December 01, 2003

 

 

China Scrap Plan for Wheat Imports From US
 

China scrapped a plan to buy U.S. wheat and may have blocked a shipment of soybeans in retaliation for U.S. tariffs and restrictions on imports of Chinese goods, according to two government reports.

 

China dropped the plan to buy wheat after the U.S. restricted some Chinese textiles imports on November 18, the China National Grain & Oils Information Center said in a report. The trade row may also be behind China's decision to stop a shipment of soybeans, a second government-sponsored report suggested.

 

China accused the Bush administration of damaging trade ties by filing as many as seven anti-dumping cases against it this year.

 

U.S. farmers may now find their access to the world's biggest grain-import market, worth more than $4 billion a year, at risk.

 

"Because of reasons related to upcoming elections, the U.S. unilaterally decided to impose restrictions on Chinese textiles, causing a deadlock in China's plans to buy more U.S. wheat," the National Grain report said.

 

President Bush, standing for re-election next year, is trying to close a trade deficit with China that reached $89.7 billion in the first nine months, 22% higher than a year earlier. China's plan to buy more wheat was part of efforts to narrow that gap, the National Grain report said.

 

U.S. rulings against Chinese imports this year have affected $1.6 billion of goods, the Ministry of Commerce said.

 

The trade row may have sparked the Chinese government's decision to stop a shipment of soybeans from unloading in the southern port of Shenzhen, Beijing Orient Agribusiness Consultant, an agricultural-ministry affiliate, said in a report.

 

"Quality-inspection officials in Shenzhen halted the shipment for containing too much fungus, but it has raised fears that increasing trade tensions may interrupt soybean trade with the U.S.," the report said.

 

China's imports of U.S. soybeans may rise as much as 17% to 9 million tons in the crop year ending September 30, 2004, the grain-information center said in a report November 10.

 

Traders say U.S. competitors may benefit from the friction, particularly as adverse weather and declining planted acreage has lowered China's wheat yields. Canada, Australia and the U.S. are China's main wheat suppliers.

 

"We believe that we are very well placed to service that market and that the market will become an importer of Australian grain," Andrew Lindberg, chief executive of AWB Ltd., Australia's monopoly wheat exporter, said.

 

It is forecast that China's 2004 wheat imports may rise fivefold.