Tension with ASEAN hurts China’s top seafood exporting province

Export growth appears to have slowed in one of China’s leading regions for seafood production and trade. According to the Ocean & Fisheries Bureau in southeasterly Fujian province the province’s overall trade in aquatic products from January to July this year reached 629,700 metric tons (MT), with total trade worth USD 3.4 billion (EUR 2.6 billion), down 2 percent and 22 percent respectively over the previous six months. While the export data looks good in year-on-year terms, there is a possible knock on from tension between China and several members of Fujian’s key export destination, the Association of Southeast Asian Nations (ASEAN) bloc.

One trader reached by SeafoodSource in the city of Xiamen said that sales of processed seafood to the Philippines and Malaysia had fallen. “We’re looking for new markets, there’s too much hassle between China and the Philippines since they started arresting fishermen (a reference to a Sino-Filipino dispute over ownership of the South China Sea),” said Frank Yu who runs Best Seas, a trading firm in Xiamen that sold processed fillets and shrimp to buyers in Manila.

Fujian’s seafood trade situation seemed to deteriorate somewhat over the first half of the year when overall trade inched up only 2.7 percent to 570,500 MT in the first half of the year, though the value of trade rose by 8.2 percent to USS 2.8 million (EUR 2.1 million). The bureau didn’t detail figures for exports to Southeast Asian countries, the key market in recent year for seafood exporters in Fujian.

Nonetheless, in year-on-year terms the trade data for China’s leading seafood exporting region look healthy. According to customs statistics Fujian’s seafood exports from January to July totaled 414,400 MT worth USD 3.065 billion (EUR 2.3 billion) — that’s up 19.9 percent and 26 percent, respectively. Imports at 215,300 MT were worth USD 397 million (EUR 300.9 million), up by 27 percent and 3.2 percent, respectively.

Last year Fujian claimed the honor of being China’s No. One seafood exporting province with shipments of 725,000 MT worth USD 5.1 billion (EUR 3.9 billion) up 5.2 percent and 6.9 percent year-on-year, respectively.

The province’s USD 2.7 billion (EUR 2 billion) trade surplus increased 31.9 percent year-on-year in the first seven months of 2014. The lower value of imports is down to two reasons: lower valued species for processing and re-export. Also, importers frequently undervalue imports to reduce taxes, explains a trading source based in Xiamen, one of Fujian’s main ports. But the gap between exports (USD 2.43 billion [EUR 1.8 billion]) and imports (USD 397 million [EUR 300.9 million]) in the first six months of this year was particularly wide — this might suggest Fujian is getting an increasing amount of its seafood from its pelagic fleet (China's largest), which brought in RMB 277.5 million (USD 45.1 million, EUR 34.2 million) worth of catches, up 11.7 percent year-on-year.

A major producer-exporter of cuttlefish, squid, eel and shrimp, Fujian had in the past two years been able to boost exports thanks to a bigger market share in nearby Association of Southeast Asian States (ASEAN) countries. In the first half of last year ASEAN was the top export destination with 162,900 MT, USD 795 million (EUR 602.5 million), up 17.5 percent and 44.6 percent, respectively; Taiwan bought 41,600 MT, worth USD 476 million (EUR 360.7 million), up 37.3 percent and 46.5 percent, respectively ahead of the U.S. which bought 26,100 MT for USD 272 million (EUR 206.1 million), up 20.8 percent and 0.4 percent, respectively. However in full-year terms in 2013 the province’s total exports to ASEAN hit USD 1.33 billion (EUR 1 billion), an increase of only 5.4 percent compared to the 44.6 percent growth reported for the first half of the year. Shipments to Taiwan at USD 895 million (EUR 678.2 million) were up by 12.7 percent.

This comes at a time when the Fujian provincial government also has aggressive plans to expand fishing in waters of the South China Sea, much of which are disputed by China and several ASEAN member states including Vietnam and the Philippines.

Located next door to the industrial hotbed of Guangdong, one of China’s wealthiest provinces (and another major aquaculture producer), the province is home to a burgeoning USD 2 billion per year abalone cultivation sector based around Dongshan island while the region of Ningde has emerged as a major producer of yellow croaker, with over USD 100 million (EUR 75.8 million) worth of the fish shipped to South Korea, the top croaker export market, in 2013.

Fujian benefits from its proximity to Taiwan, with only the narrow Taiwan strait separating the two. This has allowed Fujian to soak up much investment from wealthier Taiwan but it also meant Fujian was a leading beneficiary when mainland China and Taiwan signed a free trade agreement in agricultural and fisheries products.

Known in China for being a source of overseas Chinese emigrants and traders, Fujian is known for having a major nationwide network of traders, with many stallholders at seafood wholesale markets across the country hailing from the province. Traders from Fujian locate themselves in markets across the country because they have links to the producers and thus source seafood more easily than others.

In a recent report on the fishing industry, Fujian government warned “ocean development continues strong but while big projects are making progress we must realize the speed of growth in the ocean economy is slowing. The degree of construction pace is not fast enough. There are not enough ‘dragon head’ enterprises (large-scale enterprises officially backed by government). There is not enough brand management and promotion and we need to improve the management of territorial waters and the management of islands.”

These comments will worry neighboring countries like the Philippines and Vietnam which have major disputes with China over what Beijing terms is its territorial waters. China has increased its level of fishing, drilling and settlements on islands in disputed waters in the past two years in particular.


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