January 5, 2012

China will limit foreign investments in more grain and oilseed processing sectors from January 30, 2012, according to the new guiding directory on foreign investments released by the Ministry of Commerce.

The country will cap foreign investments in soyoil, rapeseed oil, peanut oil, cottonseed oil, tea oil, sunflower seed oil and palm oil processing projects (controlling shareholder on Chinese side), as well as rice, flour and corn processing projects.

Currently, the restriction is only put on soyoil, rapeseed oil processing projects (controlling shareholder on Chinese side) and deep corn processing projects.

China expands the restriction scope as overcapacity in edible oil, flour and corn processing industries is severe, industry insiders say. The move is also to further guarantee the nation's grain safety.

In addition, the new directory also shows that the country will encourage foreign capital to invest in production of wool oil-bearing plants as well as R&D and production of oilseeds and sugar crops reaping machines.

With mounting cost of labour, the development of farming machine can help reduce production cost of oilseeds and thus promote the industry development.