Exclusive: China ramps up checks on U.S. pork imports in potentially costly slowdown

[May 08, 2018]   By Dominique Patton

BEIJING (Reuters) - China has ramped up inspections of pork shipped from the United States, importers and industry sources said, the latest American product to be hit by a potentially costly slowdown at Chinese ports in the past couple of weeks.

Some trade experts said they believe Beijing is sending a defiant warning to Washington in response to sweeping U.S. trade demands made on China last week.

The stepped-up checks have even hit China's WH Group Ltd <0288.HK>, the world's largest pork company and owner of Smithfield Foods in the U.S., and come amid increasing scrutiny of other U.S. farm goods, including fruit and logs.

Ports are opening and inspecting every cargo that arrives, said Luis Chein, a director at WH Group, China's top importer of U.S. pork.

That compares with inspections carried out only "randomly" in the past, he told Reuters, significantly lengthening the time product stays at the port.

China's General Administration of Customs, which oversees food imports, did not respond to a fax seeking comment.

Increased checks on U.S. products are "not terribly surprising," said Even Rogers Pay, an agriculture analyst at China Policy, a Beijing-based consultancy.

"In a situation where trade tensions are high, China will enforce every possible regulation on its books. It makes strategic sense to do so at this point," she said.

Late on Monday, China's customs agency announced it was stepping up quarantine checks on apples and logs from the United States after detecting pests in imports of the products at Chinese ports.

U.S. President Donald Trump has threatened tariffs on up to $150 billion of Chinese goods, largely because of U.S. allegations that Beijing misappropriates U.S. technology through joint-venture requirements, unfair licensing practices, outright theft and state-backed acquisitions of U.S. technology firms.

Beijing denies those accusations.

China's top economic official, Liu He, will visit Washington next week to resume trade talks, the White House said on Monday, after a U.S. delegation led by Treasury Secretary Steven Mnuchin came away from a visit to Beijing last week with no agreement over a long list of U.S. trade demands.

 Pigs nearing market weight stand in a pen at Duncan Farms in Polo, Illinois, U.S. April 9, 2018. REUTERS/Daniel Acker/File Photo

FROM DAYS TO WEEKS

U.S. pork is now sitting at Chinese ports for up to two weeks, instead of a few days, industry sources told Reuters.

Most of the imported pork is frozen and not at risk of perishing. But the move comes on top of the additional 25 percent duties Beijing slapped on American pork and a slew of other goods last month, in retaliation for U.S. tariffs on steel and aluminium imports.

The United States is one of China's top overseas pork suppliers, shipping $489 million worth of the meat last year.

A person working at a Shanghai-based meat trading firm said customs officials were also taking samples from about 20 percent of U.S. pork shipments since last month, up from about 5 percent previously.

He declined to be named because of the sensitive nature of the topic.

There had been no change for imports from other destinations the company buys from, including Canada and Europe, he added. Two German pork exporters said they were not aware of any changes to inspections.

Stepped up inspections and sampling were also cited in an April 30 report by the United States Department of Agriculture attache in Beijing, which said the new measures had started on April 23 but gave no further details.

The tariffs have already cut off demand for muscle cuts, or higher value pork meat, and pressured the price of so-called "variety" meat, such as offal and feet, the biggest portion of U.S. pork exports by volume.

In addition, China's domestic hog prices have plunged in the first quarter, and are still hovering around eight-year lows of about 10 yuan ($1.57) per kg. That has led WH Group to sharply reduce its imports anyway this year, added Chein.

China's total pork imports declined 10 percent to 595,611 tonnes in the first three months of the year, according to Chinese customs.

($1 = 6.3670 Chinese yuan renminbi)

(Reporting by Dominique Patton.; Additional reporting by Beijing Newsroom and Michael Hogan in HAMBURG; Editing by Tony Munroe and Martin Howell)

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