Thursday, December 8, 2016

China's porous borders facilitate ag product smuggling

Smuggling of agricultural products over China's porous borders has become rampant as Chinese prices are now far above prices in neighboring countries.

Rice is one of the most commonly smuggled commodities since China has a long border with major rice producing countries. Customs officials say they caught 57 gangs smuggling 218,500 metric tons of rice and other grains valued at over 1 billion yuan during the first ten months of 2016.

A Chinese reporter went to Nanning, Kunming, and Wuhan to investigate how rice is smuggled into the country. At a remote part of the border with Vietnam as many as 1000 small boats crossed the 70-80-meter wide Red River loaded with rice. Rice also comes in over small roads through the mountains. In a crackdown there last year authorities claim to have seized 2400 metric tons of smuggled rice in a single day.

Authorities have built a number of concrete barriers--including a 100-meter reinforced concrete wall--to stop the smuggling. However, payoffs to local enforcement officers and new routes to circumvent the walls allowed the smuggling to continue.

Another means of smuggling rice is to falsely report long-grain rice from Vietnam as medium-grain rice, which is eligible for a lower tariff.

Once in the country, smuggled rice reportedly is shipped by rail to various cities around China in Chongqing, Chengdu, Nanjing, and Henan. There it is blended with higher quality rice, polished, or repackaged as domestic rice. Wuhan--thousands of miles from the border--had two anti-smuggling campaigns that nabbed 18 smugglers and 28,700 metric tons of rice.

A detailed investigative report of pig-smuggling broadcast on China's central television in November got a lot of public attention. One individual involved in the business estimated that 15,000 live hogs are smuggled each night at a Guangxi Province border crossing with Vietnam. Trucks bypassed an inspection station, passed through a toll booth and reportedly delivered hogs to slaughterhouses in various Chinese provinces. Smuggling of various items is so profitable in this area that local entrepreneurs have constructed dozens of private roads that smugglers pay to use. China has banned pigs from Vietnam since 2003 over concerns about foot and mouth disease (Vietnam bans Chinese pigs over classical swine fever which the Chinese deny is a problem).

The TV report raised concerns that discouraged consumers from buying pork. A local journalist in Sichuan Province's Luzhou City reassured readers that he found no smuggled pork in the city's local markets.

During August, inspection and quarantine officials in Yunnan Province's Pu'er district seized and destroyed 99 hogs smuggled in from Myanmar. The same month, Yunnan officials reported another seizure of pigs smuggled from Vietnam.

Other smuggling occurs at ports. In Guangdong Province officials uncovered a gang that circumvented the tariff rate quota system to smuggle 40,000 metric tons of cotton from 2012 to 2014.

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