Required Report - public distribution

**Date:** 11/21/2005

**GAIN Report Number:** CH5069

CH5069

**China, Peoples Republic of**

**Biotechnology**

**Agricultural Biotechnology Report**

**2005**

**Approved by:**

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

U.S. Embassy Beijing

**Prepared by:**

Anthony Cino, Kevin Latner, Wu Bugang

**Report Highlights:**

Despite problems in transparency in the development of regulations
combined with onerous testing requirement on imported biotechnology
products, U.S. biotech soybeans and other products are selling at record
highs and are forecasted to continue doing well in the future. It seems
clear now that biotechnology will play an integral part of China's
agricultural development in the next 20 years. China is currently the
largest market for U.S. agricultural biotechnology products, is the
fifth largest producer of biotechnologically enhanced plants based on
total number of acres, and is developing a strong biotech research
program. China is set to become an even larger player in agricultural
biotechnology as it has just ratified the Biosafety Protocol. FAS
Beijing continues to work with the Chinese government in this area and
to push for increased transparency and overall market access for U.S.
biotechnology crops.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Beijing \[CH1\]

\[CH\]

Table of Contents

[**SECTION I. EXECUTIVE SUMMARY 3**](#section-i.-executive-summary)

[SECTION II. BIOTECHNOLOGY TRADE AND PRODUCTION
3](#section-ii.-biotechnology-trade-and-production)

[Biotechnology crop production in China
3](#biotechnology-crop-production-in-china)

[Biotechnology crop development in China
4](#biotechnology-crop-development-in-china)

[Importation of biotechnology crops
5](#importation-of-biotechnology-crops)

[Food aid in China 5](#food-aid-in-china)

[Potential for agricultural biotechnology exports to the United States
6](#potential-for-agricultural-biotechnology-exports-to-the-united-states)

[SECTION III. BIOTECHNOLOGY POLICY
6](#section-iii.-biotechnology-policy)

[Regulatory framework of agricultural policy
6](#regulatory-framework-of-agricultural-policy)

[Political factors and their effect on the biotech trade
8](#political-factors-and-their-effect-on-the-biotech-trade)

[Approved biotechnology products 8](#approved-biotechnology-products)

[Biotechnology products under field trials
14](#biotechnology-products-under-field-trials)

[Stacked events and simultaneous approvals
14](#stacked-events-and-simultaneous-approvals)

[Labeling policy for biotechnology products
15](#labeling-policy-for-biotechnology-products)

[China and the Biosafety Protocol 15](#china-and-the-biosafety-protocol)

[Barriers to U.S. exports of biotechnology products
15](#barriers-to-u.s.-exports-of-biotechnology-products)

[SECTION IV. MARKETING ISSUES 16](#section-iv.-marketing-issues)

[Market acceptance issues 16](#market-acceptance-issues)

[SECTION V. CAPACITY BUILDING AND OUTREACH
16](#section-v.-capacity-building-and-outreach)

[U.S. Government funded outreach and capacity building programs
16](#u.s.-government-funded-outreach-and-capacity-building-programs)

[SECTION VI. REFERENCE MATERIALS 17](#section-vi.-reference-materials)

[Reference Materials Subcategory 17](#reference-materials-subcategory)

# SECTION I. EXECUTIVE SUMMARY

China is the largest market for U.S. biotechnology crops. Despite
problems in transparency in the development of regulations combined with
onerous testing requirement on imported biotechnology products, U.S.
biotech soybeans and other products are selling at record highs and are
forecasted to continue doing well in the future.

The future of agricultural biotechnology policy in the People's Republic
of China is still in some doubt, but it seems clear now that
biotechnology will play an integral part of China's agricultural
development in the next 20 years. China is currently the largest market
for U.S. agricultural biotechnology products (predominantly imported soy
beans and domestic cotton), is the fifth largest producer of
biotechnologically enhanced plants based on total number of acres (3.7
million hectares in 2004), and is developing a strong biotech research
program, spending over 363 million RMB (about \$44 million USD) in 2003,
a threefold increase over 1998 expenditures. China is set to become an
even larger player in agricultural biotechnology as it has just ratified
the Biosafety Protocol.

While China has begun to accept more domestic and imported biotechnology
products, significant barriers still exist for U.S. biotech products
entering the market in China. These barriers include requirements that
product be fully approved first from the originating country before
application for approval in China, duplicative testing for products
already approved in the United States, lack of regulatory framework to
treat stacked events, and holding only two windows a year for acceptance
of applications for new products.

Several internal and external factors seem to be influencing China's
biotech policy. First, China has sought self-reliance in grains, adding
pressure for new technologies to improve output. Bureaucratic
competition seems to exist between the several ministries within the
government over control of biotech policy. Trade concerns exist over
countries like Japan and Korea who have threatened not to import rice
and corn from China if it become a producer of biotech varieties. And
finally, China has made food security and protection of domestic
development of the biotech field a priority.

