China warns on U.S. soy as Chinese goods under scrutiny

 @ibtimes
on August 22 2007 10:02 AM

China, the world's top soy importer, has accused the United States of exporting substandard soybeans even as its own exports come under growing scrutiny abroad over safety concerns.

Recently, supervision bodies have found numerous quality problems in soybeans imported from the United States, the General Administration of Quality Supervision, Inspection and Quarantine said on its Web site (www.aqsiq.gov.cn) on Wednesday.

Harmful weeds and contaminated dirt had been found among the beans, which could threaten China's agricultural and forestry production and ecological safety, the quality watchdog said.

As an example, it said, a U.S. soy cargo in February was found to contain red beans and two types of pesticides that constituted a great threat to the safety of Chinese consumers.

China will strengthen its supervision over soybean imports to ensure the quality and safety of the beans, the quarantine authorities said.

The note sent shivers through the Chinese soy industry, which lost hundreds of millions of dollars in 2004 when the quarantine authorities turned down many arriving soy cargoes from Brazil because of what they said were quality problems.

Still, many industry officials said it was unlikely to have a major impact on Chinese soy imports, especially as Beijing is already worried about inflation due to high food prices and possible reductions in the country's 2007 crop, including soy.

Industry officials saw the move as an attempt by China to make a diplomatic point by noting that U.S. products also have quality problems. That view seemed supported by the fact that China highlighted one problem cargo that had arrived back in February, while more than a hundred U.S. cargoes have arrived since.

Official data showed China imported 16.88 million tonnes of soybeans during the first seven months of this year, including 7.84 million tonnes from the United States.

China has been criticized for safety lapses involving food, drugs and other exports ranging from toys and clothes to toothpaste. Officials have been quick to say that the vast majority of the country's exports meet standards.

They (Chinese government officials) are just scrambling around to find some quality problems from shipments from the U.S. to balance the thing out, said Phillip Laney, China country director from the American Soybean Association, in Beijing.

This is nothing new. These things happen occasionally, sometimes from the U.S., sometimes from South America. I don't think it should have any impact on the trade, he told Reuters.

A senior trader at a major international grains house agreed, saying: It is in the interest of China not to make life difficult because grains and oils prices now are very high in China. We cannot afford to have import disruptions.

Still he added: We are watching very closely. This is a card China can play. We are watching this very closely.

Nearly 20 percent of China's farmland has been hit by drought or flood so far this year, sparking fears the country's grains crop may drop for the first time in three years, triggering further price increases and higher inflation.

(Additional reporting by Nao Nakanishi in Hong Kong)

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