Meeting huge market demands. David Hayes investigates.

China's fishing industry is stepping up the worldwide search for new fishery resources as competition for depleted global fish stocks intensifies among leading fishing nations. After boosting its marine catch in the late 1990s to become the world's largest fishing nation, China's marine catch tonnage has stabilised, causing the large fish processing industry to become reliant on imported fish supplies to avoid development of further processing overcapacity.

While doubts exist about the accuracy of some of China's reported fishery statistics, according to United Nations Food and Agricultural Organisation (FAO), China was the world's largest marine and inland capture fisheries producer in 2002, recording total production of 16.6 million tonnes. This figure was some 89% more than second placed Peru, which caught 8.8 million tonnes of fishery products, and well ahead of catches recorded by other important fishing nations such as the United States, Indonesia, Japan, Chile and India.

30 years of growth

China's fishery production has witnessed a huge increase during the past 30 years with total fishery production growing tenfold from 4.7 million tonnes in 1978 to 47.1 million tonnes in 2003. Most of the increase has occurred since the mid-1990s with total production almost doubling from the 25 million tonnes reported in 1995.

In fact, the growth of China's aquaculture output has been even greater than the marine fishery catch. Both marine aquaculture and inland aquaculture output have grown rapidly as a proportion of total fisheries production during the past two decades while the marine fishing share has declined.

In 1978 marine fishing accounted for 68% of China's total 4.7 million tonne fishery industry production, marine aquaculture 10%, inland aquaculture 16% and inland fishing 6%.

By 2003, marine fishing accounted for 30% of the country's total 47.1 million tonne fishery production, while marine aquaculture had grown to account for 27% of fishery output, inland aquaculture 38% and inland fishing 5%.

Marine fish production grew quickly during the mid to late 1990s but has since levelled off at about 14 million tonnes a year. Freshwater aquaculture has grown the most and now has reached about 18 million tonnes a year, becoming China's largest source of fishery products for the first time.

Marine aquaculture also has grown rapidly since the mid-1990s. The current output of 12.5 million tonnes a year has almost reached the level of marine fishing production.

“Marine aquaculture is practiced along the entire coastline from the north to southern China. The species produced differ place by place,” commented a recently retired official from China Fishery Bureau which is under the Ministry of Agriculture. In Shandong and in Liaoning provinces in the north they produce kelp seaweed, abalone, turbot, halibut and flounder as there is cold water in the summer months. They are still trying to produce salmon. They have tried but it has not worked so far.

New sources of supply

With China's marine catch apparently having reached a plateau, the nation's fish processing industry continues to seek new supply sources to ensure that sufficient fish are available for processing. Fish imports are growing as more foreign companies sign cooperation agreements with Chinese processing plants. A growing number of foreign companies supply their own fish for processing in China to ensure the availability of fish to fulfil their orders.

According to Sea Food Scotland, for example, which promotes Scottish fishery exports, about 12,000 tonnes of British demersel white fish are shipped in refrigerated containers each year to China for processing and re-export back to the European market. Sea Food Scotland recently sent a delegation to Beijing and Guangzhou to collect more information on fishery processing companies to which seafood processing can be outsourced in future. The delegation also promoted the export of high value products such as scallops and langoustines to China where domestic consumption of high value seafood is growing.

“Many Norwegian, Icelandic and Scottish companies establish contact and sell fish direct to Chinese processors. They supply fish in refrigerated containers transported on ships,” the source explained, “Some supplies have changed in recent years especially for white fish such as cod, Alaska Pollack and blue whiting. Before the plants processed a lot of cod but the total catch decreased and many companies changed to process low value Alaska Pollack. Prices have risen as a result for Alaska Pollack and now processors are considering blue whiting from the Netherlands. Usually these are processed into frozen or dried fillets either with or without bread crumbs and packed in a block.”

In addition to European fishery firms, companies from Hong Kong, Japan, Taiwan, the United States and Canada have established processing facilities in China. Japanese investors in China's fish processing industry include Marubeni Corporation, Malauha and even Japan's Iwatai-ken prefectural government. Most foreign investors help arrange fish supplies for their local processing partner though Chinese processors increasingly are sourcing their own fish supplies to open up new markets.

“10 years ago Chinese companies were weaker than their foreign clients and their customers supplied them with fish for processing,” the official said. “But Chinese processors are stronger now and they buy fish supplies by themselves. This includes supplies for Japanese customers with whom cooperation arrangements have changed.”

Processing explosion

China's processing industry witnessed a big leap in the decade up to 2003. In 1993 fishery imports stood at US$800 million a year while fish exports were worth $1.6 billion annually. During the next three years fishery imports grew by 50% while fishery exports doubled in value as re-export processing grew. By 2002 fishery imports had reached $2.1 billion annually while fishery exports had doubled in value to $4.4 billion.

