United States

Department

of Agriculture

www.ers.usda.gov

Electronic Outlook Report from the Economic Research Service

FAU-79-02

August 2003

China's Exports Outpaced

Imports During WTO Year One

Abstract 

Many analysts predict that China will become a larger importer of agricultural products

following its accession to the World Trade Organization (WTO). However, during 2002,

its first year as a WTO member, China actually became a larger net exporter of agricultural products. China provided incentives to encourage corn exports, and soybean

imports were interrupted by uncertainty over China's biotechnology regulations. Grain

imports were minimal during 2002 due to tight world supplies that pushed the delivered

price of imports above China's domestic grain prices. China's exports of horticultural

crops accelerated, but its poultry exports were hurt by concerns about disease and antibiotic residues. Historically, U.S. exports of bulk commodities to China have seen wide

year-to-year swings. Sales of grain and cotton to China have been on the downswing

since 1998. However, steady growth in purchases of consumer-oriented products since

the early 1990s has made China a larger, more stable market for U.S. agricultural products.

Keywords: International trade, agriculture, policy, China, imports, exports, WTO, statistics, soybeans, vegetables, corn, cotton, tariff rate quota.

Acknowledgements 

Helpful comments were received from Praveen Dixit, Bryan Lohmar, Francis Tuan, and

Carol Whitton of ERS, J. Wade Sheppard and John Wade of the Foreign Agricultural

Service, Carol Goodloe of the Office of the Chief Economist, David Stallings of the

World Agricultural Outlook Board, and Ming Chen of the U.S. General Accounting

Office. Carol Whitton and John Dyck provided helpful guidance on use of agricultural

trade data.

Fred Gale and James Hansen
China's long-anticipated accession to the World Trade

Organization (WTO), effective in December 2001, is

expected to give a further boost to China's export-oriented manufacturing sector and attract much-needed foreign capital and technology. China's agricultural sector,

however, is expected to have difficulty competing in a

more liberalized trade environment. Many analysts have

predicted that China's WTO commitments to cut tariffs,

to reduce the role of state trading monopolies, and to

streamline regulations will open China's market to

greater imports of agricultural products. Its commitment

to eliminate export subsidies is expected to make its

exports of corn and other grain less competitive on

world markets. For example, Lohmar, Hansen, Hsu, and

Seeley estimated that China's WTO commitments

would lead to greater imports of wheat, soybeans, soy

oil, and corn and would reduce corn exports. Several

prominent Chinese scholars predicted that WTO accession would have severe adverse impacts on China's

farmers (Fewsmith, pp. 580-81).

During its first year as a WTO member, China actually

became a larger net exporter of agricultural products. Its

exports surged by 13.3 percent while its agricultural

imports rose by a modest 3.5 percent during calendar

year 2002.1 China's $1.5-billion rise in agricultural

exports exceeded its $369-million increase in agricultural imports by more than $1 billion (fig. 1), boosting its

trade surplus in agricultural products to $2.25 billion

during calendar year 2002.

The United States had a $1-billion agricultural trade

surplus with China during 2002, and China was the

fifth-largest U.S. export market. In bilateral U.S.-China

trade, agricultural imports and exports both grew during

2002. U.S. agricultural exports to China for calendar

year 2002 were $2.07 billion, up $128 million from the

previous year (fig. 2). U.S. agricultural imports from

China rose by $185 million (23 percent), and exceeded

$1 billion for the first time.2

U.S. agricultural exports to China during 2002 had

grown to more than double their value in the early

1990s, but were below the $2.6-billion record set in

1995 (fig. 2). The $185-million increase in agricultural

imports from China during 2002 was three times the

average annual increase of $54 million recording during the 1990s.

Introduction

2 Economic Research Service, USDA

1Based on the USDA definition of agricultural trade, which excludes fish,

seafood, forest products, and manufactured products such as textiles and

fruit juices. Data are derived from Chinese customs statistics and include

only direct U.S.-China trade. Trans-shipments through third countries or

territories are not included.

2Data for bilateral U.S.-China trade are derived from U.S. Bureau of the

Census statistics, while estimates of total China trade are derived from

Chinese customs statistics (see note for figure 1). Some U.S. exports to

China are shipped through Hong Kong, but they are not included in the

totals here. U.S. agricultural exports to Hong Kong totaled $1.09 billion

during 2002. Hong Kong and China combined accounted for $3 billion in

U.S. agricultural exports during 2002.

Figure 1

China agricultural trade, 2001-2002

Mil. dollars

Note: Calendar year data. Agricultural trade is defined according to the 

USDA, FATUS definition, http://www.ers.usda.gov/data/fatus/. It excludes 

fish, forest, and textile products. These data do not include trade with 

Hong Kong or Macau. These data are derived from China customs statistics 

and differ from U.S. statistics on China-U.S. trade due to inclusion or 

exclusion of transportation costs, differing practices for counting transshipments of goods through third countries or territories, smuggling, 

under-invoicing of imports, and declaration of products from third countries

as U.S. products to circumvent country-specific quotas or import bans. 

Source: ERS analysis of World Trade Atlas data based 

on China customs statistics.

10,383 10,752 11,487

13,011

0

4,000

8,000

12,000

16,000

2001 2002 2001 2002

China's imports

China's exports

U.S.

share

Figure 2

U.S. agricultural trade with China, 1987-2002

Dollars 

Notes: Calendar year data. Does not include trade with Hong Kong.

Source: USDA.

Imports from China Exports to China

2,067

0

500

1,000

1,500

2,000

2,500

3,000

1987 89 91 93 95 97 99 2001

1,001
Increased exports of corn and horticultural products

(vegetables, fruits, nuts, and their products) accounted

for over $1 billion of China's $1.5 billion increase in

agricultural exports during 2002 (table 1). Corn

exports were expected to fall after China's WTO accession, due to elimination of export subsidies. Instead,

corn exports reached a record 11.7 million tons during

calendar year 2002. Corn exports increased by $542

million during 2002, the largest increase of any commodity. Exports of vegetables and fruit (including preserved and processed products), mainly to other Asian

countries, increased $498 million. The increase in horticultural exports was led by a $137-million increase in

garlic exports, with smaller increases occurring for a

range of fruits, mushrooms, tomatoes, and processed

vegetables. Exports of soymeal, a byproduct of China's

rapidly growing soybean crushing industry, were up

$132 million. The increase in exports suggests that

soymeal production has outpaced its domestic use as

animal feed.

