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China's Agricultural Industry Holds up after WTO Entry
China's agricultural industry has remained buoyant in the first year of World Trade Organization membership, despite predictions that it would be severely battered by the increased competition.

Statistics show the value of exported agricultural goods increased to 12.62 billion US dollars in the first nine months, an 11.5 percent rise on a year-on-year basis, while imports fell by 0.4 percent to 8.74 billion US dollars, and the trade surplus rose by 52.3 percent to 3.88 billion US dollars.

The unexpected result soothed fears for China's vulnerable agriculture before WTO entry. But at the same time many foreign export companies attributed this to non-tariff barriers by Chinese government.

"The unexpected result of agricultural trade should be due to the market rather than the government," said Cheng Guoqiang, an expert with the Development Research Center under the State Council.

Cheng said that there were two main reasons why imported grain had little impact on domestic agricultural market.

The first was the rising price of grain in the world market caused by poor harvests in North America and Australia. The second was the low price of grain in the domestic market caused by a bumper grain production in China, which even helped grain exports rise by 44.7 percent to 9.396 million tons this year.

Meanwhile, China is seeing an increase in imported sugar, cotton and other products.

"All these prove that the market is the main factor restraining the import of grain, not the government," said Cheng.

Agricultural exports also benefit from China's newly-issued policy of supporting the agricultural industry, said Du Zhixiong, a professor of Chinese Academy of Social Sciences.

Many experts had thought that China would drastically increase exports of fruits, vegetables and aquatic products by a big margin after accession to the WTO.

"But we should not be too optimistic on the export of China's agricultural products, which still have to meet flourishing foreign non-tariff barriers," said Du.

Due to the poor competitiveness of China's agricultural industry, many non-tariff barriers issued by developed countries have a great influence on agricultural exports.

The China National Native Produce and Animal By-product Imports and Exports Corporation saw its honey exports to the European Union (EU) fall by 73.67 percent in the first 11 months of this year because of a newly-established EU technical barrier.

"We can not imagine these barriers will disappear in the coming year. China must adopt an active policy to meet this challenge, such as improving the quality and variety of our agricultural products, and exploit more export markets," said Du.

"Thanks to the favorable world grain market, WTO entry did not have a big impact on China's agricultural industry. But the outside situation is not permanent. China's agricultural industry will face more tough challenges in the future," said Cheng.

(People's Daily December 12, 2002)

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