Given the unique circumstances of its corn variety, analysts hold the view that the pressures on China's corn market are more "internal" than "external".  Accordingly, below are some proposed measures by market experts which may help turn adversities into positive forces to liven China's corn market:

1. A thorough restructuring of China's system of grain supply and distribution to implement process improvements
    
   With the development of market economy in China, pitfalls in the original age-old system of grain supply and distribution are becoming increasingly more evident; especially those relating to the difficulties encountered by farmers in selling their grains, the problems of buyers in grain procurement and storage, as well as the issue of subsidies.
    
   There is thus a need to revamp the entire chain of corn supply and distribution to improve the system's efficiency and ensure effective use of the country's social capital.  Feed processing enterprises which fulfill governmental requirements and regulations should be permitted to procure their corn supply directly.  This will enable them to have the flexibility to actively develop and enhance their productive capacity.  In due course, the process of survival of the fittest should prevail, and will serve to rev up competition among enterprises, and thence, the economy.
    
2. Lower the purchasing price of corn and allow macroeconomic forces to regulate the corn market
    
   Currently, China's "protected purchase price" of corn is kept at a relatively high level.  Hence, despite demand being lower than supply, corn production continues to stay high.  The imposition of a "protected purchase price" for corn hampered the process of effective allocation of resources by not operating according to the basic law of value.
    
   There is thus an urgent need to lower the "protected purchase price" of corn to a reasonable level, to normalize corn production.  During the last few years, the Yellow and Huai Rivers regions in north China took the lead in freeing its grain market, followed by the entire region of Inner Mongolia.
    
   On the other hand, although the three provinces in northeastern China continued to maintain their "protected purchase price" policy', in their bid to up their competitive edge in the international corn market, they lowered their "protected purchase price" level consecutively over the last two years by observing the principle of "minimal profit".  It is likely that they will continue to follow this practice during their forthcoming autumn crop sale, expected to be held soon.
    
   With prevalent operation of market economy in China today, the regulating effects of macroeconomic forces are therefore more evident.
    
3. Intensify the development of corn processing industry to increase the internal corn-utilization capabilities of China's corn producing regions
    
   Being a major corn producing country, China possesses great market potential for its corn processing industry, especially with the vast amount of business opportunities made possible with China's entry into the WTO.
    
   The continually thinning profit margin of its unprocessed grain export sector has made it necessary for China to reduce its economic dependence on this sector.  Instead, greater focus should be placed on the development of its corn processing industry, which has higher technological content, greater economic efficiency and far better market potential, for further economic growth.  Some of the key products of the corn processing industry are corn starch, corn oil and automobile fuel.
    
   Since last year, Jilin Grain Group, Jilin province's leading grain enterprise, has set up a joint-venture company with a leading French grain processing company. The joint-venture company, Cerestar Jiliang Maize Industry Co. Ltd., focuses on the production of processed corn products like malto-dextrin, glucitol, glucose, amylose, corn oil and other high value-added feed additive products.  In addition, another major project, China's largest ethanol production project, is also currently being developed in Jilin province.  All these projects represent the significant step taken by China to develop its corn processing industry.
    
4. Increase the acreage for cultivation of special purpose corn to enhance China's competitiveness in the global corn market
    
   While the use of corn as food for direct consumption has decreased evidently in recent years, demand for corn with high content of protein, oil and starch has been on the increase.  Corn producers should therefore reconfigure their corn cultivation; and devote a higher proportion of their land to the production of special-grade corn, which are not only high in nutrition and value, but can be processed to produce a wide range of by-products.
    
   Compared to normal grade corn, special-grade corn are more economically efficient, and have greater potential for further product development.  Hence, China and other corn producing countries in the world are devoting more developmental efforts to the cultivation of special-grade corn and tap its potential.
    
   Recently, China's State Development Planning Commission has granted approval for the investment of RMB 63 million to establish a production base for the cultivation of premium-grade corn in Jilin province's Si Pin municipality.  Under this project, attention are devoted to the production of premium-grade corn with high a content of starch, oil and protein.  The objective of this project is to further elevate China's standards in scientific research and production of premium-grade corn to meet market demand, and to strengthen China's competitiveness in the global corn market.
    
5. Strengthen the control and management of corn import to cushion their impact on China's domestic corn market
    
   Following China's entry into the WTO, more stringent technical measures should be introduced to actively control and manage the import of corn into China.  All imported corn should be duly inspected by the China's Customs Quality Inspection Department; and labeling regulations imposed on all imported GMO corn.  These measures would help to cushion the pressures exerted on China's domestic corn market by imported corn; and will help to propel the further development and liberalization of China's domestic corn market.

In summary, with structural improvement in China's system of grain supply and distribution, the inherent problems present in China's domestic corn market should eventually disappear.  This will allow the market to operate more freely, with better prospects in sight for both the buyers and sellers in the market.  In addition, other favorable market factors like changes in export subsidies, continual prospects for corn export, limitation of market impact by imported corn and the diminishing negative impact of old corn auction sale etc, will provide further support to free the market from restraining influences.

China's corn market looks set to forge ahead, on the operation of market principles.