
<td>49480</td>
<td>49652</td>
<td>52536</td>
<td>51748</td>
<td>51771</td>
<td>55324</td>
<td>0</td>
<td>53847</td>
</tr>
<tr class="even">
<td>Other Use, Losses</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Total Dom. Consumption</td>
<td>49652</td>
<td>49480</td>
<td>49652</td>
<td>52536</td>
<td>51748</td>
<td>51771</td>
<td>55324</td>
<td>0</td>
<td>53847</td>
</tr>
<tr class="even">
<td>Ending Stocks</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Total Distribution</td>
<td>50154</td>
<td>49735</td>
<td>50154</td>
<td>53036</td>
<td>52048</td>
<td>52314</td>
<td>55834</td>
<td>0</td>
<td>54407</td>
</tr>
<tr class="even">
<td>CY Imp. from U.S.</td>
<td>49</td>
<td>53</td>
<td>49</td>
<td>42</td>
<td>48</td>
<td>43</td>
<td>0</td>
<td>0</td>
<td>44</td>
</tr>
<tr class="odd">
<td>CY. Exp. to U.S.</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Balance</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Inventory Balance</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Weights</td>
<td>76</td>
<td>76</td>
<td>76</td>
<td>76</td>
<td>77</td>
<td>73</td>
<td>75</td>
<td>0</td>
<td>73</td>
</tr>
<tr class="odd">
<td>Production Change</td>
<td>7</td>
<td>0</td>
<td>7</td>
<td>6</td>
<td>5</td>
<td>4</td>
<td>5</td>
<td>-100</td>
<td>4</td>
</tr>
<tr class="even">
<td>Import Change</td>
<td>-72</td>
<td>0</td>
<td>-72</td>
<td>-25</td>
<td>-4</td>
<td>10</td>
<td>-6</td>
<td>-100</td>
<td>4</td>
</tr>
<tr class="odd">
<td>Export Change</td>
<td>-7</td>
<td>0</td>
<td>-7</td>
<td>0</td>
<td>18</td>
<td>8</td>
<td>2</td>
<td>-100</td>
<td>3</td>
</tr>
<tr class="even">
<td>Trade Balance</td>
<td>454</td>
<td>205</td>
<td>454</td>
<td>464</td>
<td>252</td>
<td>490</td>
<td>476</td>
<td>0</td>
<td>505</td>
</tr>
<tr class="odd">
<td>Consumption Change</td>
<td>6</td>
<td>0</td>
<td>6</td>
<td>6</td>
<td>5</td>
<td>4</td>
<td>5</td>
<td>-100</td>
<td>4</td>
</tr>
</tbody>
</table>

## Swine and pork trade matrix

  ---------------- ------------- ------------- ------------- --------------
  China Swine                                                
  Imports,                                                   
  2004-2006                                                  

  (Number of Head)                                           

                   Jan-Dec       Jan-Dec       Jan-Dec       Jan - Dec

                   Quantity      Quantity      Quantity      \% Change

  Origin           2004          2005          2006          2006/2005

  World            1,898         3,238         2,489         -23.13

  United States    840           1,892         1,038         -45.14

  Denmark          578           0             682           0.00

  Canada           480           1,032         503           -51.26

  United Kingdom   0             0             266           0.00

  France           0             314           0             -100.00

  HS Code: 010310,                                           
  010391, 010392                                             

  Source: WTA/GTA                                            
  China Statistics                                           
  ---------------- ------------- ------------- ------------- --------------

  ---------------- ------------- ------------- ------------- --------------
  China Pork                                                 
  Imports,                                                   
  2004-2006                                                  

  (Metric Tons)                                              

                   Jan-Dec       Jan-Dec       Jan-Dec       Jan - Dec

                   Quantity      Quantity      Quantity      \% Change

  Origin           2004          2005          2006          2006/2005

  World            70,683        31,254        23,911        -23.49

  Canada           23,968        19,178        15,773        -17.75

  United States    29,585        6,750         2,111         -68.73

  Denmark          17,000        4,654         970           -79.16

  France           2             577           4279          641.59

  Other            128           95            778           718.95

  HS Code: 020311,                                           
  020312, 020319,                                            
  020321, 020322,                                            
  020329, 021011                                             
  021012,                                                    

  021019, 160241,                                            
  160242 and                                                 
  160249                                                     

  Source: GTA                                                
  partners trade                                             
  statistics                                                 
  ---------------- ------------- ------------- ------------- --------------

  ------------------ ------------ ------------- ------------- -------------
  Hong Kong Pork                                              
  Re-Exports to                                               
  China, 2004-2006                                            