China's $369-million net increase in agricultural

imports obscures large offsetting changes in imports of

oilseeds and vegetable oils. Imports of soybeans and

rapeseed were down by a combined $554 million in

2002, but they still accounted for nearly one-fourth of

agricultural imports. The decline in oilseed imports

was more than offset by an $807-million increase in

vegetable oil imports (palm and soybean oil). 

In bilateral U.S.-China agricultural trade, U.S. exports

of major commodities were fairly stable. Soybean

exports, which account for more than half of U.S. agricultural exports to China, were down by 575,000 tons

and were valued at just under $1 billion in calendar

year 2002. U.S. cotton exports rose by $95 million but

were still modest by historical standards (table 2).

Export growth was relatively modest for other commodities. China's growing imports of vegetable oil did

not benefit U.S. exporters since the United States does

not produce palm oil and contributed only 2 percent of

China's soybean oil imports. The increase in U.S. agricultural imports from China consisted mainly of vegetables, fruits, nuts, and meat products. There was relatively little change in U.S. imports of other agricultural commodities.

Economic Research Service, USDA 3

Bigger Grain Exports, Smaller Oilseed Imports

Table 1—Change in China's agricultural trade, by major commodity, 2001-02

Export commodities Change Import commodities Change

Million Million

dollars dollars

Change in agricultural exports +1,524 Change in agricultural imports +369

Commodities with export increases Commodities with import increases

Corn +542 Palm oil +423

Vegetables, fruit, and nuts +498 Soybean oil +384

Soybean meal +132 Cotton +108

Pork, fresh or frozen +74 Rubber +102

Sugar and confections +71 Dairy, eggs, honey +53

Food ingredients and preparations +60 Baking related +50

Rice +52

Commodities with export decreases Commodities with import decreases

Poultry meat and offal -196 Soybeans -327

Rapeseed -227

Sugar -96

Barley -91

Other commodities +291 Other commodities -10

Note: Table shows changes between calendar years 2002 and 2001.

Source: Analysis of World Trade Atlas data derived from China customs statistics.
4 Economic Research Service, USDA

Table 2—Change in U.S. agricultural trade with China, by commodity, 2001-02

Export commodities Change Import commodities Change

Million Million

dollars dollars

Change in U.S. agricultural Change in U.S. agricultural

exports to China +129 imports from China +185

Commodities with export increases Commodities with import increases

Cotton +95 Vegetable, fruits, and nuts +96

Meat and meat preparations +83

Commodities with export decreases Commodities with import decreases

Soybeans -17 Dairy, eggs, honey -8

Other commodities +51 Other commodities +14

Note: Table shows changes between calendar years 2002 and 2001.

Source: Analysis of USDA, Foreign Agricultural Service data derived from U.S. Bureau of the Census statistics.
A combination of market conditions and policy measures contributed to China's robust exports and weak

import growth during 2002. An increase in world grain

prices during 2002 kept China's grain imports minimal. In April 2002, the corn price in southern China

was about 40 percent above the U.S. Gulf price (fig.

3). By August, the U.S. Gulf price had risen by 27 percent as it became clear that drought in U.S. production

regions, Canada, and other countries would reduce

world supplies. In late December, U.S. corn arriving at

southern China ports was priced at $133-$134 per ton,

including freight. According to reports by China

National Grain and Oils Information Center, taxes and

unloading costs pushed the cost to $162 per ton,

reportedly $18 above the cost of domestic corn.

The smaller differential between domestic and world

prices also improved the competitiveness of China's

corn and wheat exports, which normally require generous government subsidies. Corn exports accelerated to

a rate of 1 million tons per month in August 2002,

after world prices rose, and continued at this pace

through the remainder of 2002 and into 2003. China,

normally a wheat importer, also increased its wheat

exports. China exported milling-quality wheat to

Southeast Asia and was, for the first time, a net

exporter of wheat during calendar year 2002.

Domestic market conditions also were important factors in China's agricultural trade. An overhang of

excessive grain and cotton stocks built up during the

1990s is a major factor that has affected its agricultural

trade since 1998. Policymakers in China have sought

to encourage exports, limit imports, and reduce fees

for transportation of grain from production regions in

the north to consuming areas in the south in order to

draw down domestic grain stocks. Grain and cotton

auctions have been held to dispose of inventories that

could not be sold at market prices. China does not

publish information on grain stocks, but estimates of

grain and cotton use have exceeded supply for several

years, suggesting that stocks have been reduced considerably. In early 2003, officials in China still reported that grain stocks were large, but stable-to-rising

domestic prices indicated that stocks may have been

tightening.

Economic Research Service, USDA 5

Market Conditions Worked Against Grain Imports

Figure 3

China-U.S. corn price comparison, 

April and October 2002

Dollars per ton

Sources: Economic Research Service and China National Grain 

and Oils Information Center.

China, Dalian U.S. Gulf, fob

0

20

40

60

80

100

120

140

April October
Many analysts expected China's new tariff rate quota

(TRQ) system to boost imports of key commodities

(rice, wheat, corn, cotton, wool, vegetable oil, and

sugar) whose trade was tightly controlled by government-operated state trading enterprises before WTO

accession. China's WTO agreement set quotas for

imports at tariffs as low as 1 percent (U.S. Department

of Agriculture, Economic Research Service). China

was not required to fill these quotas, but imports of

commodities under TRQs were expected to rise due to

the combined effects of low tariffs and extension of

importing rights to all potential end users.

The TRQ system did little to boost imports during

2002, as the quotas were largely unused (table 3).3

China's imports of wheat, corn, rice, and rapeseed oil

amounted to less than 10 percent of their respective

quotas. Cotton imports were about one-fifth, and soybean oil imports were about one-third of their quota.

Palm oil was the only commodity whose quota was

nearly filled. The sugar quota was about two-thirds

filled, and wool imports were over 70 percent of their

quota. In total, imports of agricultural commodities

under TRQs amounted to 20.8 percent of the quotas

set for 2002. Imports of TRQ commodities were particularly disappointing for U.S. exporters. China

imported minimal amounts of corn, cotton, and wheat,

the products for which the United States is competitive

in the China market. China's largest TRQ imports,

palm oil and sugar, are not supplied by the United

States in significant amounts.

