In July 2008, the Chinese Premier Wen Jiabao made an announcement of an
additional $3 billion in state support for the development of agricultural
biotechnology over the next 15 years.



This signals China?s intent to use biotechnology as a key means to address
food security and re-affirms its position that the technology can be used
safely. This strong pro-biotech policy suggests that major food crops may
soon break free from a long regulatory limbo and be permitted for planting.

A change to permit the planting of biotech food crops (rice, corn, and
soybeans, in particular) could significantly alter Chinese production and
rural economy in the coming years. However, concerns still remain about
transparency in China?s biotechnology regulatory and approval system and its
ability to evolve with this rapidly changing technology.


China is currently the sixth largest producer of biotechnology enhanced
plants based on total acreage (3.8 million hectares in 2007) and China
recently announced that biotechnology will play an even more important role
in its future agricultural development. Moreover, China is the largest
export market for U.S. crops produced with the aid of biotechnology. Despite
a lack of transparency in the development and application of regulations,
U.S. biotech soybeans and other products are selling at record levels and
are forecast to continue doing well in the future.

The State Council recently approved a special science and technology fund
with up to 20 billion yuan (2.9 billion) for research of new varieties of
biotech crops from 2006-2020. Xinhua news agency said that the program aims
to ?gain genes of great commercial value whose intellectual property rights
belong to China and develop high-quality, high-yield, and pest-resistant GM
crops.? The agency further noted that the council stressed the importance of
the program and called upon relevant authorities to ?waste no time
implementing it?.

While China has made notable progress in its regulatory infrastructure,
outdated biotech regulations and a lack of transparency still pose market
access impediments. The barriers include requirements that a product must be
fully approved in the originating country before an application can be filed
for approval in China, redundant testing for products already approved in
other countries, inadequate protection for intellectual property rights, and
the lack of regulatory guidelines for stacked events.

Several internal and external factors influence China?s biotech policy.
These contradictory and competing political concerns have so far prevented
China from commercializing any food and fodder crops, including rice or
corn. First, though there is a strong interest in maintaining self-reliance
in grains, biotechnology has not been used as a tool to boost production due
to uncertainty over consumer reaction.

The Ministry of Agriculture (MOA) is the country?s primary governing body
over agricultural biotechnology issues. MOA Ministerial Decrees 8, 9 and 10
create the legal framework under which these products are regulated. Other
government agencies, such as the General Administration on Quality
Supervisions Inspection and Quarantine (AQSIQ) and the Ministry of
Environmental Protection (MEP), are also involved on certain issues.

SECTION II BIOTECHNOLOGY TRADE AND PRODUCTION
Biotechnology crop production in China
China has commercialized six genetically modified plants since 1997 (cotton,
tomato, sweet pepper, petunia, poplar, and papaya) and, according to an
International Service for the Acquisition of Agro-biotech Applications
(ISAAA) report, China is now the sixth largest producer of agricultural
biotechnology crops in the world by acreage, (behind the United States,
Argentina, Brazil, Canada, and India) at 3.8 million hectares in 2007.
Insect-resistant (Bt) cotton is the single largest biotechnologically
enhanced product produced in China. It is estimated that nearly 69 percent
of the 5.5 million hectares of all cotton planted in China is produced with
Bt cotton varieties. Other crops approved for commercial production are
either not being produced (a delayed ripening tomato and a virus resistant
sweet pepper) or are in relatively small production (a virus resistant
papaya on some 3,500 hectares).

Biotechnology crop development in China
The Chinese government has granted safety certificates for commercial
production of four biotech crops, including insect resistant cotton, virus
resistant papaya, virus resistant sweet pepper, and delayed ripening tomato.
Transgenic plants like poplar and petunia are also approved for production.
China does not regularly publish lists on products undergoing research and
development. Among the hundreds of biotech products under development,
insect resistant rice (Bt63), bacterial blight resistant rice (Xa21), and
high oil content canola have been approved for productive testing. According
to a recent publication by the Ministry of Agriculture, other major crops
under filed trials include insect resistant corn, high lysine content corn,
wheat resistant to pre-harvest germination, and insect resistant soybeans.

