BEIJING: China said on Monday it will impose hefty penalties on sugar imports after lobbying by domestic mills, but experts said the ruling may not go far enough to stem the flow of lower-priced sweetener into the world’s top importer.

The ruling, which will affect about a third of China’s annual sugar imports, introduces an extra tariff on shipments over a three-year period, which will fall slightly each year.

In the short term, it will inflict a blow on top growers, Thailand and Brazil, as it will close the big gap between Chinese and international prices. Chinese sugar prices are around double those on the London market.

But traders said the higher tariffs and exclusions will likely lead to increased smuggling across China’s porous southern border, while some imports from major producers may be shipped through third-party countries.

The government has also excluded about 190 smaller countries and regions from the penalties, potentially diluting their impact, analysts said. These include some of China’s closest trading partners such as the Philippines and Pakistan, both smaller sugar producers.

“Of course it will support the domestic industry for a short time,” said a China-based trader. “(But) the global raw sugar market just needs to drop a little below 15 cents” to make it profitable to import into China.

Published in Dawn, May 23rd, 2017