BEIJING—China is throwing a sweetener into a government campaign to crack down on contraband sugar, offering rewards of $80,000 or more for tips amid estimates that smuggled sugar, drawn by China's price subsidies, has outstripped legitimate imports.

Sugar-industry websites in China this week posted a May 3 notice from the government-backed China Sugar Association offering rewards ranging from 1,000 yuan ($159) to 500,000 yuan ($79,365) for information that "exposes criminal sugar smuggling." The government promised even more for "exceptional cases."

The association said the antismuggling reward was "to preserve normal sugar production and operation and the interests of 40 million sugar farmers in poor and remote areas."

The rewards signal Beijing's determination to stamp out an illicit trade that threatens to undermine recently reintroduced price supports. China is a net sugar importer and the world's top sugar importer, according to Chinese customs data, as growing affluence helps boost consumption.

The government reinstated a floor price for sugar of 6,550 yuan a ton in February after a two-year hiatus to protect farming incomes in China's sugar country, mostly in the south. China's floor price has helped buoy local prices, which were around 6,735 yuan a ton on Wednesday.

By comparison, import prices including taxes and freight were around 5,274 yuan a ton Wednesday, according to the Yunnan Sugar Network, an industry website. Global sugar prices have fallen to a 20-month low as an output surplus weighs on prices.

Chinese industry groups say that has led to a surge in illicit exports, particularly from Southeast Asia. The Guangdong Sugar Association last month estimated that sugar smuggled into China totaled about 500,000 tons in the first quarter, slightly more than the 499,254 tons imported legally according to government statistics.

In April, customs authorities in Yunnan province said it seized about 815 tons of smuggled sugar so far this year, while officials in Guangxi Zhuang Autonomous Region also reported the seizure of an undisclosed amount of smuggled sugar.

Expectations of tight supplies in China are also underpinning prices. The National Development and Reform Commission, China's top economic planning agency, said in February that domestic sugar production is likely to face a sugar deficit of two million tons this year, largely because poor weather in crucial growing periods early this year.

source: online.wsj


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