  (Metric Tons                                                

                     Jan-Dec      Jan-Dec       Jan-Dec       Jan - Dec

                     Quantity     Quantity      Quantity      \% Change

  Origin             2004         2005          2006          2006/2005

  The World          59,655       5,997         17,136        185.74

  Spain              4,261        657           3,581         445.05

  Denmark            11,158       727           2,537         248.97

  Canada             9,899        1,589         1,637         3.02

  Brazil             3,422        516           729           41.28

  Netherlands        5,381        345           690           100.00

  France             2,600        411           627           52.55

  Germany, Fed Rep   8,068        525           525           0.00

  United States      8,800        581           362           -37.69

  Other              6,066        646           6,448         898.14

  HS Code: 020311,                                            
  020312, 020319,                                             
  020321, 020322,                                             
  020329, 021011                                              
  021012,                                                     

  021019, 160241,                                             
  160242 and 160249                                           

  Source: WTA/GTA                                             
  from Hong Kong                                              
  Census and                                                  
  Statistics                                                  
  Department                                                  
  ------------------ ------------ ------------- ------------- -------------

  ------------------ ------------ ------------- ------------- -------------
  China Live Swine                                            
  Exports, 2004-2006                                          

  (Number of Head)                                            

                     Jan-Dec      Jan-Dec       Jan-Dec       Jan - Dec

                     Quantity     Quantity      Quantity      \% Change

  Destination        2004         2005          2006          2006/2005

  World              1,972,911    1,768,772     1,722,540     -2.61

  Hong Kong          1,853,771    1,646,605     1,602,222     -2.70

  Macau              118,899      120,869       117,382       -2.88

  Korea North        75           1,198         2,294         91.49

  Other              166          100           642           542.00

  HS Code: 010310,                                            
  010391, 010392                                              

  Source: GTA China                                           
  Statistics                                                  
  ------------------ ------------ ------------- ------------- -------------

  ------------------ ------------ ------------- ------------- -------------
  China Pork                                                  
  Exports, 2004-2006                                          

  (Metric Tons)                                               

                     Jan-Dec      Jan-Dec       Jan-Dec       Jan - Dec

                     Quantity     Quantity      Quantity      \% Change

  Destination        2004         2005          2006          2006/2005

  World              413,321      385,967       418,788       8.50

  Hong Kong          116,810      114,375       129,965       13.63

  Japan              53,139       68,714        79,133        15.16

  Korea North        87,031       61,609        75,364        22.33

  Vietnam            23           874           29,322        3254.92

  Kyrgyzstan         0            1,023         15,522        1417.30

  Philippines        8,197        9,354         13,571        45.08

  Singapore          21,319       16,327        12,748        -21.92

  Malaysia           14,656       12,249        11,258        -8.09

  Korea South        1,887        6,715         8,006         19.23

  Russia             70,526       43,275        6,984         -83.86

  Albania            3,571        6,224         6,783         8.98

  Macau              4,403        5,411         6,242         15.36

  Kazakhstan         248          7,686         5,420         -29.48

  Indonesia          2,877        3,038         3,032         -0.20

  Angola             116          150           2,341         1460.67

  Georgia            403          1,446         2,195         51.80

  Moldova            11,048       13,512        2,041         -84.89

  Ukraine            7,992        5,245         630           -87.99

  Other              9,075        8,740         8,231         -5.82

  HS Code: 020311,                                            
  020312, 020319,                                             
  020321, 020322,                                             
  020329, 021011                                              
  021012, 021019,                                             

  160241, 160242 and                                          
  160249                                                      

  Source: WTA/GTA                                             
  China Customs                                               
  Statistics                                                  
  ------------------ ------------ ------------- ------------- -------------

  ------------------- ----------------------------------- --------- ------ -------- -----------
  Import Tariffs of                                                                 
  Hogs and Pork,                                                                    
  Effective                                                                         
  January-December,                                                                 
  2007                                                                              

                                                                                    Effective

                                                          General   MFN    V.A.T.   Rate

  Live swine                                                                        (mfn+vat)

  0103.1000           Pure-bred breeding Swine            0%        0%     13%      13.0%

  0103.9110           Other swine, weighing less than 10  50%       10%    13%      24.3%
                      kg                                                            

  0103.9120           Other swine, weighing 10 kg or      50%       10%    13%      24.3%
                      more, but less than 50 kg                                     

