Along with an improvement in diet structure, soybean is playing an increasingly important role in foodstuffs.

China's edible oil imports soared more than 200 times from the 1986 level, and imports amounted to 8.38 million tons in 2007. Most of the imports were made from soybeans. On the basis of a 20-percent oil extraction ratio, soybean oil imports will translate into an increase of 45 percent to the soybean imports, according to Wan Xiaoxi, another analyst with the Southern Fund Management Co Ltd.

Industry insiders have already begun to describe the situation as a "soybean crisis." The description might become more sensational when it came to the monopoly of soybean processing sector by foreign-funded companies.

State media reported earlier that 70 percent of China's edible oil plants were invested in by foreigners and that 80 percent of soybean extraction capacities nationwide were controlled by foreign-invested companies.

The foreign monopoly has weakened the Chinese government's capabilities of regulating the foodstuff market at home.

Besides, the high dependence on imports made the domestic grain market more vulnerable to volatility of grain prices abroad, Liu pointed out.

On November 22, 2007 the International Grains Council estimated that grain stockpiles worldwide had reduced to a 30-year low of 255 million tons, which was ready to spur price rises.

Given the high reliance on imports, experts suggested that the Chinese government should keep a soybean stockpile of at least one year's consumption, i.e. 50 million tons. Meanwhile, more than five million tons of edible oil should be in stock. Futures market should be made use of to hedge price fluctuations on global grain markets.

(Xinhua News Agency March 7, 2008)