Several ministries are influential in biotechnology, however the
Ministry of Agriculture is the country's primary governing body over
agricultural biotechnology issues. Its Ministerial Decrees 8, 9 and 10
largely create the legal framework under which these products are
regulated. Other government agencies, such as the General Administration
on Quality Supervisions Inspection and Quarantine (AQSIQ), the Ministry
of Health (MOH) and the State Environmental Protection Administration
(SEPA) are also involved. SEPA is the leading agency on the Biosafety
Protocol and has allegedly been working on new overarching regulations
that would supercede the previous MOA decrees. There is no timeframe for
the promulgation of these regulations.

FAS Beijing is working with the Chinese government to facilitate
programs on building their capacity to better manage the biotechnology
field. FAS Beijing also continues to push for increased transparency in
the development of regulations governing this field and look for ways to
promote overall market access for U.S. biotechnology crops.

# SECTION II. BIOTECHNOLOGY TRADE AND PRODUCTION

## Biotechnology crop production in China

China has commercialized four genetically modified plants since 1997,
including cotton, tomato, sweet pepper and petunia, and China is now the
fifth largest producer of agricultural biotechnology crops in the world
by acreage (behind the United States, Argentina, Canada, and Brazil) at
3.7 million hectares in 2004. Pest-resistant cotton is the largest
biotechnology enhanced product produced in China. The production area
estimate for Bt cotton was 2.8 million hectares in 2003, which,
according to a MOA survey, increased to 3.3 MHA in 2004/2005. The result
is that about 60 percent of cotton produced in China is now Bt cotton,
which is 8 percent higher than 2003. In the Yellow River Region, Bt
varieties accounted for 95 percent, and the Yangtze River Region 70
percent. (CH5032)

There seems to be an indication that a certain level of commercial
production occurs outside of official approvals and statistics. A survey
started in 2002 at the Biochemical Analysis and Experiment Center of Ho
Chi Minh Agricultural University found that although corn is not a
biotech product that has been approved for commercial production, 30% of
the corn sampled from China was in fact genetically modified. The
imported GM corn mainly contained pest and herbicide resistant genes.
(VM5050)

For a detailed list of agricultural biotechnology products approved for
commercial production, see Section III.

## Biotechnology crop development in China

China does not regularly publish lists on products undergoing
development in China. Recent information from the Ministry of Science
and Technology suggest that hundreds of events are undergoing testing.
Generally, the Chinese government has made the advancement of the
biotechnology field a high priority. China has the most sophisticated
agricultural biotechnology program in the developing world.

There is no private sector development in China. Seeds in China are all
produced by public research institutes and universities funded by the
Chinese government. Outside investment in this field was possible until
2002 when such investment became illegal. In 2003, China's government
spent over 363 million RMB (about \$44 million USD) on biotechnology
research, three times 1998 funding levels.

China has developed several of its own transgenic grains, but none have
been commercialized. China is most notably working on the development of
a rice variety that is resistant to bacterial blight known as Xa21. This
would be the first biotechnology enhanced rice to be produced in China.
It is expected that China will use this first biotechnology rice product
as a means of paving the way for more domestic product approvals.

China recently announced the approval of a new insect resistant GM
cotton crop (YinMian 2). The crop allegedly can resist bollworms and
media in China reports an increase in yield of 25%. China's Cotton
Research Institute is using transgenic technology to breed new varieties
of cotton with disease resistance and better fiber quality, but no
detailed results were available yet and no varieties have been
commercialized. (CH5032)

## Importation of biotechnology crops

China has approved 4 biotech products for import, (soy beans, corn,
canola, and cotton) and is becoming a significant importer of U.S.
biotech products. In February of 2004 the Ministry of Agriculture
granted safety certificates to the first round of genetically altered
crops under the new regulations. Since that time, China has gone on to
approve a series of biotechnology improved crops from the U.S. The most
significant recent approval was Monsanto's NK603 corn. Due to China's
strict customs regulations under AQSIQ Ministerial Decree 62, the U.S.
was concerned that traces of biotech corn found in U.S. soy bean
shipments would be grounds for China's denial of the shipments based on
food safety. The approval of this corn variety has eased these concerns.
The complete list to date of approved biotech imports is as follows.

  ------------- -------------------------- ------------------ ----------- --------------
  **Imported                                                              
  GMOs Approved                                                           
  for                                                                     
  Processing                                                              
  Purposes**                                                              

  **Crop**      **Trait**                  **Developer**      **Event**   **Validity**

  Soybeans      Herbicide tolerance        Monsanto           GTS40-3-2   2004-2007

  Corn          Herbicide tolerance        Monsanto           GA21        2004-2007

  Corn          Insect resistance          Monsanto           MON810      2004-2007

  Cotton        Insect resistance          Monsanto           531         2004-2009

  Cotton        Herbicide tolerance        Monsanto           1445        2004-2009

  Corn          Insect resistance          Monsanto           MON863      2004-2007

  Canola        Herbicide tolerance        Monsanto           GT73        2004-2007

  Corn          Insect resistance and      Syngenta           Bt176       2004-2007
                herbicide tolerance                                       

  Corn          Insect resistance and      Syngenta           Bt11        2004-2007
                herbicide tolerance                                       

  Corn          Insect resistance and      Dupont /Dow        1507        2004-2007
                herbicide tolerance        Agrosciences                   

  Corn          Insect resistance and      Bayer CropScience  T25         2004-2007
                herbicide tolerance                                       