The lack of wheat, corn, and rice imports was, in part,

due to world market conditions that made imports

uneconomic during the latter half of 2002 (as discussed above). However, China's administration of the

TRQs also may have kept quotas from being used. The

allocation of quotas to importers was delayed until

March 2002, so imports could not take place during

the early part of the year before world prices

increased. The government has revealed very little

information about how it allocated TRQs to end-users,

but reports indicate that the number of applicants for

wheat and corn TRQs was large. Consequently, most

applicants received only a small allocation that was

not large enough to fill an ocean-going container ship.

It is likely that nearly all end users applied for as much

quota as they thought they could use since there was

no cost in applying for quota. There are also concerns

about multiple bureaucratic layers in the application

process. The amount of TRQ commodities allowed to

enter the domestic market was further reduced by

China's earmarking of a portion of each TRQ for processing and re-export.

6 Economic Research Service, USDA

Table 3—China agricultural tariff rate quotas and actual imports, 2002

Actual 2002 imports

Tariff rate China from Fill U.S. share

Commodity quota1 total U.S. rate2 of imports

--------- 1,000 tons --------- Percent Percent

Wheat 8,468 632 169 7.5 26

Corn 5,850 8 2 0.1 21

Rice 3,990 238 4 6.0 <1

Soybean oil 2,518 870 20 34.6 2

Rapeseed oil 878 78 <1 8.9 <1

Palm oil 2,400 2,221 <1 92.5 <1

Sugar 1,764 1,184 <1 67.1 <1

Wool 264 192 <1 72.7 <1

Cotton 818 177 91 21.6 51

1Set by China's WTO accession agreement. 2Actual imports as a percent of tariff rate quota.

Sources: Analysis of World Trade Atlas data and Department of Laws and Regulations of the Customs General Administration of the People’s

Republic of China.

3TRQs go unfilled in many other countries as well. The average fill rate for

TRQs worldwide in 1999 was 50 percent (U.S. General Accounting

Office).

Tariff Rate Quotas Not Filled
China's agricultural trade was also affected by various

policy measures implemented by policymakers to

counter the effects of WTO commitments. Most

notably, China's corn exports continued in 2002

despite its commitment to eliminate direct export subsidies. The pre-WTO accession corn export subsidy for

corn was over $40 per ton, yet its corn exports actually

accelerated from the previous year after the subsidy

was supposed to have been eliminated. Chinese corn

sales to South Korea and other markets continued in

2002 at prices well below Chinese domestic prices,

indicating that export subsidies continued. In early

2003, market-monitoring services in China reported

that subsidies for corn exports were still about $40 per

ton during 2002 (China Agricultural Science and

Technology Network, FoodChina.com). China introduced tax rebates, transportation fee waivers, and subsidies for storage costs in 2002 to replace the export

subsidy (Gale, 2002), but the value of these measures

appears to fall short of the $40 per ton figure.

Soybean imports were disrupted by uncertainty regarding new regulations requiring labeling of foods containing genetically modified organisms (GMO). In

June 2001, China issued preliminary regulations, followed by more detailed implementing rules issued in

January 2002. The regulations did not clearly specify

which products would be covered and how regulations

would be enforced. The ensuing uncertainty disrupted

imports of soybeans (most of which are grown from

GMO varieties in North and South America) for several months until interim arrangements for safety certificate applications were put in place. The GMO regulations were introduced to protect Chinese consumers,

but the regulations could be used to control the pace of

imports. The vagueness of the regulations potentially

gives government agencies latitude to vary the stringency of their enforcement of the regulations in order

to speed up or slow down imports. Some commentators have questioned whether GMO regulations are

enforced with equal stringency for domestic and

imported products. For example, it is not clear whether

labels and safety certificates are required for oil produced from genetically modified domestic cottonseed.

China's value-added tax is also an important policy

tool used to control agricultural trade. While Chinese

agricultural tariffs are relatively low, most imported

products are also assessed a value-added tax (VAT) of

13 percent for raw agricultural commodities like rice,

wheat, corn, and soybeans, and 17 percent for

processed or manufactured products like soymeal, vegetable oil, and textiles. The VAT is assessed on the

delivered price of goods, including the tariff. For

example, the effective tax rate on an imported product

subject to a 15 percent tariff and a 17 percent valueadded tax would be 35 percent. The VAT is also

assessed on Chinese products, but some domestic agricultural products are exempt and taxes are frequently

avoided by under-invoicing or other means. 

China offers rebates of VAT payments for exported

grain and soymeal. This practice is an acceptable

measure under WTO rules as long as the rebate does

not exceed actual tax payments. China also waives the

VAT to encourage production of certain commodities.

For example, the VAT on soymeal for animal feed was

waived for several years in the early 1990s to encourage development of China's livestock industry.

Economic Research Service, USDA 7

Policies Protect China's Market
China's agricultural WTO tariff reductions will be

phased in over several years. Tariffs on some products

were cut significantly in 2002, but overall the 1-year

change in tariffs was not that dramatic since the cuts

are spread over 3 years. China had already reduced tariffs and government control over trade significantly in

the decade leading up to WTO accession. Thus, the

impacts of China's WTO accession are spread over the

course of many years.

China began liberalizing its trade in non-TRQ commodities—vegetables, fruits, animal products,

processed foods, and dairy products—well in advance

of WTO accession. China reduced tariffs on over

3,300 items, removed state trading controls on 367

commodities in 1993, and carried out another round of

tariff reductions in 1996 (Wailes, Fang, and Tuan).

Figure 4 shows the average tariff on non-TRQ agricultural products from 1996 to 2004 (taking into account

scheduled tariff reductions for 2003 and 2004). During

the 5 years prior to WTO accession, the average tariff

on non-TRQ commodities had already fallen from

33.5 percent in 1996 to 20.8 percent in 2001. In 2002

the average tariff was 17.1 percent, so the 2001-02 tariff reduction was an average of just 3.7 percentage

points. 

