This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 7/14/2017

Overview
The United States Department of Agriculture, through the Foreign Agricultural Service (FAS), operates six offices in the People‘s Republic of China for the purpose of expanding exports of U.S. agriculture, fishery, and forestry products. In 2017, China is expected to be the most important market for U.S. exports of agricultural, forest, and fishery products followed by Canada and Mexico.  The 2017 annual export forecast for China is $22.3 billion, $2.9 billion lower than total 2016 exports.  While shipments of sorghum and DDGS have declined, China continues to have a strong appetite for soybeans, cotton, pork and pork variety meats, broiler meat, and dairy (especially whey products).  U.S. exports of these products (see accompanying table) to China accelerated in 2016 to $25.2 billion, recovering from a decline in 2015, but significantly lower than historic highs just four years ago.  Soybeans maintain the number one share of U.S. exports with a share by value of 56 percent in 2016.

First quarter U.S. exports recovered slightly in 2017  as  China’s economic growth picked up and consumer inflation moderated following decisive actions by China’s monetary authorities in 2017 to implement a series of controls to curb capital outflows, tighten monetary policy, constrain institutional investors in speculative markets, and trim value-added taxes.  At the same time, the national revenues are constrained by low returns on oil prices and exacerbated by increasing costs of pollution control.  Although China’s per capita income continues to remain strong, domestic per capita income growth slowed in 2017 to 5.9 percent from 6.3 percent in 2016.  Rising credit and debt concerns are expected to limit loosening of monetary conditions, but continued fiscal intervention in infrastructure, health, and other sectors remains effective.  Major global consumer trends in China during 2016 include continued demand growth for consumer ready products, fresh food, and animal protein products (dairy, poultry, and red meats).  As incomes continue to grow, consumer demand for away-from-home options, convenience foods, fresh food, and animal protein products will expand.  The eCommerce retail channel is expected to continue to mature as China’s mobile phone penetration of 4G mobile services is forecast to expand to more than 60 percent of the population.

Meanwhile, prospects for a rebound in U.S. agricultural exports remain constrained by China’s increasingly opaque and unresponsive legal system.  Every month China issues new entry requirements—certificates, registration, attestation—that do not necessarily increase product safety but push the onus of ensuring food safety away from Chinese food regulators.  Often these new requirements are not notified to the WTO for public comment and are not announced until implementation is imminent.  Re-certification and re-registration of facilities that have corrected oversight procedures may take months if not years.  China’s erratic rule-making also often subjects U.S. products to scrutiny that is not faced by domestic producers.  Long-standing requirements that lack a scientific basis, such as a ban on the import of U.S. beef due to BSE and a ban on U.S. poultry regardless of origin due to High Path Avian Influenza continue to remain in force even though Chinese domestic prices for poultry meat and beef remain above world levels.  China is also extending the scope of its food regulations to cover products traded under new platforms which may begin to dampen prospects for eCommerce traded products.  (For more information, please see Barriers to Trade).

China is, however, allowing the formation of trade associations.  Since the agricultural reforms of the 1970s and ‘80s, China has encouraged the privatization of state-owned enterprises and the creation of new companies and services to support the agricultural and manufacturing sectors.  However, attention to the creation of entities capable of independently representing businesses has received little support.  Because of the absence of neutral intermediaries, Chinese companies have been highly reluctant to voice their opinions regarding new regulations, standards, and incident enforcement.  Now trade associations—from pork to poultry, from bakery products to hotel associations—are beginning to appear at the provincial, regional, and national levels and may begin to play a more active role in food regulation and oversight.  While many of these new trade associations are spin-offs of state-owned enterprises, they do reflect the increasing recognition of the rights of industry to advocate for good commerce and prudent business standards.  China’s agribusiness is also following a parallel track of consolidating many small holdings and creating companies that are regionally or vertically integrated.  This includes conglomerates that handle animal genetics and feed processing to process animal products and Chinese chain restaurants, bakeries and coffee shops that span the entire country.

Key consumer trends over the past year have highlighted, in addition to growth in animal husbandry, continued consumer concern for food safety, and the expansion of eCommerce.  The former has been a driving factor for imports, which are seen as being more heavily inspected and generally safer than local products. The impact has been particularly strong for dairy products, especially those for children, and food ingredients for Chinese manufacturers seeking to avoid problems with locally sourced ingredients.

eCommerce is also a major trend for food imports, as growth rates for eCommerce far exceeded those for any other sales format. This is also being affected by consumer concerns over food safety: in general, eCommerce products are seen as more authentic and safer than those purchased through traditional stores. Logistics for eCommerce have matured, with products as delicate as fresh cherries and pears from the U.S. and live seafood being promoted and shipped through these channels quite successfully.

