China sugar industry calls for tougher measures against smuggling

BEIJING - China's sugar industry is urging the government to tackle a resurgence in smuggling across the country's southern borders, after huge volumes of cheap sugar were estimated to have illegally poured into the world's top importer in recent months.

Smuggling of agricultural products along China's borders with Vietnam and Myanmar has long been a problem. While a crackdown in 2014 helped curb this, there are worries buyers will scramble for sugar supplies as the global market braces for its first deficit in six years.

Sugar smuggling has picked up since the start of the second half of this year, Yan Weimin, deputy secretary general of the China Sugar Association, said at a conference on Sunday.

"Because the government strengthened its management of sugar imports, and domestic sugar prices warmed up again, the gap between domestic and international prices again opened up and sugar smuggling raised its head in some provinces," Yan said in his speech that was published online.

The association has urged provincial authorities to tackle the problem but it is not clear what measures will be taken.

Some estimate as much as 1.2 million tonnes of sugar have been smuggled into China this year, nearly half of it Thai sugar via Vietnam, Liu Hande, secretary general of the Guangdong Sugar Association told Reuters recently.

In the previous calendar year, China officially imported 3.49 million tonnes of sugar.

About 400,000 tonnes are thought to have entered the country illegally since early October, Liu added.

The smuggled sugar is being sold at 4,900 yuan (S$1,086) per tonne in Guangzhou, about 400-500 yuan cheaper than the locally made sweetener, Liu told the conference.

China's sugar mills have pushed for controls on imports and smuggling to protect an industry with higher production costs than almost any other market.

Arrivals in September soared 80.1 per cent from a year ago to 660,000 tonnes, according to official Chinese data.

Industry officials expect half of September's shipments and almost all from the fourth quarter to end up in bonded warehouses as Beijing stops issuing new permits until next year.

China introduced a licensing system last year requiring importers to seek permits for shipments done without quotas.

Positive feedback from the local industry means the system will be retained next year, said Ma Hongwei from the commerce ministry's external trade department.

He did not offer more details on how much sugar would be allowed into the country under the system, information eagerly awaited by traders.