China's agriculture is still facing stern challenges despite a farm trade surplus in the year following its entry to the World Trade Organization (WTO), officials and experts said yesterday.

Exports of China's farm produce grew against the odds while imports fell after the nation entered the world trade club last December, leaving a surplus of US$3.88 billion at the end of September, the Ministry of Agriculture statistics reveal.

On the back of efforts to tap the international market and improve product quality, agricultural exports reached more than US$12.62 billion between January and September. This represented an increase of 11.5 per cent on the same period last year, the latest figures of the ministry showed.

Imports dropped 0.4 per cent year-on-year to US$8.74 billion over the same period.
However, this bright picture should not make the country over optimistic, a senior researcher with a key government think-tank said.

"A year's experience in farm trade alone is not enough (for the government) to gauge and determine the profound effect of the WTO entry on China," said Cheng Guoqiang, of the Development Research Centre under the State Council, China's cabinet.

Cui Ming, a division director of the Ministry of Agriculture, said this year's performance alone was not enough to make him upbeat about the future.

The situation will not change the original decision of his ministry that the impact of WTO membership on the country should never be underestimated, especially its increasing pressure on agricultural trade, he said.

Cheng said the trade surplus in the first year largely resulted from the fact that China cut soybean imports this year because it imported too much last year and foreign soybean prices are higher.

Another reason for the expanded trade surplus is that some foreign grain products failed to enter the Chinese market to fully fulfil the tariff rate quotas because of their higher costs and reduced output.

Global grain prices rose this year partly because of the impact of natural disasters on the world's leading grain producers, including Canada, the United States and Australia. These countries slashed their grain output significantly and their grain stockpiles dropped accordingly.

In comparison, China boasts a huge inventory of grain and lower prices.
This means foreign grain exporters lost their price advantage when trying to enter the Chinese market. And China's corn and wheat were consequently able to find their way abroad, Cheng said.

In 2003 and coming years, China may face more severe international market situation and more intensified pressure from imports than it does this year, he said. Global grain prices may fall and some foreign countries are heavily subsidizing their agricultural sector, he said.
Technical barriers imposed on Chinese agricultural products by some developed countries have also impeded exports of Chinese farm produce, the experts agreed.

The country will spare no effort to further sharpen the competitive edge of its agricultural products and actively participate in the new round of agricultural negotiations of the WTO, they said.