Following is the text of the USDA's January 3 news release on China's agricultural policy:

CHINA'S AG POLICY FOCUSES ON MEETING DEMAND FOR HIGHER QUALITY FOOD

WASHINGTON, Jan. 3, 2002--The U.S. Department of Agriculture expects China's imports of wheat, soybeans, vegetable oils, and cotton to rise in the years after accession to the WTO to cause changes in China's grain industry as new pressures from external competition and internal shifts in consumer preferences reshape the industry. A new report from the USDA's Economic Research Service, China: Agriculture in Transition, focuses on the long-term expectations for China's agriculture in the face of continued growth and openness to trade.

The report says that China's demand for soybeans to feed its emerging livestock and edible oils industries will continue to grow. Soybean imports are expected to top a record 13.2 million tons in 2000/01.

China's livestock sector is expected to play a key role in reshaping China's agriculture in the coming years and it is competitive in terms of production costs but sanitary issues limit export opportunities. The expanding scale of the sector and the shift from backyard to modern feeding operations will expand the demand for feed ingredients, including grains and protein meals.

The report notes that China's government is starting to move away from past policies that emphasized quantity of grain produced over quality. Protection or support prices for certain types of low-quality wheat and rice have been discontinued. Premium prices are offered for high-quality grains.

China is the world's largest agricultural producer and is the largest producer of many of the world's major agricultural commodities. China is also the world's largest consumer of agricultural products. China's economy is still one of the fastest growing economies in the world, with a reported 8-percent gross domestic product growth in 2000. A surge of foreign investment and continued government spending stimulated the country's economy during the first half of 2001. In the long term, greater openness to trade and social reforms will boost economic growth, stimulating demand for food and fiber.

This report also includes a summary of the agricultural provisions of the 1999 U.S.-China bilateral agreement that served as the foundation of China's terms of accession to WTO.

The ERS report, China: Agriculture in Transition, is available online 
at http://www.ers.usda.gov/publications/wrs012/.