Since 2013, China has embarked on a comprehensive review of its food safety and agricultural standards, including an extensive overhaul of its National Food Safety Law. Due to the changing regulatory environment in China, U.S. exporters are advised to carefully check import regulations. Individuals and enterprises interested in exporting U.S. agriculture, fishery, and forestry commodities to China should contact the FAS offices (listed below) as well as USDA Cooperator organizations. Exporters of U.S. agricultural commodities should also review the FAS website, which features general information about trade shows and other promotional venues to showcase agricultural products, FAS-sponsored promotional efforts, export financing and assistance, and a directory of registered suppliers and buyers of agricultural, fishery, and forestry goods in the United States and abroad.

The Animal Plant Health Inspection Service also operates an office in Beijing.

U.S. Exports of Agricultural, Forestry, and Fishery Products to China
January - December
Cumulative to Date Values in Millions of U.S. Dollars

 

2012

2013

2014

2015

2016

Jan - Mar 2016

Jan - Mar 2017

YTD/ YTD Change (%)

Bulk Total

19,968

18,076

17,602

14,067

16,388

3,540

4,292

21

Soybeans

14,878

13,300

14,476

10,523

14,204

2,860

3,354

17

Coarse Grains (ex. corn)

0

95

1,466

2,115

1,023

334

260

(22)

Cotton

3,429

2,200

1,111

859

553

97

421

336

Wheat

214

1,283

194

160

205

17

102

505

Tobacco

119

176

216

197

172

172

124

(28)

Other Bulk Commodities

1,329

1,022

138

213

230

61

30

(1)

Intermediate Total

3,243

4,377

4,174

4,295

2,857

669

633

(5)

Hides & Skins

1,349

1,655

1,497

1,268

949

223

256

15

Distillers Grains

616

1,382

1,247

1,632

477

115

34

(71)

Feeds & Fodders NESOI

222

303

366

377

380

113

72

(36)

Hay

141

234

255

331

356

67

88

31

Soybean Oil

265

135

132

13

104

0

24

99,805

Planting Seeds

98

102

104

119

88

17

47

173

Vegetable Oils (ex. soybean)

95

54

50

48

47

12

11

(6)

Sugar, Sweeteners, Bev. Bases

16

21

20

19

12

4

2

(50)

Soybean Meal

2

4

11

6

10

1

1

(27)

Other Intermediate Products

439

485

493

480

434

117

99

 

Consumer Oriented Total

2,649

3,046

2,441

1,904

2,167

450

509

13

Pork & Pork Products

704

703

474

427

715

155

166

7

Dairy Products

415

706

693

452

384

75

131

74

Fresh Fruit

111

115

102

137

187

19

21

10

Tree Nuts

392

359

192

208

182

39

36

(7)

Processed Vegetables

136

142

133

137

152

42

29

(30)

Prepared Food

82

120

115

91

126

33

29

(11)

Processed Fruit

87

61

69

95

100

19

30

62

Wine & Beer

76

85

80

63

91

14

15

12

Snack Foods NESOI

33

36

48

51

37

9

8

(7)

Non-Alcoholic Bev. (ex. juices)

41

53

37

34

35

8

9

8

Other Consumer Oriented

571

666

497

210

157

37

33

(11)

Agricultural Related Products

2,773

3,482

3,865

3,254

3,811

874

939

7

Forest Products

1,640

2,344

2,661

2,066

2,544

538

710

32

Fish Products

1,124

1,115

1,181

1,037

960

210

227

8

Ethanol (non-bev.)

0

11

8

135

296

124

0

(100)

Distilled Spirits

8

12

14

15

11

2

2

45

Biodiesel & Blends > B30

0

-

-

-

0

0

-

--

GRAND TOTAL

28,632,947

28,980,528

28,081,916

23,519,144

25,222,778

5,532,867

6,372,920

15

Leading Sub-Sectors
China continues to lead global demand for soybeans.  Soybeans are crushed and used for livestock feed and edible vegetable oil.  Strong demand for livestock production continues to drive demand for oilseed protein meals.  Expanded U.S. export shipments and sales to China are made possible by a larger-than-previously-expected U.S. crop and a 4 percent rise in China’s national crushing margin in 2017.

Chinese pork imports are projected to slow to just 5 percent, but still remain at historically high levels as domestic supplies remain constrained.  Meanwhile, U.S. exports of pork variety meats to China are forecast to expand.

As Chinese broiler production continues to fall further in 2017, unmet demand will be partially filled with higher imports as was the case last year.  As a result, Chinese imports are forecast up nearly 40 percent to 600,000 tons.

