Supply continues to surpass demand in China's consumer commodity market, although the trend has eased since last year, according to the Ministry of Commerce.

Except edible oil, China's major farm products, will achieve a balanced supply-demand relation in the second half of the year, the ministry said in a report posted on its website Thursday.

"Supply-demand interaction on the consumer commodity market continues to improve as the number of oversupplied goods decreases," it said.

But, from an overall perspective, the ministry said: "Oversupply has not been rectified fundamentally."

Overheated investment in some sectors has resulted in excessive output, which cannot be digested by demand in the short term, said the ministry, adding the situation deserved close further attention.

According to a survey grouping 600 major consumer products, 154 or 25.7 percent of the surveyed goods had balanced supply-demand relations.

The other 446 found that demand could not soak up what manufacturers provided, accounting for 74.3 percent of the surveyed goods.

"This is 2.7 percentage points less than that of the first half of the year," the ministry said.

Officials said they took it as a good sign that bodes well for the market.

The report also puts forward a range of suggestions to rectify oversupply such as taming duplication in low-level investment, increasing domestic demand, strengthening market supervision to ensure food safety, further developing the agriculture market, and increasing farmers' incomes to boost buying enthusiasm.

The supply-demand scenario tends to be good for farm products, said the report.

The increasing likelihood of bumper grain harvests and rising imports will help quench the thirst for major agricultural products, including rice, wheat, cotton and refined sugar in the second half of 2004, the report said.

"Supply-demand relations of these goods are turning onto the right track," it said.

China's grain output this year is expected to increase 4.8 percent year on year to 101.05 million tons, the first rise since 2000.

This matches the increase in growing acreage, which exceeds 100 million hectares with a rise of 1 percent year on year, figures from the National Statistics Bureau say.

As for trade, China has reduced the export quotas of corn, leading to a 75.6 percent decrease in corn exports to 1.63 million tons in the first half of the year.

Meanwhile, the nation imported 2.73 million tons of wheat, an increase of 875 percent on a yearly basis. And more international wheat will be brought into China. Up to June, China signed contracts to buy 7 million tons of wheat from the international market, according to the report.

Cotton and edible sugar enjoy a similar picture.

The harvest of domestic cotton and large imports of cotton from abroad will greatly relieve market demand in the second half of 2004.

China imported 1.45 million tons of cotton from January to June. The figure might exceed 2 million for the full year.

However, there will be a glut of edible oil because of increases in both output and imports, said the ministry.

China imported a total of 3.35 million tons of edible oil from January to June, a jump of 70 percent compared with the same period in 2003. The oversupply also makes selling the product more difficult.

The ministry predicted that the supply of edible oil, which will top 20 million tons, will be 3 million more than consumers need in 2004.

(China Daily September 17, 2004)