China increases import of Vietnamese agro-products

HANOI: China has stepped up buying farm products from Vietnam, including coffee, rice and rubber as it grapples with harsh crop weather, but higher prices could stoke inflation in the Southeast Asian nation, government data and state media said.

Rising Chinese imports of Vietnamese agricultural produce, which has seen robust growth in the past decade, will continue at least through the rest of this year, based trade ministry forecasts.

Trade between the old rivals which fought a brief but intense border war in 1979 has jumped so far this year despite strained ties since late May because of a flare-up in a long-standing disagreement over sovereignty in the South China Sea.

Exports to China extended strong growth into June, which would push up prices of Vietnamese commodities, Vietnam's trade ministry officials were quoted by the Saigon Economic Times newspaper as saying in an online report (www.thesaigontimes.vn).

Vietnam's inflation topped 20 percent in June, its highest annual rate since November 2008, the government said.

Growth expected to hit 9.5 percent in the world's second-largest economy for the first half, is stirring demand for agricultural products, while a drought followed by recent heavy rains hit grains output in key growing regions, though China has played down its impact.

China imported more than 100,000 tonnes of white sugar from Vietnam between Jan. 1 and June 15, or around 10 percent of the exporter's total output this year, the report released late on Wednesday said.

Vietnam's exports to China between January and June soared 56.6 percent from a year ago to $4.5 billion, the government's General Statistics Office said in its monthly report.

Exports from Vietnam to China last year jumped 49 percent to $7.3 billion, far beyond average annual growth of 16.5 percent in the 2005-2010 period, and revenues are forecast to rise another 27 percent to $9.3 billion this year, Hanoi's trade ministry has said.

COFFEE EXPORT NEARLY DOUBLES

Vietnamese coffee export to China nearly doubled to 16,800 tonnes in the first five months of this year from 9,900 tonnes in the same period last year, data from Vietnam's Agriculture Ministry showed.

China and Russia, where coffee consumption has been rising, have been identified as potential growth drivers for the export business of Vietnam, the world's second-largest coffee producer after Brazil.

Students returning from abroad and frequent international travellers will keep China's coffee consumption at 15-20 percent annual growth by patronising new domestic outlets selling high-priced versions of the brew, industry watchers said.

China is the top buyer of Vietnam's rubber, having imported 144,000 tonnes of the commodity between January and May, up 23 percent from a year ago and representing 60 percent of Vietnam's total rubber export in the period, the Agriculture Ministry said in its six-month report.

"Many rice cargoes have gone from here to the north in recent weeks, probably to China via land border trade," said a rice trader in Ho Chi Minh City, lying next to the Mekong Delta food basket.

He said data of land border trade - using cash payment and via small lots of delivery - were not available, so while sales believed to be bound for China have been strong, there were no official records.

In official trading, involving payment via banks and deliveries by ships, Vietnam sold 191,000 tonnes of rice from January to May this year, the agriculture ministry said, compared with no official import by China in the same period of 2010.

China is also listed among the 10 biggest importers of Vietnam's tea, timber and furniture, vegetable, shrimp and fish, cashew nuts as well as cassava and cassava chips, the agriculture ministry's report showed.

Vietnam's export of cassava and cassava products to China is forecast to rise to $800 million for the whole of 2011, after $509 million has been generated in the first five months and more than $440 million in the whole of last year, forecasts by a trade ministry official and farm ministry data showed.

Copyright Reuters, 2011