China’s Two Sessions 2021: What Are the Proposals for Food Industry?

Two sessions 2021 commenced on March 4 and concluded on March 11. In the most important annual meeting in China, NPC deputies from all walks of life converged in Beijing and shared their insights on industry and social development. The following are the proposals related to food industry.

Upgrade dairy industrial chain

Both Leng Youbin (chairman of Firmus) and Shi Yudong (R&D Engineer from Mengniu) mentioned that China should establish a dairy industrial chain security mechanism and promote its high-quality development. At present, domestic manufacturers heavily rely on the supply of imported dairy ingredients such as raw milk, whey powder and lactoferrin, which is likely to bring on potential risks towards the overall industrial chain. In this case, Leng Youbin suggested that the competent authority should support dairy manufacturers in developing upstream industry and place more emphasis on dairy deep-processing so as to develop high value-added ingredients ¹. Shi Yudong also raised series of measures to cope with raw milk supply & demand conflicts, such as the application of concentrated raw milk and implementation of dynamic milk powder storage mechanism ².

Increase the import sources of dairy cow

According to the research conducted by National Dairy Industry and Technology System, the amount of Holstein cow in China dropped from 8.6 million in 2014 to 5 million in 2018, representing approximately 40% decrease ³. The insufficiency of dairy cow directly affects the raw milk supply in China, and Shi Yudong proposed that China should grant cow import permits to more countries. This idea is also supported by Wei Lihua, chairman of Junlebao Dairy Group. At present, domestic enterprises are only allowed to import dairy cow from Australia, New Zealand, Uruguay and Chile, and the current imported cow price climbed to 30 thousand/herd from 15 thousand/herd in 2018 due to the supply shortage. Under such circumstance, Wei Lihua suggested that more countries like America and Canada should be granted market access approval of dairy cow, and Chinese enterprises could have stronger bargaining power after the expansion of suppliers ⁴.

Optimize dairy regulation

Chinese dairy industry has undergone significant changes during the recent decade, while some technical requirements stipulated in the current standard (GB 19301-2010, implemented in 2010) are incompatible with the actual condition, which may have negative impact on the industry progress. Therefore, NPC deputy Wang Yinxiang suggested the competent authority expedite the promulgation of new GB standard for raw milk. The new raw milk standard should have more stringent requirements, which could be embodied as lower microorganism limits and somatic cell count (SCC) ⁵.

Simplify the market access of plant extracts

Lu Qingguo, chairman of Chenguang Biotechnology Group, proposed that China should optimize the supervision of imported plant extract ⁶. Currently quite a few ingredients extracted from plants are supervised as Chinese medicine when it comes to importation, however, plant extract processing enterprises in China are not eligible to apply for customs clearance of drug, leading to the frequent import failure of plant extracts. Lu Qingguo suggested that the import policy of plant extract should be separated from that of Chinese medicine and the market access of plant extract should be simplified.

In addition, health food sector should be placed more emphasis on and be supported from the perspectives of industrial policy, R&D and technical progress. One of the current urgency is to rebuild consumers’ confidence towards domestic health food products.

Remove the consumption tax of domestic wine

The proposal submitted by Zhou Hongjiang, chairman of Changyu Wine Co., Ltd, focused on the tax reduction of domestic wine, including ⁷:

• Remove the wine consumption tax of 10%

• Wine should be treated as agricultural product, exempted from or reduced of corporate income tax. Besides, the added-value tax should be decreased to 9% from 13% referring to the preferential tax policy of primary agricultural products.

Currently imported products dominate China’s wine market, whose market share accounted for 58% in 2019 8. One of the key competition advantages for imported wine lies in its lower cost. As wine is listed as agricultural product in most overseas countries, local government not only levy lower tax on it, but also offer subsidy to the manufacturers. When it comes to exportation to China, the tariff levied on wine is decreasing, and “Wine Consumption Tax Administrative Measures” stipulated that domestic consumption tax imposed on imported wine could be deducted by the consumption tax levied for customs clearance, leading to a lower cost of import.

Upgrade bar code to traceability QR code on food package

Bar code (EAN code) is very commonplace on food package nowadays, which is mainly used for commercial trading and settlement. Targeting at a more stringent food supervision, NPC deputy Hua Xiaoli appealed to popularize the use of QR code on food package, which could record more traceability information such as manufacturer name, production place, contact information, food ingredients, batch number, shelf life, transportation method, and etc. 9 Once the product is found unqualified, it would be recalled more efficiently based on the information recorded in the QR code.