Soybeans, for example, were already entering China at

low 3-percent tariffs prior to WTO accession and have

been China's leading agricultural import in recent

years. The value of China's soybean imports reached

$2.8 billion in 2001, accounting for one-fourth of

China's agricultural imports. Soybeans were subject to

import quotas prior to WTO accession, but unlike

grains, cotton, and vegetable oils, no TRQ was set for

soybeans. 

China committed to further reduction in tariffs after its

December 2001 WTO accession, but the reductions are

spread over the 2002-04 period. The average tariff for

non-TRQ commodities was 20.8 percent in 2001 (preWTO). After WTO accession, the average non-TRQ

agricultural tariff fell to 17.1 percent in 2002, to 16

percent in 2003, and is set to fall to 15 percent in 2004

(fig. 4).

8 Economic Research Service, USDA

Gradual Reduction in Tariffs

Figure 4

China's average agricultural tariffs 

for commodities not under tariff 

rate quotas, 1996-2004

33.5

20.8

17.1 16.0 15.0

0

5

10

15

20

25

30

35

40

1996 2001 2002 2003 2004

Percent

Note: For a definition of "agricultural" commodities, see

www.ers.usda.gov/data/fatus/. Figure 4 excludes

commodities that were subject to quotas and 

state-trading prior to WTO accession and is not 

weighted by trade volume.

Sources: Calculated by ERS using data from Customs 

General Administration of the People's Republic of China.

 
Most a priori projections of the trade impacts of

China's WTO accession focused on prospects for

greater imports of bulk commodities, such as grain,

cotton, and soybeans. Less attention has been given to

China's emergence as a major exporter of consumeroriented agricultural products, such as vegetables,

fruits, meat products, and processed foods. Consumeroriented products require more labor and less land per

unit of output than do most bulk commodities, so they

are well suited to China's land-scarce, labor-abundant

economy (Wang; Wailes, Fang, and Tuan).

During 2002, consumer-oriented products were the

largest component of China's agricultural exports, totaling $6.7 billion and accounting for over 60 percent of

all agricultural exports (fig. 5). Vegetables, fruits, and

nuts accounted for nearly $500 million of the $1.5 billion increase in agricultural exports during 2002.

China's horticultural, poultry, meat, and seafood (not

included in USDA's definition of agricultural trade)

exports to Japan, Russia, other Asian, European, and

Middle Eastern countries have been rising rapidly in

recent years due to their low cost and increasing production. Consumer-oriented agricultural exports rose

13 percent during 2001 and 8.5 percent during 2002.

China's consumer-oriented export growth has been

slowed during recent years as trade partners raised

concerns about the sanitation and safety of its products. Poultry exports were down $196 million during

2002, as the industry encountered sanitary barriers

overseas. The European Union banned Chinese meat

and aquatic products in January 2002, due to concerns

about drug residues. Japan also tightened its inspection

requirements for meat from China and banned its

poultry imports due to a disease outbreak. Japanese

inspectors also rejected some vegetables from China

for excessive chemical residues. Sanitary and phytosanitary barriers have thus become an important constraint on growth of China's exports.

Bulk commodities were the largest component of

China's agricultural imports ($5.4 billion during 2002),

consistent with China's land-scarce resource endowment. However, China was also a major exporter of

bulk commodities ($3.3 billion). Corn accounted for

about half of bulk exports, while soybeans accounted

for over 40 percent of bulk imports. Domestic soybean

production has not been able to keep up with rapidly

growing demand, so China now relies on imports for

roughly half of its soybean use. China has encouraged

exports of corn to South Korea and other Asian markets to dispose of surplus corn production from its

northeastern provinces. Northeastern farmers have

China's lowest corn production costs and few profitable alternatives to corn growing, but transporting

corn to potential customers in southern China is costly.

China's imports of cotton, another bulk commodity, are

expected to grow as its textile industry expands.

China is both an importer and an exporter of partially

processed intermediate commodities. It imports hides

and skins for use in its footwear and leather product

manufacturing industries, as well as vegetable oils and

a number of non-meat animal products. China is also a

major exporter of silk and soymeal.

Economic Research Service, USDA 9

China's Consumer-Oriented Exports Booming

Bil.

Figure 5

China agricultural trade, by commodity 

type, 2002

Exports

Imports

Source: Analysis of World Trade Atlas data derived from 

China customs statistics.

Bulk commodites Intermediate Consumer

2

4

6

8

-6

-4

-2

0

dollars
China is a net importer from the United States of all

three categories of agricultural products: bulk, intermediate, and consumer-oriented (fig. 6). The United

States, with an abundant endowment of land and a

highly efficient crop production sector, supplies about

one-fifth of China's bulk commodity imports (primarily soybeans during 2002). 

Historically, bulk commodities have accounted for

most U.S. agricultural exports to China. During 2002,

for example, soybeans alone accounted for 45 percent

of U.S. agricultural exports to China. In earlier years,

China was an important destination for U.S. cotton,

wheat, and—in some years—corn. Bulk exports to

China show wide year-to-year swings and are therefore difficult to predict. From 1989 to 2002, bulk

exports averaged about $1 billion annually, but were as

high as $2 billion during 1995 and were less than $500

million during 4 years (fig. 7). U.S. wheat exports to

China reached 3.6 million tons during calendar year

1995, but fell to less than 300,000 tons 2 years later in

1997. Cotton exports to China fell from 486,000 tons

in 1995 to 95,000 tons in 1998. U.S. coarse grain

exports to China exceeded 5 million tons in 1995, but

fell to 108,000 tons the following year. 

The composition of bulk exports to China has also varied. Wheat and cotton were the primary bulk exports

until 1996, but wheat exports have been minimal since

1996 and cotton exports have not reached $150 million

since 1997. Exports of coarse grains to China were

$638 million during 1995, but were $15 million or less

in most other years. The United States exported significant quantities of soybeans to China for the first time

in 1996 and soybeans accounted for most U.S. bulk

exports to China from 1998 through 2002. 

Policy decisions account for much of the volatility in

China's grain and cotton trade since imports of these

commodities remained under tight government control

until WTO accession. China's imports of grain and

cotton have been well below historical levels since

1998, as policymakers sought to dispose of excess

grain and cotton stocks accumulated during the mid1990s. The failure of grain and cotton imports to

rebound and the policy-induced disruption of soybean

trade during 2002 shows that bulk commodity trade

with China is still difficult to predict. 