  Canola        Herbicide tolerance        Bayer CropScience  Ms1Rf1      2004-2007

  Canola        Herbicide tolerance        Bayer CropScience  Ms1Rf2      2004-2007

  Canola        Herbicide tolerance        Bayer CropScience  Ms8Rf3      2004-2007

  Canola        Herbicide tolerance        Bayer CropScience  T45         2004-2007

  Canola        Herbicide tolerance        Bayer CropScience  Topas19/2   2004-2007

  Canola        Herbicide tolerance        Bayer CropScience  Oxy-235     2004-2007

  Corn          Herbicide tolerance        Monsanto           NK603       2005-2008
  ------------- -------------------------- ------------------ ----------- --------------

## Food aid in China

China is no longer a recipient of food aid. The final delivery of food
aid from the World Food Program (WFP) was delivered to China in April of
2005 after 25 years of being an aid recipient. The WFP has determined
that China can now afford to eliminate its areas of extreme poverty by
itself.

## Potential for agricultural biotechnology exports to the United States

China has produced and is producing several biotechnologically enhanced
crops that have not yet passed through the U.S. regulatory system. See
the list of commercialized crops for more details.

# SECTION III. BIOTECHNOLOGY POLICY

## Regulatory framework of agricultural policy

China's Ministry of Agriculture has been delegated the lead
biotechnology agency in agriculture with several other agency's
involvement, including China's General Administration on Quality and
Supervision, Inspection and Quarantine (AQSIQ), China's State
Environmental Protection Administration (SEPA), the Ministry of Science
and Technology (MOST), the Ministry of Commerce (MOFCOM), and the
Ministry of Health (MOH).

The biotechnology regulatory environment for agriculture outlined in the
State Council's regulations *"Food and Agricultural Import Regulations
and Standards; Agricultural Genetically Modified Organisms Safety
Administration Regulations 2001"* (CH1056) is largely governed by MOA's
implementing regulations, Ministerial Decrees 8, 9 and 10. These
decrees: *Measures on the Safety Evaluation Administration of
Agricultural GMOs*, *Measures on the Safety Evaluation Administration of
Agricultural GMO Imports*, and *Measures on Agricultural GMO Labeling
Administration* (CH2002) cover domestic approval, import approval and
labeling respectively.

Approval for domestic cultivation:

The approval process for biotechnology products involves five steps:
research, pilot experiment, environmental release, experimental
production, and safety certification. Safety certificates are issued by
the MOA's Biosafety Office of Agricultural GMO, and are not good
nationally and can only be used in the provinces it has been granted
for. The Biosafety Office of Agricultural GMO delegates testing to the
National Biosafety Committee. The following steps are taken exclusively
for products that will undergo local development and cultivation.

**(1)** First the applicant must assemble the appropriate materials as
outlined in Decree 8, including a report on experimental research the
applicant has already undertaken. **(2)** After submitting the materials
and review by MoA's Biosafety Office of Agricultural GMO, the applicant
may begin "Medium testing," which are controlled tests at a small level
in a controlled environment. **(3)** Upon completion of the test and
passing the safety examination of the National Biosafety Committee, an
application is made back to the Biosafety Office of Agricultural GMO to
begin the next round of testing known as "environmental release."
Environmental release is medium scale test in natural environment with
specified safety precautions. **(4)** Upon completion of these tests and
passing the safety examination of the National Biosafety Committee, an
application is made back to the Biosafety Office of Agricultural GMO to
begin the final round of testing known as "production testing."
Production testing is large-scale testing conducted prior to final
approval. **(5)** Finally, after passing the safety evaluation of the
National Biosafety Committee, the applicant may apply to the Biosafety
Office of Agricultural GMO for a safety certificate. Upon receipt of the
application the Biosafety Office of Agricultural GMO will arrange for
the National Biosafety Committee to conduct a safety evaluation. The
applicant, upon passing the evaluation, is granted the safety
certificate and is allowed to move on to the usual examinations,
registrations, evaluations and approval formalities.

*Importation into the China market:*

Agricultural biotechnology products imported into China must be approved
by the Ministry of Agriculture. The approval process varies depending on
whether the product's intended use (research, production or as a raw
material, which makes up all products on the table below) and on the
safety level, rating the potential threat of the organism to health and
the environment.

Generally, for importation of products for raw material, which consists
of the bulk of exports from the U.S. to China, Article 12 of decree 9
states that foreign company must apply for an agricultural GMO safety
certificate from the Biosafety Office of Agricultural GMO. The
regulations require applicants to provide a variety of materials and to
have certification that the exporting country has allowed use of
products and sells them in its domestic market and that they have
undergone tests there showing no harm to animals, plants and the
ecological environment.

Again, different conditions apply depending on the use and nature of the
product to be imported. Note that products imported for production must
also go through the series of field test described in the section above.
Importers are encouraged to consult these regulations in detail.

Import safety certificates are good for three years, and renewal can be
initiated one year prior to their expiration. The safety certificates
issued for the first phase of biotechnology product approvals under the
new regulations are due to expire in 2007. The decision to renew these
and subsequent certificates will focus on changes in product use over
the initial certification, whether intentional or not.

Labeling:

For labeling see the relevant section below.

