China Stalls Us Wheat Imports Plan

Chinese imports of US wheat, pledged ahead of president Jiang Zemin's recent state visit, have not begun and could hinge on guarantees it is free of a fungus that has been hampering trade for decades, officials said on Wednesday.

"Imports have not started yet," an official of Beijing's Ministry of Foreign Trade and Economic Co-operation (MOFTEC) said.

Imports would not go ahead unless the United States could guarantee that wheat sold to China was free of a fungus called TCK smut, the official of MOFTEC's import department said.

"If they insist on selling wheat that is not (guaranteed) free of TCK, we just cannot buy it," he said by telephone, adding, "There is no room for discussion on this issue."

China announced two days before President Jiang left for the United States that a trade mission coinciding with his visit would buy 700,000 tonnes of the US wheat.

Jiang's October 26-November 2 visit was the first US state visit by a Chinese leader in 12 years, and the wheat purchase plans were seen as part of Beijing's efforts to cut its ballooning trade deficit with the United States.

The announcement was also seen aimed at calming the powerful US agriculture lobby, which has helped elevate TCK to a trade issue and has threatened to use it to thwart Beijing's long-held dream to join the World Trade Organisation.

Wheat futures on the Chicago Board of Trade (CBOT) rose slightly on the import announcement, but traders said at the time they saw it as a political move.

Recent reports that China had bought 100,000 tonnes of US wheat appeared to be a total of Chinese purchases of US wheat so far this year, industry sources said.

One US agriculture official said China had bought four containers of the United States wheat this year, in January, April, June and September.

Traders and diplomatic sources said these containers were probably ordered by joint venture millers in China's south which were able to import high-quality wheat for blending.

US and Chinese officials said there had been no breakthrough in continuing talks over the dispute. "The principle on TCK will be maintained," the MOFTEC official said.

The dispute over the fungus has affected trade ties between Washington and Beijing for about 25 years, with China standing by its policy of refusing to accept wheat that cannot be guaranteed free of the fungus.

Beijing says TCK smut can cut wheat yields by up to 30 per cent. Washington says it is harmless. Until this year, only wheat from the US Pacific northwest was subject to the Chinese moratorium.

But US quarantine sources said that because the fungus was present in containers used to ship wheat, no wheat grown anywhere in the country could be certified TCK-free.

"We feel that by the time the wheat is in China and goes through the milling process, the pest risk is negligible," a US quarantine official said.

China's wheat production has been rising and the quality of its crop improving in recent years, which has reduced the need for imports to around three million tonnes this year, from annual needs of more than 12 million tonnes in the early 1990s.

Most of the current import needs are expected to come from Canada, with some from Australia, industry sources have said. (Reuters)