U.S. exports of intermediate products (hides and skins,

fats and oils, animals, animal feeds, and sweeteners)

and consumer-oriented products (vegetables, fruits,

meats, dairy, processed foods, and beverages) to China

have grown in importance since the early 1990s.

Exports of intermediate products to China grew from

$22 million in 1990 to over $680 million during 2002.

Intermediate and consumer-oriented products com10 Economic Research Service, USDA

U.S. Bulk Exports to China Hard to Predict

Mil. dollars

Figure 6

China-U.S. agricultural trade, by commodity 

type, 2002

Exports Imports

Source: Analysis of World Trade Atlas data derived from 

China customs statistics.

Bulk commodites Intermediate Consumer

-200

0

200

400

-1,000

-800

-600

-400

-1,200

to U.S. from U.S.

Bil. dollars

Figure 7

U.S. exports of bulk commodites to 

China, 1989-2002

1989 93 95 97 99 2001

0

0.5

1.0

1.5

2.0

2.5

Coarse grains Wheat Cotton Soybeans

Source: USDA.

91
bined were 45 percent of U.S. agricultural exports to

China during 2002, up from less than 5 percent in

1990.

China was the fifth-largest market for U.S. intermediate agricultural products during 2002. China's intermediate imports boomed in the early 1990s when it began

to import large quantities of soy oil and soymeal.

Intermediate exports to China peaked at over $700

million during 1998 and fell in subsequent years as

China shifted its imports from soy oil and meal to raw

soybeans. U.S. exports of hides and skins for use in

China's leather product manufacturing industry have

also grown rapidly. Hides and skins constituted over

60 percent of U.S. intermediate exports to China in

2002. Exports of planting seeds, other oils and fats

have also grown. 

Historically, consumer-oriented U.S. exports to China

have been low due to a combination of relatively low

incomes in China, high tariffs and other trade barriers,

lack of market infrastructure, and plentiful domestic

supplies. However, in the last decade China has shown

signs of becoming a major market for U.S. exports of

consumer-oriented products. China's consumer-oriented

imports from all countries rose from $470 million in

1996 (Wang) to $1.7 billion during 2002. From 1990 to

2002, U.S. exports of consumer-oriented products to

China rose from $5 million to over $280 million (fig.

8). China was the 11th-largest market for U.S. consumer-oriented agricultural products during 2002, up

from 66th-largest in 1990.4 Growth has occurred for a

variety of different products, including poultry, red

meat, offal, dairy products, grapes, apples, and snack

foods. China's rising imports of consumer-oriented

products reflects rising living standards, declining tariffs for non-staple foods, and the emergence of China

as a major market for food products. Consumption of

imported fruits, meats, dairy products, and processed

foods is currently limited to a relatively high-income

market segment, mostly in coastal cities and provincial

capitals. Demand for imported consumer-oriented

foods is likely to continue growing as tariffs fall further. Improvements in refrigerated storage facilities,

better transportation infrastructure, growth of modern

supermarkets, and rising living standards in smaller

cities and rural areas will also boost growth. 

The growth in consumer-oriented and intermediate

exports will add to China's importance as an export

market. Reduced reliance on bulk commodity exports

may increase the stability of U.S. exports to China.

Trade in consumer-oriented and intermediate commodities is less volatile than trade in bulk commodities, in that they are less influenced by weather-related

supply shocks and inventory changes.

Economic Research Service, USDA 11

Mil. dollars 

Figure 8

U.S. consumer-oriented agricultural 

exports to China, by commodity, 1990-2002

Dairy products

Fruit & vegetables

Meats

Other consumer products

Source: USDA.

1989 91 93 95 97 99 2001

100

150

200

250

300

50

0

4China's imports of consumer-oriented food products have frequently been

transshipped through Hong Kong to southern China to avoid high tariffs

and bureaucratic barriers. Some reports say that these “gray market” shipments have declined during the last several years as tariffs and other trade

barriers have fallen. It is possible that the increased direct exports to China

may partially reflect diversion of shipments from “gray market” shipments

to official exports to China.
China's agricultural imports and exports are both likely

to grow in coming years. Strong income growth and

rapid urbanization in China will increase demand for

food products, generating demand for imports. The

rapid growth of its manufacturing industries will also

generate demand for industrial inputs like cotton, animal hides, rubber, and food ingredients. At the same

time, China will become an increasingly important

source of inexpensive vegetables, fruits, fish, and

processed foods, such as instant noodles, for other

land-scarce, middle- and high-income Asian countries.

As Chinese officials and end-users in China gain more

experience in implementing WTO commitments, the

importing process should become smoother. For example, 2003 TRQs for corn were allocated 2 months

ahead of the pace set in 2002. TRQs for wheat and

corn should be utilized at a greater rate and imports

should rise. However, it is likely that imports of corn,

wheat, and rice will again be well below their quotas

unless world market prices fall enough to make

imports more attractive to Chinese buyers. 

Imports of corn and wheat are likely to rise at some

point as the overhang of excess stocks in China is liquidated. However, uncertainty about stock levels

makes it difficult to predict whether imports will

increase during 2003 or in later years. A decline in

world prices from the drought-induced highs in 2002

and a resurgence of growth in China's livestock sector

would increase demand for imports of corn and wheat.

China's serious problem with water scarcity in wheatgrowing regions is another factor favoring rising wheat

imports in the long run. 

At the same time, however, Chinese officials remain

averse to reliance on imported grain. They are likely to

curb a surge of imports by implementing nontariff

measures, such as phytosanitary requirements, tightened inspection requirements, delays in approval of

import quota allocations, new domestic regulations for

importers, indirect taxes, and fees.

China will remain a large importer of soybeans, and

USDA projections indicate that China will account for

most of the growth in world soybean imports in the

next decade. Dozens of large, modern crushing plants

have been constructed and China's soybean crushing

capacity far exceeds its domestic soybean production.

While demand continues to grow, various policy measures and domestic soybean production growth could

potentially curb import growth. China can make use of

its vaguely worded regulations for genetically-modified (GMO) food to slow imports by changing testing

requirements or other aspects of the application

process, or by delaying the granting of applications for

safety certificates. China gave assurances that soybean

trade would not be interrupted while interim measures

are in force through April 2004, but the long-term outlook is still uncertain. Agriculture officials are implementing plans to promote both the quantity and quality

of China's soybean production. There are also ongoing

efforts to raise yields and oil content. An increase in

the ratio of soybean price to corn price could shift

some corn acreage to soybeans.