  0103.9200           Other swine, weighing 50 kg or more 50%       10%    13%      24.3%

  Pork                                                                              

  0203.1110           Pork of sucking pigs, fresh or      70%       20%    13%      35.6%
                      chilled                                                       

  0203.1190           Other pork, carcass or half         70%       20%    13%      35.6%
                      carcass, fresh or chilled                                     

  0203.1200           Hams, shoulders and cuts thereof,   70%       20%    13%      35.6%
                      with bones in                                                 

  0203.1900           Other pork, fresh or chilled        70%       20%    13%      35.6%

  0203.2110           Pork of sucking pig, carcass or     70%       12%    13%      26.6%
                      half carcass, frozen                                          

  0203.2190           Other pork, carcass or half         70%       12%    13%      26.6%
                      carcass, frozen                                               

  0203.2200           Hams, shoulders and cuts thereof,   70%       12%    13%      26.6%
                      with bones in                                                 

  0203.2900           Other frozen pork                   70%       12%    13%      26.6%

  Source: China                                                                     
  Customs                                                                           
  ------------------- ----------------------------------- --------- ------ -------- -----------

  ------------------- ---------------------- --------- -------- -------- -----------
  Import Tariffs on                                                      
  Pork Offal                                                             
  Effective                                                              
  January-December,                                                      
  2007                                                                   

                                                                         Effective

                                             General   MFN      V.A.T.   Rate

                                                                         (mfn+vat)

  0206.3000           Pork offal, fresh or   70%       20.0%    13%      35.6%
                      chilled                                            

  0206.4100           Pork liver, frozen     70%       20.0%    13%      35.6%

  0206.4900           Other pork offal,      70%       12.0%    13%      26.6%
                      frozen                                             

  Source: China                                                          
  Customs                                                                
  ------------------- ---------------------- --------- -------- -------- -----------

  ------------------ ----------- ----------- -------- ------ ---------------
  China Wholesale                                            
  Pork Prices On                                             
  Average, 2004-2006                                         

  (US\$/KG,                                                  \% Change
  \$1+RMB7.76)                                               

                     2004        2005        2006     2007   2006/05

  January            1.40        1.65        1.52     1.72   13.16

  February           1.45        1.69        1.43     1.79   25.17

  March              1.49        1.63        1.36            

  April              1.56        1.60        1.29            

  May                1.57        1.59        1.23            

  June               1.62        1.59        1.22            

  July               1.66        1.61        1.35            

  August             1.72        1.59        1.37            

  September          1.75        1.55        1.46            

  October            1.75        1.48        1.53            

  November           1.67        1.42        1.59            

  December           1.66        1.43        1.65            

  Source: The                                                
  Ministry of                                                
  Agriculture                                                
  ------------------ ----------- ----------- -------- ------ ---------------

  ------------------ ----------- ----------- -------- ------ ---------------
  China Wholesale                                            
  Hog Prices On                                              
  Average, 2004-2006                                         

  (US\$/KG,                                                  \% Change
  \$1+RMB7.76)                                               

                     2004        2005        2006     2007   2006/05

  January            0.84        1.05        0.82     1.02   24.39

  February           0.88        1.05        0.75     1.08   44.00

  March              0.92        0.99        0.71            

  April              0.96        0.94        0.57            

  May                0.96        0.94        0.68            

  June               1.02        0.89        0.65            

  July               1.06        0.86        0.75            

  August             1.10        0.87        0.84            

  September          1.13        0.87        0.94            

  October            1.12        0.77        0.94            

  November           1.05        0.74        0.98            

  December           1.02        0.76        1.00            

  Source: The                                                
  Ministry of                                                
  Agriculture                                                
  ------------------ ----------- ----------- -------- ------ ---------------

  ------------------ ----------- ----------- -------- ------ ---------------
  China Wholesale                                            
  Piglet Prices On                                           
  Average, 2004-2006                                         

  (US\$/KG,                                                  \% Change
  \$1+RMB7.76)                                               

                     2004        2005        2006     2007   2007/06

  January            1.20        1.44        0.97     0.98   1.03

  February           1.05        2.05        0.74     0.96   29.73

  March              1.13        1.71        1.00            

  April              1.71        1.13        0.68            

  May                1.21        1.25        0.63            

  June               1.31        1.56        0.60            

  July               1.48        1.32        0.60            

  August             1.51        1.29        0.66            

  September          1.66        0.87        0.81            

  October            1.59        0.76        0.82            

  November           1.50        0.76        0.75            

  December           1.52        0.79        0.86            

  Source: The                                                
  Ministry of                                                
  Agriculture                                                
  ------------------ ----------- ----------- -------- ------ ---------------

(End of report)