March 22, 2011
News Release 11-029
Inv. No. 332-518
Contact: Peg O'Laughlin, 202-205-1819

Demand for imported food is growing rapidly in China due to rising incomes, greater urbanization, and the increasing importance of food quality and safety to consumers, reports the U.S. International Trade Commission (USITC) in its new publication China's Agricultural Trade: Competitive Conditions and Effects on U.S. Exports.

U.S. farmers and food manufacturers have benefited significantly from rising Chinese imports of several important products, according to the report. However, they continue to face export restrictions created by tariffs, tariff-rate quotas (TRQs), and non-tariff measures (NTMs); some of these measures substantially limit or prohibit certain U.S. agricultural products from entering the Chinese market. Low labor costs, government support, and trade policies enhance the competitiveness of Chinese agricultural products, while other factors such as its land tenure system and its fragmented transportation and cold storage infrastructure weaken it.

The USITC, an independent, nonpartisan, factfinding federal agency, completed the report at the request of the U.S. Senate Committee on Finance.

As requested, the report provides an overview of China's agricultural consumption, production, and trade, including China's participation in the global export market and in trade agreements. It describes China's tariffs, TRQs, and NTMs that affect U.S. imports, as well as competitive factors in the Chinese agricultural sector. The study also provides economic modeling analysis of the effects of Chinese tariffs, certain NTMs, and trade agreements on Chinese imports of U.S. products.

Highlights of the report follow:

• The U.S. and Chinese agricultural trade relationship has grown significantly in recent years. China is the world's largest producer and consumer of agricultural products. The United States is the largest supplier of agricultural products to China, supplying 26 percent of those imports in 2010. That year, China became the United States' second largest buyer, behind Canada, accounting for 14 percent of total U.S. agricultural exports.
• Chinese agricultural imports from the world grew 23 percent annually during 2005-10. Its imports, including those from the United States, are concentrated in a narrow range of products; roughly one-half are accounted for by soybeans and cotton. China's exports are concentrated in labor-intensive horticultural items sold to regional markets.
• China's NTMs impeded between $2.6 billion and $3.1 billion in sales of selected U.S. agricultural products in 2009, while China's tariffs and TRQs inhibited between $1.3 billion and $2.1 billion in sales of a broader range of U.S. agricultural products that year.
• Agriculture accounts for 11 percent of China's gross domestic product and employs just under half of the population. China is a major global producer of agricultural products and is largely self-sufficient, with the exception of a few key commodities.
• China's support for its farm sector has grown substantially since 2004, driven by three main policy objectives: maintaining a high degree of self-sufficiency in grains, raising farmer's incomes, and promoting rural development.
• China's FTAs and preferential trade agreements are largely with trade partners in East Asia and Oceania. Their provisions vary in scope but overall have had a negligible effect on total U.S. agricultural exports.

China's Agricultural Trade: Competitive Conditions and Effects on U.S. Exports (Investigation No. 332-518, USITC Publication 4219, March 2011) will be available on the USITC's Internet site at http://www.usitc.gov/publications/332/pub4219.pdf. A CD-ROM of the report may be requested by e-mailing pubrequest@usitc.gov, calling 202-205-2000, or contacting the Office of the Secretary, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. Requests may also be faxed to 202-205-2104.

USITC general factfinding investigations, such as this one, cover matters related to tariffs or trade and are generally conducted at the request of the U.S. Trade Representative, the House Committee on Ways and Means, or the Senate Committee on Finance. The resulting reports convey the Commission's objective findings and independent analyses on the subjects investigated. The Commission makes no recommendations on policy or other matters in its general factfinding reports. Upon completion of each investigation, the USITC submits its findings and analyses to the requester. General factfinding investigation reports are subsequently released to the public unless they are classified by the requester for national security reasons.