Other Ministries:

China's State Environmental Protection Administration (SEPA) has the
lead authority for the Biosafety Protocol, which China ratified on April
27, 2005, and thus is charged with developing implementing regulations.
Though SEPA has not published any new or revised laws with regard to
implementation of the Protocol, SEPA has continued to state its intent
to develop an overarching Biosafety Law that would take precedence over
the Ministry of Agriculture\'s decrees regulating agricultural
biotechnology. SEPA has stated that work on the new biosafety law began
5 years ago and has been held up due to their importance and
comprehensive nature.

Ministry of Science and Technology (MOST) has also been an active
participant in the development of biotechnology policy and
implementation. MOST also manages a large amount of central government
funds that are distributed to Chinese institutes researching new strains
of biotech seeds and foods.

The General Administration of Quality Supervision, Inspection and
Quarantine (AQSIQ) is responsible for nation-wide management of the
inspection and quarantine for entry and exit of all GMO products.
AQSIQ's local entry and exit inspection and quarantine agencies are
responsible for the inspection and quarantine of entry and exit GMO
products within each jurisdiction. AQSIQ's Ministerial Decree 62
(CH4017) governs the steps that should be taken at customs when
importing or exporting biotechnologically enhanced goods.

## Political factors and their effect on the biotech trade

Factors influencing the development of biotech policy in China include:

Self-reliance: China's efforts over the last several years to become
self-reliant on grain (official sources indicate self-reliant as being
85-90% self-sufficiency) have created pressure on the government to
adopt more progressive biotechnology policies.

Bureaucratic Competition: Inter-agency struggles exist over the future
of biotechnology policy in China. China's signing of the Biosafety
Protocol and the need for new national regulations to bring itself into
conformity with the Protocol have cast some doubts on who will take the
country forward in this area. MoA largely regulates this area now,
however SEPA (who is seen as more cautious on biotech issues) is said to
be drafting the regulations to go with the Protocol. MOST (who has been
a strong supporter of development of biotechnology in China) has also
been influential in the development of policy.

Trade Concerns: There is uncertainty over the impact that further GM
crop commercialization would have on Chinese agricultural exports.
Although the country has become a net farm product importer in recent
years, it is concerned about losing export markets for non-GM crops and
food products. China exports corn and rice to Korea and Japan and both
have said they will stop importing if China commercializes biotech
varieties of these products.

Food Security: China continues to place great emphasis on food security
and developing a domestic biotechnology capacity, and wants to insure
the health of its biotechnology sector as it opens its market.

Thus while China develops biotech rice due to food security concerns,
market concerns have lead to the prohibition on planting biotech
soybeans. This prohibition against planting new soybean strands exists,
despite the fact that RoundupReady Soybeans are cleared for import, so
that China can maintain a "GMO Free" label when exporting Chinese
soybeans to those European and Asian markets that restrict the import of
biotech-derived foods. (CH5017) Thus policy makers are still struggling
with competing interests.

In the policy realm, China has sent mixed signals to the global biotech
industry and agricultural traders over the years. Having pursued a
promotional approach in the mid-1980s, Beijing introduced a more
cautionary stance towards GM crops in the late 1990s. A 2002 ban on
foreign investment in the local GM seed industry has set back efforts by
international biotechnology firms to develop a foothold in this
potentially lucrative market. Nonetheless, public funding to the
biotechnology sector increased in the late 1990s, and promoting genetic
engineering as a key instrument of food security policy.

## Approved biotechnology products

The following is a list of food products that have been approved for
commercial production by China. The list does not include the petunia
events that have been approved nor animal vaccine events that have also
received approval.

  ------------ ------------ ------------------- -------------- -------------- --------------
  **Ag GMOs                                                                   
  approved for                                                                
  commercial                                                                  
  production                                                                  
  in China (as                                                                
  of March 1,                                                                 
  2005)**                                                                     

  **Crop**     **Trait**    **Developer**       **Event**      **Commercial   **Validity**
                                                               production     
                                                               area**         

  Cotton       Insect       Monsanto            NC33B          Hebei,         2003-2007
               resistance                                      Shandong       

  Cotton       Insect       Biotech Research    Bt cotton      Shanxi, Anhui, N/A
               resistance   Institute, CAAS                    Shandong,      
                                                               Hubei          

  Cotton       Insect       Monsanto            NC32B          Anhui          2000-2004
               resistance                                                     

  Cotton       Insect       Monsanto            PM1560BG       Anhui          2000-2004
               resistance                                                     

  Cotton       Insect       Biotech Research    SGK321         Anhui, Hebei,  1999-2004,
               resistance   Institute, CAAS                    Henan,         2002-2005
                                                               Shandong,      
                                                               Shanxi         

  Cotton       Insect       Biotech Research    GK1            Anhui          2003-2007
               resistance   Institute, CAAS                                   

  Cotton       Insect       Monsanto            DP410B         Anhui, Henan,  2003-2007
               resistance                                      Hubei, Hunan,  
                                                               Jiangsu,       
                                                               Jiangxi,       
                                                               Sichuan        

  Sweet pepper Virus        Beijing University  PK-SP01        Beijing,       1999-2004
               resistance                                      Fujian, Yunnan 