The government has not approved any biotech staple food crops for
commercialization, even though it has made significant investment in
research and development of agricultural biotechnology in this area.
However, the progress of domestic research, slow productivity growth, and
food inflation may have contributed to a renewed interest in permitting the
release of a broader array of crops.

In July 2008, the State Council approved a special research program on the
development of new biotech varieties with an investment that could total as
much as $2.9 billion (funding to be allocated by central and local
governments) over the next 15 years. The program, outlined in the Long and
Mid-term National Development Plan for Science and Technology (2006-2020),
will focus on research of crops (rice, wheat, corn, and cotton) as well as
animals (swine, cattle, and sheep). The target is to develop new varieties
with traits such as insect and/or disease resistance, stress tolerance, high
yields, and high efficiency.

Experts suggests that the plan reflects the central government?s intention
to use biotechnology as one of the key tools to address food security in
China and as a signal that commercialization of staple food crops will be
permitted in the near future. Many in Chinese industry anticipate the
government will grant safety certificates for locally-developed transgenic
corn within a year.

According to the European Union, unauthorized biotech rice (Bt63) has
recently been detected in the rice shipments from China to European
countries. This has triggered the European Commission to adopt emergency
measures that require imports of rice and rice products originating or
consigned from China be certified as free of the unauthorized genetically
modified organism ?Bt63? as of April 15, 2008.

There is essentially no private sector development on biotechnology in
China. Biotech seed development in China is conducted by public research
institutes and universities funded by various parts of the Chinese
government, though marketing is often done by affiliated private companies.
Foreign investment on research and production of biotech plants, breeding
poultry and livestock, and breeding aquatic products is prohibited. Foreign
investment is allowed in conventional seed production, but is limited to
minority shareholders in joint ventures with Chinese companies.

Importation of biotech crops
China has approved four biotech products for import as processing materials
(soybeans, corn, canola, and cotton) and is a significant importer of U.S.
biotech products. The first batch of safety certificates were granted to
imported biotech improved crops in 2004. The current list of biotech events
approved for import as processing materials follows:


Biotech crops approved for import as processing materials (updated July 15,
2008)

Crop
Trait
Event
Developer
Safety certificate validity

Cotton
Insect resistance
531
Monsanto
02/20/2004-02/20/2009

Cotton
Herbicide tolerance
1445
Monsanto
02/20/2004-02/20/2009

Cotton
Insect resistance
BollgardII
Monsanto
07/20/2006-07/20/2011

Corn
Insect resistance and herbicide tolerance
59122
DuPont & Dow AgroSciences
12/20/2006-12/20/2009

Soybean
Herbicide tolerance
GTS40-3-2
Monsanto
12/20/2006-12/20/2009

Canola
Herbicide tolerance
GT73
Monsanto
12/20/2006-12/20/2009

Canola
Herbicide tolerance
Ms1Rf1
Bayer CropScience
12/20/2006-12/20/2009

Canola
Herbicide tolerance
Ms1Rf2
Bayer CropScience
12/20/2006-12/20/2009

Canola
Herbicide tolerance
Ms8Rf3
Bayer CropScience
12/20/2006-12/20/2009

Canola
Herbicide tolerance
T45
Bayer CropScience
12/20/2006-12/20/2009

Canola
Herbicide tolerance
Topas19/2
Bayer CropScience
12/20/2006-12/20/2009

Canola
Herbicide tolerance
Oxy-235
Bayer CropScience
12/20/2006-12/20/2009

Corn
Insect resistance
MON863
Monsanto
12/20/2006-12/20/2009

Corn
Insect resistance
MON810
Monsanto
12/20/2006-12/20/2009

Corn
Insect resistance and herbicide tolerance
Bt11
Syngenta
12/20/2006-12/20/2009

