China

Supply/Demand Basics

  • World’s 2nd largest corn producer and consumer.
  • World’s largest swine, aquaculture, and egg producer, 2nd largest poultry meat and corn ethanol producer and growing dairy and beef producer.
  • World’s largest sorghum and DDGS importer in recent years, but imports are declining due to protectionist policies.

Country Overview

  • Population / growth: 1.4 billion / 0.8%
  • Urban % / growth: 57.9% / 2.3%
  • GDP / growth: $23.1 trillion / 6.8%
  • GDP per capita: $16,600
  • Slowing economic growth not expected to have large effect on consumption growth due to restructuring toward more consumption, less savings and focus on growth in low-income areas where per capita animal protein consumption is low.
  • Urban residents consume more animal protein than their rural counterparts, and urbanization is expected to grow from 55 percent to 70 percent in 8 years.
  • An outbreak of African Swine Fever virus (ASFv) in 2018 may reduce corn feed demand by 10-20 MMT in 2019, but the swine industry is expected to recover over time.

Trade and Market Share Issues

  • Trade tensions and retaliatory tariffs cut off nearly all exports in mid-2018
  • China was the largest importer of U.S. sorghum in 2018 and largest importer of DDGS until 2017 but exports of both have been affected by AD/CVD investigations and duties and other trade tensions. Corn imports are constrained by a TRQ as well as GMO processing certificates.
  • Ethanol exports are also affected by a 30 percent tariff (the WTO bound rate) re-imposed at the end of 2016.

Policy Issues

  • Trade tensions and retaliatory tariffs are the biggest obstacle to developing export opportunities in China.
  • China is aggressively seeking to draw down large corn stock ostensibly built up over 2012-2015, and these efforts appear to be working as the market for corn is tightening and many expect to stock to return to “normal” levels next year.
  • China’s Ministry of Agriculture officially embraces biotechnology, but many consumers and other stakeholders are still skeptical and progress towards greater acceptance is slow.
  • In 2017 China announced a major commitment to using E10 nationwide by 2020, although how this will be accomplished and the role that imports will play is still uncertain.
  • Multiple other trade policy issues also need to be addressed for exports of feed and ethanol to resume.