July 6, 2006

EU aims to expand agricultural exports to China

        
The EU would see its annual agricultural exports to China surpass EUR 2 billion in five years from EUR 900 million now, if current trade trends persist, said a EU representative.

As its economy continues to develop, China's growing  urban middle class would would boost farm trade, said Raimondo Serra, Agricultural Counselor with the Delegation of the European Commission in China.

EU's agriculture exports are likely to hit EUR 4 billion, when China's urban middle class reaches 200 to 250 million, said Serra at a forum during the "Sino-Italian Green Week".

With rising income, the Chinese would be increasingly willing to try western foods, spawning opportunities for EU's farms, Serra said.

On the other hand, China has the capacity and climate to produce most products and has a comparative advantage in labor-intensive crop farming, he cautioned.

He warned that China's production of garlic, mushrooms, tomato paste and frozen strawberries can pose stiff competition for EU farmers.
 
Still, China, which is short of land and water resources, has production limitations and the country has been a net food importer since 2003.

Serra said the EU has opportunities in China, especially in value-added products.

In an environment of relatively low tariffs, the EU has to be more on the offensive rather than defensive in the competition for trade dollars, Serra said.

In the past 5 years, the value of wines exported from EU to China have tripled, so have exports of olive oil and cheese.

Last year, EU's imports from China totaled EUR 158 billion and its exports to China reached EUR 52 billion.
 
Agriculture trade, however, formed a small portion of this trade.

EU farm produce imports from China reached EUR 2.1 billion last year and its export volume to China reached EUR 900 million.