  Sweet pepper Virus        Beijing University  PK-TM8805R     Beijing,       1999-2004
               resistance                                      Fujian, Yunnan 

  Tomato       Long shelf   Microorganism       Da Dong No. 9  Beijing        2000-2004
               life         Research Institute,                               
                            CAS                                               

  Cotton       Insect       Biotech Research    GK-12          Hebei, Henan,  1999-2004
               resistance   Institute, CAAS                    Jiangsu,       
                                                               Shandong,      
                                                               Xinjiang       

  Cotton       Insect       Biotech Research    GK91-5         Hebei, Henan,  1999-2004,
               resistance   Institute, CAAS                    Liaoning,      2003-2007
                                                               Shanxi,        
                                                               Xinjiang       

  Cotton       Insect       Monsanto            DP99B          Hebei, Henan,  2003-2007
               resistance                                      Shandong       

  Cotton       Insect       Biotech Research    SGK-23         Henan,         2003-2007
               resistance   Institute, CAAS                    Shandong,      
                                                               Anhui, Hebei   

  Cotton       Insect       Biotech Research    SGK-27         Henan, Hebei,  2003-2007
               resistance   Institute, CAAS                    Anhui, Hubei,  
                                                               Shandong       

  Cotton       Insect       Biotech Research    SGKz4          Henan,         2004-2008
               resistance   Institute,                         Shandong       
                            CAAS/Cotton                                       
                            Research Institute,                               
                            CAAS                                              

  Cotton       Insect       Biotech Research    GK19           Hubei,         2003-2007,
               resistance   Institute, CAAS                    Xinjiang       2002-2005

  Cotton       Insect       Biotech Research    GK22           Jiangsu        2002-2005
               resistance   Institute, CAAS                                   

  Cotton                    Microorganism       DR409          Shanxi,        2004-2008
                            Research Institute,                Shandong,      
                            CAS/Cotton Reserch                 Henan          
                            Institute of Shanxi                               
                            Academy of Ag.                                    
                            Sciences                                          

  Cotton       Insect       Monsanto            DPH37B         Anhui          N/A
               resistance                                                     

  Cotton       Insect       Monsanto            NC20B          Henan          N/A
               resistance                                                     

  Cotton       Insect       Biotech Research    GK30           Shandong,       
               resistance   Institute,                         Henan          
                            CAAS/Shandong                                     
                            Cotton Research                                   
                            Center                                            

  Cotton       Insect       Biotech Research    GK31           Shandong        
               resistance   Institute,                                        
                            CAAS/Shandong                                     
                            Cotton Research                                   
                            Center                                            

  Cotton       Insect       Biotech Research    GK32           Shandong,       
               resistance   Institute,                         Jiangsu        
                            CAAS/Shandong                                     
                            Cotton Research                                   
                            Center                                            

  Cotton       Insect       Biotech Research    GK33           Henan,          
               resistance   Institute,                         Shandong       
                            CAAS/Shandong                                     
                            Cotton Research                                   
                            Center                                            

  Cotton       Insect       Biotech Research    GK34           Shandong        
               resistance   Institute,                                        
                            CAAS/Shandong                                     
                            Cotton Research                                   
                            Center                                            

  Cotton       Insect       Biotech Research    GK35           Shandong        
               resistance   Institute,                                        
                            CAAS/Shandong                                     
                            Cotton Research                                   
                            Center                                            

  Cotton       Insect       Biotech Research    GK39           Hebei, Henan    
               resistance   Institute,                                        
                            CAAS/Hebei Hejian                                 
                            Guoxin Rural                                      
                            Extension Service                                 

  Cotton       Insect       Biotech Research    GK44           Henan           
               resistance   Institute,                                        
                            CAAS/Hebei Hejian                                 
                            Guoxin Rural                                      
                            Extension Service                                 

  Cotton       Insect       Biotech Research    GK45           Henan, Hebei    
               resistance   Institute,                                        
                            CAAS/Hebei Handan                                 
                            Research Institute                                
                            of Ag. Sciences                                   

  Cotton       Insect       Biotech Research    GK51           Anhui           
               resistance   Institute,                         (Huainan),     
                            CAAS/Jiangsu Siyang                Jiangsu        

  Cotton       Insect       Biotech Research    GK52           Shandong        
               resistance   Institute,                                        
                            CAAS/Shandong                                     
                            Cotton Research                                   
                            Center                                            

  Cotton       Insect       Biotech Research    GK58           Jiangsu         
               resistance   Institute,                                        
                            CAAS/Jiangsu Dafeng                               
                            Cotton Breeding                                   
                            Farm                                              

  Cotton       Insect       Biotech Research    GKz1           Henan, Shaanxi  
               resistance   Institute,                                        
                            CAAS/Shandong Lunan                               
                            Ag Extension                                      
                            Service                                           

  Cotton       Insect       Biotech Research    GKz2           Henan, Shaanxi  
               resistance   Institute,                                        
                            CAAS/Shandong Lunan                               
                            Ag Extension                                      
                            Service                                           

  Cotton       Insect       Biotech Research    GKz8           Hubei, Jiangsu  
               resistance   Institute,                                        
                            CAAS/Shandong Lunan                               
                            Ag Extension                                      
                            Service                                           

