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Crop growers eye rural China

(China Daily/Agencies)
Updated: 2009-09-28 09:00

China's economy expanded 7.9 percent in the second quarter from a year earlier, fueled in part by 4 trillion yuan in stimulus spending.

In 2008, bilateral trade amounted to $333.74 billion, making China and the United States each other's second-largest trading partners.

In the past five years, American exports to China grew by 20 percent annually. Last year, China accounted for 49 percent and 34 percent of American soybean and cotton exports, respectively.

COFCO, the country's largest oil and food producer, plans to build a soybean processing plant in southwestern China's Guangxi Zhuang autonomous region with a capacity of 1.2 million tons a year, according to a Xinhua News Agency report.

The report, citing sources familiar with the project valued at 1.85 billion yuan, stated that construction would likely be in Qinzhou in the Beibu Gulf economic zone.

In April, COFCO opened a 4 billion yuan oil-pressing project in Tianjin.

China's major edible oil producers, including Sino Grain Oils & Fats Industrial Co and Jilin Grain Group, also plan to open new factories to boost capacity.

Per capita edible oil consumption is 14.5 kilograms a year in China.

However, the National Development and Reform Commission (NDRC), China's top planning body, warned that the soy crushing capacity of the world's largest soy importer was far larger than needed -- suggesting the Chinese government could push for consolidation in the sector.

Besides excessive expansion in steel and cement sectors, over-capacity in the shipbuilding, aluminum and soy crushing industries were also worrisome, said Chen Bin, a department director with the NDRC.

The government would further curb such expansion next and push for restructuring of those industries, Chen was quoted by the 21st Century Business Herald as saying. He said some provinces were still building or planning to build new plants.

Industry officials said that about half of the country's 80 million tons of annual soy-crushing capacity was not operating last year, and added that the situation is unlikely to improve this year.

In 2007, only 44 percent of capacity was in operation, and many of the closures were plants with a daily capacity below 1,000 tons, according to the report.

The Chinese government encouraged a restructuring of the industry to form some big companies that would have better logistics and port facilities, Liu Xiaonan, a commission official, said at a soy conference last month.

Liu said the government was encouraging soy plants to sign long-term contracts to ensure supplies because China relies heavily on imports.

(For more biz stories, please visit Industries)

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