State-Owned Enterprises Corn Import Monopoly

China's customs information network issued a statistical report on the rapid increase in China's corn imports. The report includes some tabulations of customs statistics showing a near monopoly of state-owned companies buying exclusively from the United States.

State-owned enterprises are the predominant corn importers in China. During the first four months of 2013, SOEs have accounted for nearly all corn imported--over 1.4 million metric tons of corn. Other types of companies imported a little over 3000 metric tons combined. In 2010, SOEs accounted for two-thirds of imports. That year, private companies imported 35,000 mt while SOEs imported over 1 million metric tons. Foreign-invested companies imported 155,000 mt during 2010. (No data were reported for 2011 or 2012.)

China corn imports by type of importer
	2010			2013 (Jan-April)
	Import volume	Share		Import volume	Share
Type of enterprise	1000 tonnes	Percent		1000 tonnes	Percent
State-owned	1,069	67.9		1,444	99.7
Foreign-invested	155	9.8		*	*
Private and other	35	22.3		3	0.2

*= less than 1.

Source: China Customs Information Net.

The dominance of state owned enterprises reflects their preferential access to import quota and financing. SOEs get half of the 7.2-mmt tariff rate quota for corn each year while the rest is split among hundreds of private sector applicants. Small mills and traders are not even eligible to apply for import quota. 

The report also reveals that nearly all imports come from the United States. During 2011-12, over 97 percent of China's corn imports came from the United States. During the first four months of 2013, 99.8 percent came from the U.S. 

According to the report, China is pursuing a strategy of diversifying corn suppliers. In 2012, China approved Argentina as a source of corn imports, but the grain may be used for processing only. At the end of 2012, Ukraine was approved. The article describes the quick approval of Argentina as giving China an alternative to the United States for sourcing corn. China's quarantine authorities (AQSIQ) signed an initial agreement with Argentina in February 2012 and issued approvals to Argentine exporters only two months later. However, actual purchases from these "alternative" exporters have been small thus far. AQSIQ says Peru and Laos may soon be approved as exporters of corn for processing use.

The reports says it is important to note that Argentina's corn is very similar to that of the United States--about 80 percent is genetically modified (GM). The report describes genetically modified corn as a continuing food safety "hidden danger." The report says that effects of GM corn on human health have thus far been inconclusive, but the report claims that "not a few" domestic and foreign tests have shown that GM foods are a "potential hazard" to animals. Despite having no conclusive evidence of harm, the report urges caution regarding imports of GMO corn.