China's corn exports are likely to continue at a rapid

pace through calendar year 2003 and into 2004, but

USDA projects a decline in future years (U.S.

Department of Agriculture, Economic Research

Service, Agricultural Baseline Projections). The liquidation of excess corn stocks will reduce the urgency

for policymakers to continue various tax rebates and

fee waivers aimed at boosting corn exports. Exports

could also be reduced if a shift of acreage from corn to

soybeans reduces corn production. 

Domestic demand for corn, driven by growth in

China's livestock production, is expected to grow, thus

diverting corn from exports to the domestic market.

For the 2003-12 period, USDA projects average annual growth of 4.2 percent in beef production, 2.9 percent in poultry production, and 2 percent in pork production, as China's farm sector responds to increasing

demand for meat and livestock products (U.S.

Department of Agriculture, Economic Research

Service, Agricultural Baseline Projections). Demand

for corn to feed the growing livestock herd is projected

to grow 3 percent annually, with a cumulative increase

of over 30 million tons over the 2003-12 period.

Demand for soymeal used for feed will grow even

faster, at 5.1 percent annually, due to increasing use of

modern feed rations that include high-protein meals.

Use of corn for starch, food products, alcohol, and

industrial uses is also growing.

China's textile and leather product manufacturing

industries are expected to grow rapidly, fueled by low

12 Economic Research Service, USDA

Outlook for China's Agricultural Trade
labor costs and eventual relaxation of textile import

quotas in the United States and other markets. This

growth is expected to revive China's cotton imports

from their low levels in 2002. It is unlikely that China

can increase domestic cotton production enough to

accommodate growth in its textile industry. Demand

for U.S. hides and skins for use in leather products

manufacturing will remain strong. 

China's exports of horticultural, livestock, and manufactured food products are likely to continue growing,

since China can produce these products at relatively

low cost. However, China's products have been rejected in some overseas markets due to disease problems,

excessive chemical residue, and other problems.

China's increased involvement in world trade is

spurring efforts to improve its animal health, raise its

food safety standards, and improve its inspection systems. China's high-value food product exports are likely to rise as its sanitary and safety standards rise to

world levels. At the same time, rising living standards,

falling tariffs, and improved access to the market will

increase U.S. exports of consumer-oriented fruits,

meats, snack foods, and processed foods to China.

Economic Research Service, USDA 13
14 Economic Research Service, USDA

China Agricultural Science and Technology Network

(CAST), “Xinhua Weekly Corn Report: Prices Up

Slightly in Northeastern Corn Production Regions,

Stable in Southern Consumption Regions,” China

Agricultural Technology Information Network,

April 2, 2003. http://www.cast.net.cn.

China National Grain and Oils Information Center,

“2002 Nian Guonei Liangyou Shichang Jianze

Nianbao” (2002 Annual Domestic Grain and Oils

Market Overview Report). 2002 National Grain

Bureau Soft Science Report, Jan. 20, 2003. 

Customs General Administration of the People’s

Republic of China, Customs Import and Export

Tariff of the People’s Republic of China. Beijing:

Economic Management Publishing House, various

years.

Fewsmith, Joseph, “The Political and Social

Implications of China's Accession to the WTO.” The

China Quarterly, vol. 173, 2001, pp. 574-91.

FoodChina.com, “FoodChina Daily Report,” Internet

newsletter, March 31, 2003.

Gale, Fred. “China's Corn Exports: Business as Usual,

Despite WTO Accession.” Feed Outlook supplement, U.S. Department of Agriculture, Economic

Research Service, FDS1202-01, Dec. 2002.

http://www.ers.usda.gov/publications/

fds/dec02/fds1202-01/

Lohmar, Bryan, James Hansen, Hsin-Hui Hsu, and

Ralph Seeley, “WTO Accession Will Increase

China's Agricultural Imports.” Agricultural Outlook,

April 2002, pp. 17-20.

Qing, Xiang, and Adam Branson, “People's Republic

of China Poultry and Products Annual, 2002,” U.S.

Department of Agriculture, Foreign Agricultural

Service, GAIN report CH2042, Sept. 10, 2002.

U.S. Department of Agriculture, Economic Research

Service, “China: WTO accession.” Web-based briefing room. http://www.ers.usda.gov/briefing/

china/wto.htm

__________________. “Agricultural Baseline

Projections.” Web-based briefing room.

http://www.ers.usda.gov/Briefing/Baseline/.

Wade, John, and Jianping Zhang, “China Livestock

and Products Annual 2002,” U.S. Department of

Agriculture, Foreign Agricultural Service, GAIN

report CH2044, Sept. 16, 2002.

_________, “China, People’s Republic of, Grain and

Feed, Corn and Wheat Update 2002,” U.S.

Department of Agriculture, Foreign Agricultural

Service, GAIN report CH2057, Dec. 6, 2002.

Wailes, Eric, Cheng Fang, and Francis Tuan, “U.S.-

China Agricultural Trade: Constraints and

Potential,” Journal of Applied and Agricultural

Economics, vol. 30, no. 1, July 1998, pp. 113-126.

Wang, Zhi, “China's Agricultural Trade in 1996:

Commodity Structure, Geographical Distribution,

and Its Role in U.S and World Trade,” China

Situation and Outlook Report, U.S. Department of

Agriculture, Economic Research Service, WRS-97-

3, June 1997, pp. 6-15.

