China

Supply/Demand Basics

  • World’s 2nd largest corn producer and consumer
  • World’s largest swine, aqua, egg, beer, and distilled sprit 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 declined significantly due to protectionist policies and trade tensions.

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 60 percent to over 70 percent in 5 years.
  • An outbreak of African Swine Fever virus (ASFv) in 2018 reduced corn feed demand by 10-20 MMT in 2019, but the swine industry is expected to begin recovery in 2020.

Trade and Market Share Overview

  • 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 and retaliatory duties.
  • Ethanol imports are also affected by a 30 percent tariff (the WTO bound rate) re-imposed at the end of 2016.
  • China efforts to draw down large corn stocks ostensibly built up over 2012-2015 appear to have worked and there is no longer heightened concern over large corn stocks.

Policy Issues

  • Trade tensions and retaliatory tariffs are the biggest obstacle to developing export opportunities in China, but appear to be moving toward resolution.
  • Corn imports are constrained by a TRQ as well as GMO processing certificates. 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, but recently began to lower expectations on that. How the program evolves from here and the role that imports will play is still uncertain.
  • Multiple other trade policy issues also need to be addressed for exports of U.S. feed and ethanol to resume. Some but not all of these appear to be addressed in a preliminary trade deal signed in January 2020.