  Cotton       Insect       Biotech Research    GKz10          Jiangsu,        
               resistance   Institute,                         Shandong       
                            CAAS/Shandong                                     
                            Cotton Research                                   
                            Center                                            

  Cotton       Insect       Biotech Research    GKz11          Hebei, Henan    
               resistance   Institute,                                        
                            CAAS/Hebei Handan                                 
                            Research Institute                                
                            of Ag                                             

  Cotton       Insect       Biotech Research    GKz12          Jiangsu,        
               resistance   Institute,                         Shandong       
                            CAAS/Shandong                                     
                            Cotton Research                                   
                            Center                                            

  Cotton       Insect       Biotech Research    GKz13          Jiangsu,        
               resistance   Institute,                         Shandong       
                            CAAS/Shandong                                     
                            General Seed                                      
                            Station                                           

  Cotton       Insect       Biotech Research    GKz17          Hubei, Hunan    
               resistance   Institute,                                        
                            CAAS/Hunan Cotton                                 
                            Science Research                                  
                            Institute                                         

  Cotton       Insect       Biotech Research    GKz18          Jiangxi,        
               resistance   Institute,                         Zhejiang       
                            CAAS/Zhejiang Cixi                                
                            Academy of Ag                                     
                            Sciences                                          

  Cotton       Insect       Biotech Research    GKz19          Hebei, Henan    
               resistance   Institute,                                        
                            CAAS/Hebei Academy                                
                            of Ag & Forestry                                  
                            Sciences                                          

  Cotton       Insect       Biotech Research    GKz20          Jiangsu         
               resistance   Institute,                                        
                            CAAS/Jiangsu Keteng                               
                            Cotton Co. Ltd                                    

  Cotton       Insect       Biotech Research    GKz21          Hebei, Henan    
               resistance   Institute,                                        
                            CAAS/Hebei Hejian                                 
                            Guoxin Ag Extension                               
                            Service                                           

  Cotton       Insect       Biotech Research    GKz22          Shandong        
               resistance   Institute,                                        
                            CAAS/Shandong                                     
                            Cotton Science                                    
                            System Engineering                                
                            Co.                                               

  Cotton       Insect       Biotech Research    GKz23          Anhui, Hubei    
               resistance   Institute,                                        
                            CAAS/Nanjiang                                     
                            Agricultural                                      
                            University                                        

  Cotton       Insect       Biotech Research    GKz25          Anhui,          
               resistance   Institute,                         Shandong       
                            CAAS/Shandong                                     
                            Cotton Research                                   
                            Center                                            

  Cotton       Insect       Biotech Research    GKz26          Jiangsu,        
               resistance   Institute,                         Shandong       
                            CAAS/Shandong                                     
                            Cotton Research                                   
                            Center                                            

  Cotton       Insect       Biotech Research    GKz27          Hubei, Jiangsu  
               resistance   Institute,                                        
                            CAAS/Jiangsu                                      
                            Academy of Ag                                     
                            Sciences                                          

  Cotton       Insect       Biotech Research    GKz29          Jiangsu,        
               resistance   Institute,                         Shandong       
                            CAAS/Shandong                                     
                            Cotton Research                                   
                            Center                                            

  Cotton       Insect       Biotech Research    GKz32          Jiangsu         
               resistance   Institute,                                        
                            CAAS/Jiangsu                                      
                            Yancheng Xinyang Ag                               
                            Experiment Station                                

  Cotton       Insect       Biotech Research    GKz33          Hubei           
               resistance   Institute,                                        
                            CAAS/Hubei Huimin                                 
                            Seed Co.                                          

  Cotton       Insect       Biotech Research    GKz34          Sichuan         
               resistance   Institute,                                        
                            CAAS/Sichuan                                      
                            Academy of Ag                                     
                            Sciences                                          

  Cotton       Insect       Biotech Research    GKz39          Jiangsu,        
               resistance   Institute,                         Shandong,      
                            CAAS/Shandong                                     
                            Jiyang Luyou Cotton                               
                            Institute                                         

  Cotton       Insect       Biotech Research    GKz41          Hebei, Henan    
               resistance   Institute,                                        
                            CAAS/Hebei Handan                                 
                            Academy of Ag                                     
                            Sciences                                          

  Cotton       Insect       Biotech Research    GKz(zhong)39   Henan,          
               resistance   Institute,                         Shandong,      
                            CAAS/Cotton                        Anhui          
                            Research Institute,                               
                            CAAS                                              

  Cotton       Insect       Biotech Research    RH-5           Anhui, Henan,   
               resistance   Institute,                         Shandong       
                            CAAS/Cotton                                       
                            Research Institute,                               
                            CAAS                                              

  Cotton       Insect       Biotech Research    sGK3           Hebei,          
               resistance   Institute,                         Shandong       
                            CAAS/Hebei Hejian                                 
                            Guoxin Ag Extension                               
                            Service                                           

  Cotton       Insect       Biotech Research    sGK10          Hebei, Henan    
               resistance   Institute,                                        
                            CAAS/Beijing Silver                               
                            Land Biotech Co.                                  