References
Economic Research Service, USDA 15

Appendix table 1—Value of China's agricultural imports and exports, calendar years, 2000-02

HS Imports Exports

Code1 Description 2000 2001 2002 2000 2001 2002

Billion dollars Billion dollars

All imports and exports 225.1 243.6 295.3 249.3 266.7 325.6

Total agricultural 9.9 10.4 10.8 11.6 11.5 13.0

Million dollars Million dollars

01 Live animals 52.3 35.5 53.4 385.2 344.5 343.7

0102 Cattle 2.2 6.0 22.0 38.0 33.7 33.1

0103 Swine 4.1 1.9 2.0 231.9 221.2 214.9

0105 Poultry 11.2 10.3 12.5 104.1 77.7 82.1

02 Meat 637.0 596.9 626.0 753.6 842.1 665.8

0203 Pork 58.4 41.6 81.4 68.6 135.8 209.5

0207 Poultry meat and offal 480.7 443.0 425.7 587.4 597.5 401.1

04 Dairy, eggs, honey 217.9 218.7 272.0 187.9 192.3 194.3

05 Other animal products 158.0 172.7 187.6 756.8 653.4 649.6

06 Live trees and plants 20.7 22.1 32.9 31.8 34.9 43.1

072 Vegetables 59.6 56.3 51.1 1,482.0 1,684.1 1,821.6

08 Edible fruit and nuts 368.4 366.6 377.6 417.3 435.9 555.1

09 Tea, coffee, spices 22.8 21.2 23.2 505.5 542.9 551.6

0902 Tea 4.2 2.9 2.7 347.1 342.3 331.9

10 Grains 574.1 607.4 481.8 1,638.9 1,034.1 1,651.2

1001 Wheat 147.4 121.4 102.7 0.2 46.5 70.1

1003 Barley 313.3 381.9 291.0 0.1 0.1 0.1

1005 Corn 0.4 4.8 1.6 1,047.2 625.4 1,166.8

1006 Rice 112.7 98.9 79.7 561.1 329.2 381.7

11 Milling products, malt, starch 63.7 80.7 95.0 92.6 107.4 118.3

122 Miscellaneous seeds, grains,

fruits 3,061.3 3,330.7 2,761.7 832.9 871.8 891.9

1201 Soybeans 2,270.2 2,809.5 2,482.8 64.0 77.2 76.7

1202 Peanuts 0.2 0.1 0.3 231.7 263.9 263.7

1205 Rapeseed 657.6 373.6 146.6 0.4 0.0 0.7

13 LAC, vegetable saps, extract 34.2 31.7 36.4 47.3 67.1 77.1

14 Vegetable plaiting materials 83.2 64.8 44.3 42.6 43.1 43.8

152 Fats and oils 1,011.4 771.7 1,574.5 124.2 117.3 106.9

1507 Soybean oil 125.9 23.5 408.0 17.1 23.1 21.6

1511 Palm oil 456.2 425.8 848.7 0.2 0.1 3.2

162 Prepared meat 7.4 7.9 9.6 491.2 618.8 698.2

17 Sugars 181.6 376.2 279.9 172.9 155.7 227.1

18 Cocoa 70.8 80.3 79.9 29.0 27.5 36.0

19 Baking related 71.2 93.3 143.6 360.3 413.1 455.1

20 Preserved food 59.6 85.0 113.7 1,314.7 1,499.2 1,761.1

21 Miscellaneous food 146.7 181.4 179.5 359.3 400.1 460.3

222 Beverages 127.5 99.9 83.6 402.0 431.4 465.0

232 Food waste, animal feed 332.5 156.3 136.9 249.4 293.6 404.4

2304 Soybean oilcake, residue 105.9 11.7 0.2 4.7 61.8 193.4

2401 Tobacco leaf 164.0 233.2 215.6 151.3 189.9 205.8

353 Modified starches, glue,

perfume, acid 235.5 257.2 293.1 109.9 124.9 134.2

4001 Natural rubber 584.2 592.3 693.9 0.3 0.4 0.9

414 Hides, skins, and furs 626.1 843.0 774.0 11.4 10.9 12.4

505 Raw silk 8.2 6.1 3.1 277.3 246.2 244.6

516 Wool 778.4 806.8 819.7 11.5 15.2 13.5

5201 Cotton 74.1 71.0 179.7 305.2 81.4 169.6

537 Flax, jute, other vegetable fibers 113.0 112.4 120.0 10.9 7.4 9.3 1Harmonized codes system for identifying commodities in international trade statistics. 2HS 07 excludes cassava. HS 12 excludes seaweed. HS

15 excludes oil from fish and marine mammals. HS 16 excludes fish, caviar, crustaceans, and mollusks. HS 22 excludes ethyl alcohol. HS 23

excludes flour and meals from fish. 3Includes HS 35, 3301, 33021010, 33021090. 4Includes HS 4101, 4102, 4103, 4300. 5Includes HS 5001,

5002. 6Includes HS 5101, 5102. 7Includes HS 5301, 5303, 5305.

Source: ERS analysis of World Trade Atlas data derived from China customs statistics.
16 Economic Research Service, USDA

Appendix table 2—Value of U.S. agricultural trade with China, calendar year, 2000-2002

