China allows first-ever US rice imports ahead of trade talks

[BEIJING] China has opened the door to imports of rice from the United States for the first time ever in what analysts took to signal a warming of relations between the world's two biggest economies after a frosty year marked by tensions and tit-for-tat tariffs.

The green light from Chinese customs, indicated in a statement posted on the customs authority's website on Friday, comes in the run-up to talks between the countries in January after US President Donald Trump and Chinese President Xi Jinping agreed to a moratorium on higher tariffs that would affect trade worth hundred of billions of dollars.

It was not immediately clear how much rice China, which sources rice imports from within Asia, might seek to buy from the United States. But the move, which comes after years of talks on the matter, follows pledges from China's commerce ministry of further US trade openings earlier this week.

"I wouldn't be surprised to see importers trying to move rice into China from California but I don't know if it will be in breathtaking quantities right away," said Stuart Hoetger, an analyst and physical rice trader based in California.

As of Dec 27, imports of brown rice, polished rice and crushed rice from the United States are now permitted, as long as cargoes meet China's inspection standards and are registered with the US Department of Agriculture.

The USDA on Dec 11 forecast US rice production at 6.93 million tonnes while Chinese rice imports were estimated at 5 million tonnes. Rice makes up only a small portion of US agricultural exports, which are dominated by shipments of soybeans, grain, tree nuts and meat.

US rice futures had little reaction to the announcement, declining by 7 cents to US$10.06 per cwt (hundredweight).

"The permission for US rice suggests an improving US and China relationship," said Cherry Zhang, an agriculture analyst with consultancy JCI. Ms Zhang said she expected any imports would likely be ordered by state-owned companies.

Officials at a government-affiliated think tank in Beijing said the price of US rice was not competitive, compared with imports from South-Asia, and said the move to formally permit imports from the United States should be interpreted as a goodwill gesture.

China opened its rice market when it joined the World Trade Organization in 2001, but a lack of phytosanitary protocol between China and the United States effectively banned imports, according to trade group USA Rice.

Nonetheless, in July China formally imposed additional tariffs of 25 per cent on US rice, even though imports were not permitted at the time.

REUTERS