China’s growing food imports from the EU

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China is turning into one of the world’s largest and most lucrative food markets. As the incomes of China's 1.3 billion people and urbanisation rates continue to rise, demand for quality, health and environment conscious food products will escalate. Domestic production will eventually be unable to meet the exponential growth in demand due to rising food consumption, marked changes in the composition of diets and continued stress on China’s natural resources due to water scarcity and land degradation. China had been a significant net exporter of agricultural products previously, but since 2003 the imports of agricultural products have exceeded exports. China is now a major net importer of agricultural products. The Chinese food market is considered as one of the most dynamic and promising food markets for EU agricultural exports. Given China's enormous size and catch-up potential, Zhi Wang (1997) and Colby et al. (2000) indicated that freer trade after China’s WTO accession would substantially expand Chinese demand for food products. China's middle class is expected to number 150 million by 2010. This means new opportunities for EU exporters in the growing processed and high-value food market, mainly in busy urban areas because of convenience, healthier choices, variation and quality. The Chinese market for high-value consumer goods is estimated to be worth 1 trillion euros by 2010 (DG Trade 2007a). Overall, China was a €25 billion (USD 32 billion) market for agricultural products in 2005, with the EU holding only a 3.8% share. EU’s market share in China has been relatively steady over the recent years. The product composition of EU agricultural exports to China has stayed more or less the same over the period 2001-2005. China is increasingly becoming an important destination for EU agricultural exporters even though the EU is having an agricultural trade deficit with China. In 2005, EU-15 agricultural exports (including seafood) reached €956 million (USD 1,214 million), €416 million or 77% more than the 2001 level. The growth in EU exports to China has increased from an averaged 4.6% per year in the period 1990-2000 to an averaged 14.3% per year in the period 2001-2005. The EU will see its agricultural exports to China exceed €2 billion in five years, if current trade trends continue. EU's agricultural exports are likely to hit €4 billion, when China's urban middle class reaches 200 to 250 million (People's Daily 2006). Booming middle class income levels have fuelled most of the country's increased appetite for imported food products and their tastes are expanding to include more western-style foods as more people become more affluent. From