  Cotton       Insect       Biotech Research    sGK11          Hebei, Henan    
               resistance   Institute,                                        
                            CAAS/Beijing Silver                               
                            Land Biotech Co.                                  

  Cotton       Insect       Biotech Research    SGK36          Hebei, Henan    
               resistance   Institute,                                        
                            CAAS/Henan Xinxiang                               
                            Jinke Cotton                                      
                            Research Institute                                

  Cotton       Insect       Biotech Research    SGK35          Henan           
               resistance   Institute,                                        
                            CAAS/Beijing Silver                               
                            Land Biotech Co.                                  

  Cotton       Insect       Biotech Research    sGK156         Anhui, hebei,   
               resistance   Institute,                         Henan,         
                            CAAS/Cotton                        Shandong       
                            Research Institute,                               
                            CAAS                                              

  Cotton       Insect       Biotech Research    sGK3017        Anhui, Hebei,   
               resistance   Institute,                         Henan,         
                            CAAS/Cotton                        Shandong       
                            Research Institute,                               
                            CAAS                                              

  Cotton       Insect       Biotech Research    sGKz2          Henan, Jiangsu  
               resistance   Institute,                                        
                            CAAS/Nanjing Ag                                   
                            University                                        

  Cotton       Insect       Biotech Research    sGKz4          Anhui, Hubei    
               resistance   Institute,                                        
                            CAAS/Cotton                                       
                            Research Institute,                               
                            CAAS                                              

  Cotton       Insect       Biotech Research    sGKz6          Hebei, Henan    
               resistance   Institute,                                        
                            CAAS/Hebei Handan                                 
                            Academy of Ag.                                    
                            Scieices                                          

  Cotton       Insect       Institute,          sGKz8          Hebei,          
               resistance   CAAS/Beijing Silver                Shandong       
                            Land Biotech Co.                                  

  Cotton       Insect       Biotech Research    sGKz9          Anhui, Jiangsu  
               resistance   Institute,                                        
                            CAAS/Jiangsu                                      
                            Academy of Ag                                     
                            Sciences                                          

  Cotton       Insect       Biotech Research    SGKz980        Anhui, Henna,   
               resistance   Institute,                                        
                            CAAS/Cotton                                       
                            Research Institute,                               
                            CAAS                                              

  Cotton       Insect       Biotech Research    SGKz2018       Anhui, Henan,   
               resistance   Institute,                         Hubei,         
                            CAAS/Cotton                        Shandong       
                            Research Institute,                               
                            CAAS                                              

  Cotton       Insect       Biotech Research    SGKzBZ12       Anhui, Henan,   
               resistance   Institute,                         Hubei,         
                            CAAS/Cotton                        Shandong       
                            Research Institute,                               
                            CAAS                                              
  ------------ ------------ ------------------- -------------- -------------- --------------

## Biotechnology products under field trials

China allows and requires field-testing of biotechnology crops targeted
for cultivation. Permission for all testing and final issuance of a
safety certificate is handled by the Ministry of Agriculture's Biosafety
Office or Agricultural GMO. After passing "medium testing," defined as
"small-scale experiments conducted in a controlled system or under
controlled conditions," China requires applicants to go through two
field-tests before being approved for a safety certificate. The first
test is the "environmental release" test, defined as "medium-scale
experiments conducted under natural conditions with proper safety
protection." This is followed by the "production testing," which is
carried out on a large-scale prior to production and application.
Industry states this process of bringing a product to market for
cultivation takes eight to ten years if there are no serious problems.

China does not regularly publish a list of products under development.
Information from the Ministry of Science and Technology indicates that
since 2001 China has initiated 333 limited field tests and 158 enlarged
field tests of biotechnology products.

## Stacked events and simultaneous approvals

At the moment China's regulations do not touch on stacked events and
thus no formal approval process for stacked events exists. China has
approved cases of stacked events for local cultivation and officials
have indicated that China will consider approval for importation of
products with stacked events for processing on a case-by-case basis.
China has not decided how it will regulate this area in the future.
China also does not allow simultaneous approvals in the U.S. and China.
China currently requires approvals to be undertaken in the home country
before approval can be sought in China.

## Labeling policy for biotechnology products

China's labeling regulations, governed by Ministry of Agriculture Decree
10 (CH2002), require agricultural biotech products listed in the
regulations be labeled and prohibits the importation and sale of any
unlabeled or mislabeled products. The listed products are:

1\. Soybean seed, soybean, soybean powder, soybean oil and soybean meal;

2\. Corn seeds, corn, corn oil and corn powder;

3\. Rape seed for planting, rape seed, rape oil and rape meal;

4\. Cotton seed;

5\. Tomato seed, fresh tomato and tomato jam.

Decree 10 states the reason for the regulation is "to strength the
administration of Ag GMO labeling, standardize the selling activities of
Ag GMOs, guide the production and consumption of Ag GMOs and protect
consumers' right to be informed." The regulations spell out the type of
labeling required as well as the specific language that is required on
the individual labels.

## China and the Biosafety Protocol

China's State Council ratified the Biosafety Protocol on April 27, 2005.
This was not in time for the 2nd Meeting of the Parties (MOP) in
Montreal, thus China participated as an observer. China is expected to
be an active and influential participant in the MOP-3 meetings taking
place in March 2006 in Brazil.