Corn
Insect resistance and herbicide tolerance
Bt176
Syngenta
12/20/2006-12/20/2009

Corn
Herbicide tolerance
GA21
Monsanto
12/20/2006-12/20/2009

Corn
Herbicide tolerance
T25
Bayer CropScience
12/20/2006-12/20/2009

Corn
Insect resistance and herbicide tolerance
TC1507
DuPont & Dow AgroSciences
12/20/2006-12/20/2009

Cotton
Herbicide tolerance
LLCOTTON25
Bayer CropScience
12/20/2006-12/20/2009

Soybean
Herbicide tolerance
A2704-12
Bayer CropScience
12/20/2007-12/20/2010

Corn
Herbicide tolerance
NK603
Monsanto
12/20/2007-

12/20/2010

Corn
Insect resistance & herbicide tolerance
MON88017
Monsanto
12/20/2007-

12/20/2010

Cotton
Herbicide tolerance
MON88913
Monsanto
12/20/2007-

12/20/2012


SECTION III BIOTECHNOLOGY POLICY
Ministerial Responsibilities
The Joint-Ministerial Conference for Biosafety Management of Agricultural
Genetically Modified Organisms (GMOs) is a loose mechanism that meets
irregularly to discuss and coordinate on major issues in biosafety
management of agricultural products of biotechnology. The conference
consists of seven government agencies under the State Council, including the
Ministry of Agriculture (MOA), National Development and Reform Commission
(NDRC), the Ministry of Environmental Protection (MEP), the General
Administration on Quality and Supervision, Inspection and Quarantine
(AQSIQ), the Ministry of Science and Technology (MOST), the Ministry of
Commerce (MOFCOM), and the Ministry of Health (MOH).

MOA is chiefly responsible for approval of biotech agricultural crops for
import and domestic production. MOA has taken over from MOST the management
of central government funds distributed to Chinese institutes and
universities for research and development of biotech crops. MEP (formerly
State Administration of Environmental Protection or SEPA) is the lead agency
for negotiation and implementation of the Biosafety Protocol (BSP), which
China ratified on April 27, 2005. AQSIQ and their local inspection and
quarantine offices (CIQs) are responsible for the nation-wide management of
the inspection and quarantine for entry and exit of all biotech products.
AQSIQ?s Ministerial Decree 62 (CH4017) governs the steps that should be
taken at customs when importing or exporting biotechnologically enhanced
goods.

China has established a system of technical experts to support the
regulatory system on agricultural biotechnology. The National Biosafety
Committee (NBC) consists of 74 experts with multidisciplinary backgrounds
from nine ministries, nine research institutions, and nine universities. The
Ministry of Agriculture announced that NBC will increase the number of
yearly meetings from two to three a year beginning 2008, likely in March,
July, and November, to evaluate applications for safety certificates for
biotech products for different uses as submitted by domestic and foreign
seed developers. The new arrangement allows applicants to have more
flexibility to file their applications before NBC meetings. The Committee
is divided into three expert groups responsible for: biotech plants, animals
and microorganisms, and food and feed.

The National Technical Committee for Standardization of Biosafety Management
of Agricultural GMOs consists of 41 experts and administrative officials and
is responsible for drafting and revising technical standards for biotech
products, including standards for safety assessment, testing, and detection.

There are 49 MOA-authorized centers across the country, which undertake
environmental safety testing, food safety testing, and detection of
agricultural GMOs.

The agricultural departments at provincial levels are responsible for
monitoring field trials of biotech products, facilities processing GMO
products, seed market, and labeling.