HS U.S. exports to China U.S. imports from China

Code1 Description 2000 2001 2002 2000 2001 2002

Billion dollars Billion dollars

All imports and exports 16.3 19.2 22.1 100.1 102.3 125.2

Million dollars Million dollars

Agricultural total 1,716.0 1,938.5 1,960.0 811.6 816.2 1,001.4

01 Live animals 8.5 8.4 13.9 5.1 5.8 11.7

0102 Cattle 0.1 0.9 1.4 0 0 0

0103 Swine 1.5 0.6 1.8 0 0 0

0105 Poultry 5.0 5.7 8.5 0 0 0

02 Meat, edible offal 62.1 69.2 81.0 3.7 3.5 8.3

0203 Pork 3.6 10.1 7.6 0 0 0

0207 Poultry 41.9 36.9 45.3 0 0 0

04 Dairy products 13.1 25.2 24.7 27.5 21.4 13.8

05 Other animal products 35.0 38.3 33.6 188.1 172.7 197.7

06 Live trees, plants 1.1 1.0 1.5 6.9 9.7 12.7

072 Vegetables 8.0 6.3 5.9 54.0 61.4 89.5

08 Fruit and nuts 30.7 38.4 40.3 25.0 31.3 50.7

09 Tea, coffee, spices 1.0 1.6 0.5 45.7 48.1 55.3

0902 Tea 0.0 0.0 0.2 18.9 19.9 23.1

10 Cereals 28.7 22.3 29.0 0.7 1.1 0.7

1001 Wheat 17.8 21.4 25.9 0 0 0

1003 Barley 6.0 0 0 0 0 0.1

1005 Corn 0.4 0.7 2.2 0.5 0.4 0.3

1006 Rice 0.3 0.2 0.8 0.5 0.9 1.8

11 Milling products, starches 4.7 3.2 2.6 5.3 2.4 3.0

12 Oilseeds 1,043.9 1,030.2 1,024.3 77.3 67.4 68.5

1201 Soybeans 1,007.7 1,012.8 995.8 0 0 0

13 LAC, gums, resins 9.6 13.7 13.9 48.5 44.1 48.4

14 Vegetable plaiting 10.9 3.9 3.0 6.9 8.4 8.7

152 Fats and oils 20.5 14.1 28.5 7.3 5.7 6.2

162 Meat preparations 8.9 20.1 27.2 58.9 107.2 185.5

17 Sugars 17.7 22.3 12.8 25.8 26.2 46.5

18 Cocoa 6.6 5.7 8.5 17.5 11.1 10.0

19 Baking related 9.3 8.4 9.4 28.8 31.4 37.7

20 Preserved food 22.0 33.6 42.1 148.1 175.8 224.2

21 Miscellaneous food 34.3 57.4 44.8 33.1 37.4 42.3

222 Beverages 2.7 4.4 6.1 15.7 23.1 29.2

232 Food waste, animal feed 68.0 63.2 80.4 21.1 21.2 29.8

2401 Tobacco leaf 0.8 1.3 0.5 17.6 5.0 4.9

353 Modified starches, glues,

perfumes, resins 0 0 0 0 0 0

4001 Natrual rubber 0.1 0.2 1.0 5.5 3.0 1.9

414 Hides and skins 227.6 396.0 393.5 0.1 0.2 0.2

50015 Raw silk 0 0 0 0 0 0

516 Wool 0.1 0.2 1.0 5.5 3.0 1.9

5201 Cotton 46.3 42.9 138.0 0.1 0 0

537 Flax, jute, veg. fibers 0 0 0.2 0.1 0.1 0.1

1Harmonized codes system for identifying commodities in international trade statistics. 2HS 07 excludes cassava. HS 12 excludes seaweed. HS

15 excudes oil from fish and marine mammals. HS 16 excludes fish, caviar, crustaceans, and mollusks. HS 22 excludes ethyl alcohol. HS 23

excludes flour and meals from fish. 3Includes HS 35, 3301, 33021010, 33021090. 4Includes HS 4101, 4102, 4103, 4300. 5Includes HS 5001,

5002. 6Includes HS 5101, 5102. 7Includes HS 5301, 5303, 5305.

Source: USDA.
Economic Research Service, USDA 17

Appendix table 3—China's major agricultural imports, by volume, 2000-02

HS All imports1 From United States2

Code3 Description 2000 2001 2002 2000 2001 2002

1,000 tons 1,000 tons

02 Meat 1,145 972 880 92 93 115

0203 Pork 136 94 145 3 6 7

0206 Edible animal offal 134 143 114 7 11 10

0207 Poultry meat, offal 850 705 574 78 72 91

1201 Soybeans 10,419 13,939 11,316 5,231 5,436 4,861

1205 Rapeseed 2,969 1,724 618 0 0 0

10 Grains 3,091 3,366 2,818 0 0 0

1001 Wheat 876 690 605 135 136 169

1003 Barley 1,974 2,368 1,907 57 0 0

1005 Corn 0 36 6 0 1 20

1006 Rice 239 269 236 1 0 4

15 Fats and oils 2,771 2,609 3,915 0 0 0

1507 Soybean oil 308 70 870 1 6 0

1511 Palm oil 1,391 1,520 2,221 0 0 0

08 Fruit and nuts 984 964 1,017 38 45 48

Nuts 73 128 126 3 4 5

Bananas, tropical fruit 614 432 374 0 0 0

Citrus 62 68 58 17 25 26

Grapes, melons, apples, pears 92 123 198 16 15 14

1701 Sugar 675 1,199 1,184 1 0 0

2304 Soybean oilcakes 505 53 1 0 0 0

4001 Natural rubber 852 984 956 0 0 3

5201 Raw cotton 47 56 171 32 45 151

5101 Wool 239 150 192 0 0 1

1Derived from Chinese import statistics. 2Derived from U.S. export statistics. 3Harmonized codes system for identifying commodities in international trade statistics.

Source: ERS analysis of World Trade Atlas data derived from China customs statistics and USDA.
18 Economic Research Service, USDA

Appendix table 4—China's agricultural exports, by volume, 2000-02

All exports1 To United States2

HS code3 Description 2000 2001 2002 2000 2001 2002

1,000 head 1,000 head

0103 Live swine 2,039 1,973 1,889 0 0 0

0105 Live poultry 48,901 41,952 42,804 0 0 0

1,000 tons 1,000 tons

02 Meat 514 572 524 1 1 2

0203 Pork 53 103 162 0 0 0

0207 Poultry meat, offal 405 403 328 0 0 0

07 Vegetables 2,593 3,242 3,915 56 73 106

0703 Garlic, onions 560 852 1,337 1 5 20

0701-0709, ex.0703 Other fresh, chilled vegetables 736 814 955 3 4 5

0710 Frozen vegetables 312 382 342 15 17 18

0711-0713 Preserved, dried vegetables 986 1,195 1,282 35 46 59

08 Fruit and nuts 886 895 1,235 10 15 16

0805 Citrus fruit 200 171 217 15 17 18

0808 Apples, pears 444 488 682 5 7 6

0801, 0802 Nuts 57 56 58 3 5 5

0902 Tea 228 250 252 14 16 16

0904-0910 Spices 257 308 352 20 23 28

10 Grain 13,593 8,484 14,520 1 2 1

1001 Wheat 3 455 688 0 0 0

1005 Corn 10,485 5,998 11,674 0 0 <1

1006 Rice 2,953 1,860 1,979 1 <1 <1

1201 Soybeans 213 249 276 <1 1 2

1202 Peanuts 400 495 521 0 0 0

1701 Sugar 415 196 326 <1 <1 <1

1704 Confections 49 51 73 8 10 16

5201 Cotton 292 53 150 0 0 0

2304 Soybean oilcakes 29 315 1,013 0 0 0

1Derived from China customs statistics. 2Derived from U.S. import statistics. <1 = less than 1,000 tons. 3Harmonized codes system for identifying commodities in international trade statistics.

Source: ERS analysis of World Trade Atlas data derived from China customs statistics and USDA data.