The largest source of fishery imports is Russia which supplies fish worth over US$320 million annually, but buys very little marine produce from China. Peru supplies fish worth about $190 million annually and buys little in return. Japan supplies fish worth about $195 million annually and the United States fish worth $100 million, much of it being processed for re-export.

In tonnage terms China imports about 1.1 million tonnes of marine products annually, mostly unprocessed, while exports total about 1.3 million tonnes a year, mostly processed products such as fish fillets.

The main fish processing centres are in the port city of Qingdao in Shandong Province and Dalian in Liaoning Province. These are traditional fishing cities where fish filleting plants have been built as new business ventures. Many processing plants originally started up as joint ventures with foreign companies, but the industry now includes locally owned plants as well as 100% foreign plants.

Some processing plants belong to business enterprises that operate their own deepsea fishing fleets while others buy in their requirements from the global market. Many processing companies offer products that cater to different seafood markets worldwide, the products offered depending on the fishery products that can be caught or purchased for processing.

“There is overcapacity in the Chinese fish processing industry as there is a lack of fishery materials,” the official said. “There is fierce competition for fish. Seafood consumption is increasing globally but the catch is declining.”

According to government statistics Shandong Province has the largest fish processing industry exporting about 450,000 tonnes of aquatic products annually, equivalent to 28% of China's estimated 1.3 million tonnes of aquatic product exports. Aquatic imports by Shandong are 400,000 tonnes annually, much of it processed for re-export. Liaoning Province has the second largest fish processing industry exporting about 295,000 tonnes of aquatic products annually, equivalent to 22% of China's aquatic exports. Liaoning imports 190,000 tonnes annually, much of it for processing. Guangdong Province is third exporting about 185,000 tonnes of aquatic products annually, equivalent to 14% of China‚s aquatic exports.

In terms of processed fishery product export markets, Japan is the largest fishery trade partner importing processed products from China worth about US$1.75 billion annually. South Korea is second, importing Chinese processed seafood worth $386 million a year, while the US takes fishery products worth $350 million and the European Union products worth $260 million.

Meanwhile, mariculture is a growing part of the fishing industry and likely to gain in importance in future due to the impact of over fishing on coastal fishermen‚s livelihoods. In East China and the Shanghai area, shrimp, crab and kelp seaweed are the major marine aquaculture products while in southern China fish species raised include grouper, yellow croaker, skipjack tuna, red drum and shrimp.

Coastal fishing

“The government is trying to decrease coastal fishing and increase marine aquaculture. It's under planning to replace coastal fishing,” the official said. “It's easy to make policy, but a big challenge at the implementation stage. It's not easy for central, local or provincial government to fulfil fishery policies. It's acceptable for this policy to be introduced gradually as how else is there to feed the fishermen?”

According to government statistics, China's fishing fleet consists of 15,000 fishing boats of which only 442 have been reported to the International Maritime Organisation as measuring more than 24m in length. The source noted that the Chinese government has issued instructions that the number of small fishing vessels with motors less than 185 horsepower should be reduced in each coastal province. The reduction in small fishing boat numbers will also have an impact on fishermen numbers. Not all fishermen are full time as some fish on a part-time basis and have other jobs.

Both marine and aquaculture fishermen numbers have increased sharply with the growth in fishery production. The government is looking to redeploy excess coastal fishermen numbers into the marine aquaculture sector. According to government figures some 12.3 million people were engaged in marine fishing in 2003, a 69% increase compared with 7.3 million in 1990. The growth of aquaculture fishermen has been larger in proportion with some 4 million aquaculture fishermen engaged in their occupation in 2003, an increase of 135% since 1990.

Almost all fishermen in China are privately employed. The main exceptions are those working for the distant water fishing fleet that generally are owned by provincial governments. The cities of Shanghai, Dalian in Liaoning Province and Qingdao in Shandong have large fishing companies that are owned by the local municipal government and also carry out coastal fishing activities. Some municipal fishing companies are wholly integrated and own fish farms, coastal and distant water fishing fleets, processing plants and fishmeal plants.

Distant water fleets

Operating globally, China's distant water fishing fleet has agreements with a number of countries to fish in exclusive economic zones (EEZs) but faces problems in some waters. The Chilean government recently reduced the number of permits for Chinese fishing vessels to enter its ports to three compared with 11 prior to April 2005. The action was taken following a reduction in Chile's jack mackerel catch due to over fishing that the Chinese vessels were also targeting.

“Every country operates strict policies for fishermen encroaching into their EEZs. These are very strict rules and Chinese fishermen are feeling the difference,” commented the retired China Fishery Bureau official. “They pay a lot for EEZ licences though some Chinese vessels also enter foreign waters illegally and are arrested and heavily fined. This has happened in some African countries and Spain. In the South China Sea there is a lot of conflict as many countries have territorial waters claims in that area.

Last November people on Indonesian coastal boats shot dead Chinese fishermen on Chinese vessels and the Minister of Agriculture has taken this up with Indonesia”s Ministry of Marine Affairs and Fisheries.”


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