Regulatory Framework
The biotechnology regulatory environment for agriculture is outlined in
State Council regulations ?Food and Agricultural Import Regulations and
Standard? and ?Agricultural Genetically Modified Organisms Safety
Administration Regulations 2001? (CH1056) and largely implemented by MOA
under Ministerial Decrees 8, 9 and 10. These decrees (Measures on the
Safety Evaluation Administration of Agricultural GMOs, Measures on the
Safety Evaluation Administration of Agricultural GMO Imports, and Measures
on Agricultural GMO Labeling Administration (CH7053)) govern domestic
approval, import approval, and labeling, respectively.

The Chinese government is currently revising these seven-year-old
regulations to cope with the rapid evolving technology. Details about the
revision and timing of publication of the revised regulations are not
publically available. The National Biosafety Committee has recently
developed a guideline for safety assessment (environment safety and food
safety) to streamline the application and safety assessment processes.

The Ministry of Agriculture has added an additional application window for
accepting applications for biotech products of various intended uses. The
deadlines to accept the application materials are March 1, July 1, and
September 1 of each year. The evaluation decisions will be released 45 days
after each deadline. MOA used to have only two windows (deadlines on March
31 and September 30) to accept the applications.

Import approvals

The Ministry of Agriculture is responsible for approving biotechnology
products that are intended for import into China. The approval process
varies depending on the product?s intended use (research, processing
material, or production), safety levels, and the potential threat of the
organism to human or animal health and the environment. MOA Decree 9
(CH7053) outlines the different requirements for importing biotech products
with different purposes.

For importation of products as processing materials, Decree 9 states that a
foreign seed developer must apply for an agricultural biotech safety
certificate from MOA?s Agricultural GMO Biosafety Office. The regulations
require applicants to provide a variety of materials and to have
certification that the exporting country has allowed use and sale of
products in its domestic market and that they have undergone tests there
showing no harm to animals, plants, or the environment. MOA also requires
authorized domestic institutions to conduct environmental safety (field
trials) and food safety (animal feeding) tests to verify data provided by
the seed developer. All these documents, including reports generated from
verification tests, must be reviewed by the National Biosafety Committee
before MOA can issue a safety certificate.

Although the regulation provides that MOA should respond to an application
for a safety certificate within 270 days, the approval processes and
timelines of issuing a safety certificate vary from crop to crop depending
on the product?s intended use and potential impact on human or animal health
and the environment. In general, the process of getting a safety certificate
for imported biotech food crops as processing materials like soybeans will
last about two years because it involves steps of varying length, such as
import of testing materials, field trials and/or feeding study, and
evaluation by the NBC.

Approval for domestic production

To produce biotech crops domestically in China, technology providers must
pass a safety evaluation by the National Biosafety Committee and must be
issued a safety certificate by the MOA?s Agricultural GMO Biosafety Office.
As outlined below, the approval process for biotechnology products for
domestic cultivation involves five steps: research, intermediary experiment,
environmental release, productive testing, and safety certification.
Importantly, approvals are sought at the provincial level. After completing
the five steps, products are eligible for safety certificates. The
Agricultural GMO Biosafety Office delegates evaluation of the application to
the National Biosafety Committee.

In February 2008, the Ministry of Agriculture announced that Bt cotton
varieties and their backcross breeding varieties having received safety
certificates for commercial production may apply for production in all
ecologically suitable areas. For other biotech crops, a safety certificate
is good for the province or region where the original application was made.

In addition to a safety certificate for commercial production, biotech seed
developers must seek registration of the biotech seed variety at the
provincial agricultural department as required by the Seed Law. The process
will take another 2-3 years. (Note: in some provinces this process may begin
in step 4 of ?production testing? and therefore can save one year).