As the lead authority for the Biosafety Protocol, China's State
Environmental Protection Agency (SEPA) is charged with developing
implementing regulations. Though SEPA has not published any new or
revised laws with regard to implementation of the Protocol, SEPA has
continued to state its intent to develop an overarching Biosafety Law
that would take precedence over the Ministry of Agriculture\'s decrees
regulating agricultural biotechnology.

## Barriers to U.S. exports of biotechnology products

Several barriers to U.S. exports of biotechnology products to China
include:

No simultaneous approvals: China requires U.S. regulatory approval for a
product before a product may apply for approval in China. This system
makes it impossible to apply simultaneously in both markets and thus
causes a delay on bringing U.S. agricultural biotechnology products to
the Chinese market.

Windows for submission: China has only two windows a year when companies
can submit applications for new products, once in March and another in
September.

Lack of clarity on stacked events: China has not yet developed policy on
stacked events, and no formal approval process for stacked events
exists. China has approved cases of stacked events for local cultivation
and officials have indicated that China will consider approval for
importation of products with stacked events for processing on a
case-by-case basis. Lack of clarity in this area is a concern of
industry.

Duplicated testing for imports: When goods are being approved for import
to China they must first prove they have been approved by their host
country. They are then required to undergo similar tests in China before
being approved for a safety certificate. The extra testing in China
means a delay of one to two years when bringing a product to market.

# SECTION IV. MARKETING ISSUES

## Market acceptance issues

China's consumers are by and large open to and acceptant of agricultural
biotechnology products. Generally, there does not seem to be a negative
stigma attached to biotech foods as exists in some other Asian markets.
A recent nation-wide joint study by Lin, Somwaru and Tuan of USDA's
Economic Research Service and Huang and Bai of the Chinese Academy of
Sciences' Center for Chinese Agricultural Policy found about 60 percent
or higher of respondents were willing to purchase biotech foods
(including soy beans and rice) without any price discrimination. Thus,
these consumers would not differentiate between biotech and non-biotech
foods when at a marketplace if the prices were equal. Another 20 percent
would only buy biotech food when a price discount was offered. Finally
another 20 percent of respondents to the study would not accept biotech
foods (with the exception of neutrceutical biotech rice) regardless of
any discounts in price.

Another study by the same group found that Chinese consumers' awareness
to biotech foods was low, with about 75 percent having never heard of
biotech foods or having heard of them on an occasional basis. The study
found that a great majority of Chinese consumers favorable or neutral
attitude toward biotech foods, with only 5-15 percent of urban consumers
opposed to biotech foods.

These findings seem consistent with a recent study by the Asian Food
Information Centre's study on communicating with consumers on
biotechnology that found that a "majority of consumers adopted an
open-minded position towards biotechnology foods and did not reject them
per se."

# SECTION V. CAPACITY BUILDING AND OUTREACH

## U.S. Government funded outreach and capacity building programs

The U.S. and China are working closely on several fronts to assist China
in its capacity to effectively and fairly handle its biotechnology
sector. The U.S.- China High-Level Biotechnology Joint Working Group
(BWG) was established in July 2002 as a way to address bilateral
biotechnology issues of mutual interest. To supplement the policy
discussions, a technical subgroup (TWG) was established in July 2003.
Together, this forum has become a constructive means by which the U.S.
and China regularly engage to address issues of concern.

During the 5th BWG held in Beijing on August 15-16, the U.S. and China
signed a memorandum of understanding to undertake a biotechnology
capacity building initiative funded by the U.S. Trade and Development
Agency.

Some technical cooperation programs agreed to at the last BWG are a
Technical Workshop on Safety Assessment, a Sampling/Testing Expert
Exchange, a Veterinary Biologics visit in Iowa, a Biotechnology Short
Course, an Insect Resistance Management Collaboration, other research
collaborations, APEC support and future technical meetings.

# SECTION VI. REFERENCE MATERIALS

## Reference Materials Subcategory

For more on studies on the marketing of biotechnology products, please
see "Consumer Attitudes Toward Biotech Foods in China" by W. Lin, A.
Somwaru and F. Tuan of the Economic Research Service of the U.S.
Department of Agriculture and J. Huang and J. Bai of the Center for
Chinese Agricultural Policy of the Chinese Academy of Sciences. The
study is a selected paper prepared for presentation at the American
Agricultural Economics Association Annual Meeting in Denver, Colorado on
August 1-4, 2004.

A second study by the same authors titled "Consumers' Willingness to Pay
for Biotech Foods in China" was prepared for presentation at the
American Agricultural Economics Association Annual Meeting in
Providence, RI and is dated May 12, 2005.

Yet another study on the market in China is the Asian Food Information
Centre's "Communicating with Consumers on Food Biotechnology," prepared
in May of 2005. The survey tracks consumer views on biotech foods from a
variety of angles. The report looks at China, India, and the
Philippines.

Other useful sources for information are:

USDA GAIN Reports:
<http://www.fas.usda.gov/scriptsw/attacherep/default.asp>

The International Service for the Acquisition of Agri-biotech
Applications: [www.isaaa.org](http://www.isaaa.org/)