BEIJING, Nov 3: A senior Chinese government official urged the country not to import sugar in the next 11 months due to expectations of a large domestic surplus, according to a report posted by an industry Web site.

Given that one-third of China’s sugar mills are losing money, mills should also cut sugar refining, officials urged.

China should do its best to import less or not to import at all in 2008/2009 (Oct/Sept), Ma Zhanping, a deputy director with the country’s top planner, National Development and Planning Commission, was quoted as saying.

Ma’s speech over the weekend was posted on the industry Web site (www.gsec.com.cn) by the Guangxi Sugar Exchange, the country’s largest physical sugar exchange.

A cut-off in imports would help China to reduce its surplus of 2 million tons, half of which has been carried over from the past year due to slower growth in domestic consumption, Ma was quoted as saying.

It was not clear if the government would stop issuing low-tariff import quotas. It normally allows private buyers to import half a million tons, out of a total annual quota of 1.945 million tons.

China’s sugar consumption in the year through September is estimated at between 13.5 to 13.8 million tons, almost flat from the previous year’s level, said Ma.

He estimated sugar output would also equal last year’s level of 14.84 million tons.

A reduction in domestic food production and exports was attributed to the slow consumption growth. A melamine-tainted milk scandal was also likely to hurt demand, said Ma.

Contamination of dairy products by the chemical melamine has reduced demand for sugar, which is used in dairy products, including powdered milk and yoghurt.

About one-third of China’s sugar mills are losing money, said Xu Xihe, a deputy director with the commerce ministry, but they should scale down production rather than exporting or producing fuel ethanol as the industry has proposed.

Chinese refined sugar prices are still about $100 per ton higher than international prices, and Beijing would have to subsidize refiners in order to make exports competitive, traders said.—Reuters