Overall dairy consumption in China is fairly stable, with higher-end fresh milk and yogurt products replacing milk-based beverages. Consumers continue to prefer imported dairy products for quality and food safety reasons, resulting in increased imports across the dairy sector. Imports of Ultra High Temperature (UHT) Pasteurized milk will continue to rise, albeit at a slower rate than in the past and will further penetrate into the third- and fourth-tier cities in China.  The vast majority of imports continue to come from the EU, New Zealand, and Australia, which enjoy free trade agreements with China. The biggest consumption change has been growing Chinese middle-class demand for yogurt and yogurt products, with producers diverting increasingly large accounts of fluid milk and whole milk powder (WMP) into yogurt production.  The majority of imported UHT milk is ordered through eCommerce channels by young professionals in the larger cities.

China continues to remain a top market for U.S. whole and processed tree nut exports.  Nuts and seeds are a traditional snack food in China. Walnuts remain the favorite nut among Chinese consumers as walnuts are considered a health food that contributes to overall brain health.  Imported nuts such as almonds, pistachios, pecans, and macadamia nuts are holding an increasingly large market share as a result of rising incomes and enhanced consumer awareness about the nutritional attributes of nuts.

Opportunities

Beef
Beef consumption has been increasing in China as urban consumers gain affluence.  High pork prices have also pushed upper-middle and high-class consumers shift to beef consumption. China still maintains a de-facto ban on U.S. beef imports, despite the OIE restoring the United States’ bovine spongiform encephalitis (BSE)-risk status to “negligible” (the highest status available) in 2013.  U.S. beef has been banned from the Chinese market since the December 2003 discovery of BSE in the United States. While China announced a conditional lifting of the ban in September of 2016, no actual trade can begin until the United States and China reach a bilateral agreement on traceability and import protocol requirements.  To date, no consensus has been reached. If China resumes imports of U.S. beef in 2017, Post expects that initial import numbers will be modest, mainly due to the relatively higher prices of U.S. beef.

Animal Feed
Over half the world’s commercial swine are in China, requiring massive imports of animal feed inputs, like soybeans and sorghum.  Additionally, in April 2017, China lowered value-added taxes on primary agricultural products from 13 percent to 11 percent.

Cotton
China’s cotton imports are forecast slightly higher on a strong pace of imports to date and potential expansion of China’s import quota.  This recovering trend is also supported by the Chinese textile industry seeking to source higher-grade cotton from foreign suppliers to stay competitive in export markets.

Dairy Products
U.S. imports are constrained in large part by slow approvals of U.S. dairy facilities and products under China’s new registration regulations.   Once resolved, imports of U.S. fluid milk are expected to get a boost thanks to Chinese consumers’ overall positive perceptions about the safety and quality of U.S. food products.

Tree Nuts
Nut consumption, especially for imported nuts, will recover in MY 2016/17 as current world prices for most nuts have dropped sharply from the high levels in the previous year.  Chinese eCommerce is an increasingly important marketing venue for imported tree nuts. Tree nuts are ideal products for eCommerce sales due to their long shelf life, convenient packaging, and long distance shipping suitability.

Fresh Fruit
China’s imports of deciduous fruit will continue to increase on strong demand for high quality fruit and off-season supplies.  Apples are the top fruit consumed in China.  Because of their nutritional content, apples have long been an important component of the Chinese diet. In May 2015, China granted market access to all apple varieties from all states within the United States. As a result, by the end of MY 2016, the United States had replaced Chile as the top apple supplier to China and the volume is expected to continue growing in the years to come.  eCommerce is an emerging marketing venue for deciduous fruits in 1st and 2nd tier cities but still only represents a small fraction of the market due to logistical challenges.
Citrus imports are expected to continue to grow driven by consumer demand (especially in first tier cities) for high-quality and counter-seasonal fruit.

Wood and Wood Products
Despite a strong U.S. dollar, industry contacts report that demand for U.S. wood continues to rise.  With ample supply of sustainable high-quality timber resources, consistent quality and reliable grading systems, U.S. wood and wood product imports are expected to continue to expand.

Offices
Agricultural Affairs Office
AgBeijing@usda.gov
Agricultural Trade Office - Beijing
ATOBeijing@usda.gov
Agricultural Trade Office - Guangzhou
ATOGuangzhou@usda.gov
Agricultural Trade Office - Shanghai
ATOShanghai@usda.gov
Agricultural Trade Office – Chengdu
ATOChengdu@usda.gov
Agricultural Trade Office - Shenyang
ATOShenyang@usda.gov
Animal and Plant Health Inspection Service
Elia.P.Vanechanos@aphis.usda.gov
Web Resources
FAS Home Page
FAS Data & Analysis
FAS publishes a wide range of reports on agriculture, agricultural markets and market access issues and regulations. These reports are available on the FAS webpage.
FAS Offices Overseas

 

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.


More Information

China Agribusiness Trade Development and Promotion