Foreign media: China to revise grain import quota system to combat corruption

Sina Finance News, Beijing, November 21 morning news - Reuters reports that according to Chinese officials and industry insiders, China plans to revise its grain import quota system to combat related corruption and control the national grain reserves.

Fang Yan, Deputy Director of the Agricultural Economy Department of China's National Development and Reform Commission, told Reuters that China will change its import quota system this month.

⟦NL> In China, low-tariff quotas are allocated to state-owned enterprises and some private enterprises. China is one of the countries with higher grain prices in the world, and these import quotas have become a cash cow for well-connected companies.

Ma Wenfang, an analyst at Beijing Orient Agribusiness Consultant Ltd., said: “Currently, some enterprises bribe government officials to obtain quotas, causing flour mills and other downstream enterprises to be excluded from import quotas.”

Ma Wenfang's company has proposed replacing the current quota system with a public bidding method. The public bidding method would allow enterprises to bid for quotas.

Affected by the revision of the import quota system, the government has postponed the allocation of 2015 grain and cotton import quotas. In the past, the government would announce quotas by the end of September each year.

Under the WTO quota framework, import tariffs can be as low as 1%, while to protect Chinese farmers, China imposes higher tariffs on amounts exceeding the fixed quota. For example, for wheat, companies without import quotas may ultimately pay tariffs as high as 180%.

Global price gaps in agricultural products have fueled a black market, where companies can sell their quotas for high profits. For example, the price of Chinese cotton is 40% higher than the import price.

According to a March report by Chinese media citing the All-China Federation of Industry and Commerce, companies with cotton import quotas sold quotas to processing companies at 4,000 yuan per ton.