China not hiking grain import quotas for US trade deal: Top official

BEIJING • China will not increase its annual low-tariff import quotas for corn, wheat and rice to accommodate stepped-up purchases of farm goods from the United States, said senior agriculture official Han Jun.

Mr Han's remarks, reported by local media group Caixin yesterday, underline China's desire to protect farmers at a time when it is under pressure to buy billions of dollars more of US agricultural goods to calm a prolonged trade war - even though its grain imports have been well below quota levels in recent years.

"This is soothing market nerves here," said analyst Meng Jinhui from Shengda Futures. "I think the market is worried about a blow from the possible increase of grain imports, and that (message) has gone to the high leadership."

US President Donald Trump last month said China will likely double its US$24 billion (S$32 billion) in pre-trade war purchases of US agricultural products as part of a "phase one" trade deal to be signed this month.

Mr Han, a vice-agriculture minister and part of the negotiating team, last month said China would buy more US wheat, rice and corn, leading to speculation that Beijing could increase annual quotas on the amount of wheat, corn and rice that can be imported at a tariff rate of 1 per cent.

Mr Han said the quota is offered to global markets and "we won't adjust it for one country", said the Caixin report.

In 2017, before the trade war started, purchases of the three grains from the US totalled only around US$534 million, leaving room for a significant rise in imports within the existing quotas.

Mr Darin Friedrichs, senior Asia analyst at INTL FCStone, said on Monday: "Although there are certainly types of high-quality wheat that China would look to import, maxing out the tariff rate quota would also weigh on domestic producers."

Mr Meng said that increasing sales of meat, ethanol, distillers grains and soya beans are likely to be more important for reaching the US target for doubling farm exports to China.

US Trade Representative Robert Lighthizer last month said Beijing had committed to buy an additional US$32 billion of US agricultural products over two years, or about US$16 billion a year - more than the 2017 baseline of US$24 billion.

REUTERS

A version of this article appeared in the print edition of The Straits Times on January 08, 2020, with the headline 'China not hiking grain import quotas for US trade deal: Top official'. Print Edition | Subscribe