According to a joint notification by NDRC and the Ministry of Finance to the
Ministry of Agriculture, a fee charge schedule for safety evaluation and
testing of agricultural GMOs is summarized as follows:

1) Intermediary experiment (2,500 yuan each)

2) Environment release (3,000 yuan each)

3) Productive testing (5,000 yuan each or 3,000 yuan for additional
imports as processing materials )

4) Test of GMO survival and competiveness (83,000 yuan each)

5) Test of ecological risk of gene flow (92,000 yuan each)

6) Test of GMO impact on non-target organisms and biodiversity (96,000
yuan each)

7) Anti-nutrient test (1,000 yuan per item)

8) 90-day rat feeding study (120,000 yuan each)

A rough outline of the process of GMO application is listed below. Where
available, the names of institutions and contacts are provided.

1- MOA open window: accept applications

Contact: Mr. Lian Qing

Tel: 6419-1811

2- Biosafety Management Division at the Center for Science and Technology
Development (CSTD): review and submit the application to National Biosafety
Committee (NBC)

Contact: Mrs. Li Ning

Tel: 6419-5089

3- NBC: plenary sessions in March, July and November to hear preliminary
views about applications and decides what tests need to be done.

4- GMO office processes import permit for field trials and feed study
based on NBC approvals

Contact: Mr. Wei Kai

Tel: 6419-3059

5- Detection and Testing Division at the Center for Science and
Technology Development: designates testing institutes and locations for
field trials and feed study; work with applicants and designated testing
institutes on development of testing methods and positive samples.

Contact: Mr. Song Guiwen

Tel: 6419-5096

6- Provincial Agriculture Bureau: endorses field trials in the province
based on approvals from the GMO office;

7- Testing institutes for field trials and feed study: draft reports
after the field trials and feed study are complete.

8- Biosafety Management Division of CSTD: review the report and submit to
NBC

9- NBC reviews the reports about field trials and feed study at the three
meetings;

10- GMO office issues safety certificate to applicant based on NBC
decision.

Approved biotechnology products
A list of biotech products that have been approved for commercial production
in China is available on MOA?s web site at [www.agri.gov.cn].

Labeling Policy
China?s labeling regulations, governed by Ministry of Agriculture Decree 10
(CH7053), requires approved agricultural biotech products be labeled and
prohibits the importation and sale of any unlabeled or mislabeled products.
The types of products subject to mandatory labeling include:

1. Soybean seed, soybeans, soybean powder, soybean oil, and soybean meal;

2. Corn seeds, corn, corn oil and corn powder;

3. Rape seed for planting, rape seeds, rape oil, and rape meal;

4. Cotton seed;

5. Tomato seed, fresh tomato, and tomato paste.

China and the Biosafety Protocol
The State Council ratified the Biosafety Protocol on April 27, 2005 and
China participated in MOP-3 discussions in Brazil in March 2006 as a full
member.

As the lead authority for the Biosafety Protocol, China?s Ministry of
Environmental Protection (MEP) is charged with developing implementing
regulations. Though MEP has not published any new or revised laws with
regard to implementation of the Protocol, MEP has continued to state its
intent to develop an overarching Biosafety Law that would take precedence
over the Ministry of Agriculture's decrees regulating agricultural
biotechnology.

Issues of Concern in the Biotechnology
Below are some of the current issues of concern for foreign countries and
companies that export biotech commodities to China.

Product Approval: As noted above, the requirement that any product have
complete regulatory approval in the country of development is a significant
impediment to the import of products of biotechnology for processing. This
system creates a lag time of about two years that prevents the marketing of
seeds in the United States or other foreign markets because the resultant
products can be marketed in China. As the full spectrum of safety testing is
done in China after the finalized approval in the country of origin, this
measure does not to appear to provide additional safety but rather eliminate
the possibility that a biotech event would be approved in China but not in
the country of origin.

Low Level Presence: China maintains a policy of zero tolerance for
unapproved varieties. As China imports a broader arrange of products,
especially processed products, and develops a broader range of products
approved for domestic food consumption zero tolerance has potentially
serious repercussions for food distribution systems.

Stacked events: China?s regulations currently do not contain guidance on its
policy about the evaluation of stacked events. The Chinese Ministry of
Agriculture considers stacked events new products and requires a full
regulatory review even if the same event has been approved previously.
While China has approved cases of stacked events for local cultivation and
import, officials have indicated that China will consider approval for
importation of products composed of stacked events for processing on a
case-by-case basis. Additional transparency regarding China?s policy toward
plants containing multiple biotech traits would assist registrants.

Investment restrictions: The Chinese investment catalogue puts significant
restrictions on investment and/or control over intellectual property
(CH7087). Full modernization of the Chinese seed sector and biotechnology
research would be greatly assisted by providing foreign companies greater
ability to develop seeds specific to the Chinese market using the same
technologies open to domestic competitors.

Re-submission of discontinued products: China currently requires periodic
re-registration of products that are approved for use (including import for
processing), even if they are no longer in commercial seed channels, in
order to maintain up-to-date testing methodology. While there is not an
issue with the policy per se, companies generally hold very small quantities
of discontinued seed and the Chinese required volume of seed is too large
and poses safety issues if the plants need to be reproduced for this reason
alone.

Intellectual Property Rights: Concern remains that there are potential
conflicts of interest within the Chinese system for reviewing applications
for biosafety certificates. Many of the domestic laboratories or institutes
that actively test products under MOA review are also technology developers.

Import of testing materials: Although current regulations allow import of
transgenic organisms for research and experiment purposes, the Ministry of
Agriculture is not ready to accept such requests as they are not positive
whether and how the testing/experiment results should be used in the safety
assessment for the organism once it is has completed the regulatory approval
process in the country of initial development and has been submitted by the
developer to MOA for an import approval. MOA Decree 9 provides that import
approval process can begin only after the biotech crop has been granted
approval by the government of the exporting country for the same usage in
domestic market.

Revision of biosafety regulations: The Ministry of Agriculture has
repeatedly stated that it will modify the current regulations governing
agricultural GMOs that were first published in 2002 (CH7053) in a bid to
keep pace with the advancement of biotechnology. It is hoped that the
modification process will be transparent and the revised version will be
notified to the WTO for public comments.

SECTION IV MARKETING ISSUES
Market acceptance issues
China?s consumers are by and large open to and accept biotechnology
products. Generally, there does not seem to be the negative stigma attached
to biotech foods that exists in some other Asian markets. A recent
nation-wide study found 60 percent or more of respondents were willing to
purchase biotech foods (including soybeans and rice) without any price
discrimination. Twenty percent would only buy biotech food products when a
price discount was offered. Twenty percent of respondents to the study would
not accept biotech foods (with the exception of biotech rice with enhanced
nutritional traits) regardless of any discounts in price.

Another study found that Chinese consumers? awareness to biotech foods was
low, with about 75 percent having never heard of biotech foods or having
heard of them on an occasional basis. The study found that a large majority
of Chinese consumers hold a favorable or neutral attitude toward biotech
foods, with only 5-15 percent of urban consumers opposed to biotech foods.

These findings are consistent with a recent study by the Asian Food
Information Center?s study on communicating with consumers on biotechnology
that found that a ?majority of consumers hold an open-minded position
towards biotechnology foods and did not reject them per se.?

SECTION V CAPACITY BUILDING AND OUTREACH
U.S. Government funded outreach and capacity building programs
The U.S. and Chinese governments are working closely on several fronts to
assist China in its capacity to effectively and fairly handle biotechnology.
The U.S. - China High-Level Biotechnology Joint Working Group (BWG) was
established in July 2002 as a way to address bilateral biotechnology issues
of mutual interest. To supplement the policy discussions, a technical
subgroup (TWG) was established in July 2003. Together, these fora have
become a constructive means to address issues of common concern. The most
recent BWG and TWG were held in March 2008 in Washington D.C. with both
sides committed to continued dialogue and collaboration on regulatory and
technical exchanges on agricultural biotechnology.
www.checkbiotech.org