Report: China’s seafood demand overstated, with most imports processed and reexported

A study of China’s seafood sector suggests Chinese demand for seafood is overstated and that China’s reexports account for 75 percent of the country’s seafood imports.

Authored by a joint U.S.-Norwegian group of academic economists and scientists and titled, “China’s seafood imports – Not for domestic consumption?” the report found China’s seafood-processing sector, based on low cost and scale accounts, threatens the sustainability of the seafood industry elsewhere by facilitating mislabeling.

“[This] largely contradict[s] the narrative that Chinese domestic demand is driving massive Chinese imports, because imports are positively correlated with economic and population growth, although some imported species like Atlantic salmon primarily go to the domestic market,” it found.

China’s processing of wild-caught fish for reexport outcompetes processing in other parts of the world in a way that resembles China’s success in manufacturing more broadly, according to the report, which was published in Science in January 2022. The report calculates that 11 percent of global seafood trade consists of product counted as an import to China and then as an import to the country to which it’s shipped post-processing.

Only a few species produced by China are primarily export-oriented, including sardines, mackerel, octopus, and tilapia, “and a few species are primarily imported for domestic consumption, such as Atlantic salmon, or as in the case of blue whiting, most likely exported under a different name.”

The report points out that China’s exports of cod and haddock are 35 percent higher than its imports, suggesting substitution by a “cheaper whitefish such as blue whiting, for which there are no recorded exports.”

The enormous scale of China’s processing for reexport operation creates space for mislabeling and cover for illegal, unreported, and unregulated (IUU) fishing, the study found.

“Exports [from China] as a share of combined imports and production exceed 100 percent for some higher-valued species such as cod and haddock, providing evidence of mislabeling,” it said. “A study of various species revealed, for example, that 57 percent and 39 percent of China’s Pacific salmon imports originate in the U.S. and Russia, respectively. This is crucial for seafood sustainability because the processing stage is an opportunity for seafood mislabeling with respect to country of origin and species.”

There are question marks over reliability of data and of labelling of both cuttlefish/squid and tuna, notes the report. Cuttlefish and squid make up 72 percent of all landings from China’s distant-water fleet, and tuna makes up 15.3 percent. Ten percent of China’s overall production of cuttlefish and squid (of which 40 percent is exported) is supplied by imports, according to the report, which draws on Chinese and international data.

 “For both species groups, the exports are larger than the imports but lower than imports plus the landings of the [distant-water] fleet,” it found.

Traceability is badly needed, urge the report’s authors. While the EU’s red and yellow card system and the US Seafood Import Monitoring Program are “a start” they’re deficient according to the report.

“The U.S. program does not even include Alaska pollock and salmon,” it said. “Systematic use of blockchain technology and international coordination could enable tracing seafood from different territorial waters that are comingled in processing and reexported and thereby reduce incentives for overfishing.”

Enabled in part by a U.S. Department of Agriculture grant, the report found China’s reexport model has “inadvertently” disadvantaged and damaged fishing and seafood-dependent communities elsewhere, with China’s seafood-processing model based on scale, low wages, and efficient transportation infrastructure enabling cheap and steady inputs and outputs. Furthermore, China’s economic model for maintaining dominance in seafood processing is reinforced by fishery management systems in place in many parts of the world, the report said.

“For example, a total catch limit in a fishery without quotas for individual vessels may hold the fish stock at a sustainable level, but it creates incentives for each vessel to race to catch fish before the catch limit is reached and the fishing season ends,” it said. “This racing concentrates landings early in the season and leaves processors with minimal fish to process later in the season. A consequence is idle or underutilized processing capacity part of the year, effectively increasing the costs of local processing, increasing China’s competitiveness as a reexporter.”

By creating less economic value and fewer jobs in other countries’ processing sectors, existing fisheries management efforts are undermining social sustainability globally, the report’s authors said. They called for a fisheries management approach that spreads out catches to “enhance social sustainability by increasing capacity utilization.”

The report noted that recently, some seafood processing work has moved from China to Southeast Asia, and that there is a movement in the United States to “re-shore” processing from China. With Chinese wages having increased sharply in the past decade, China’s advantage on labor costs is waning, and skyrocketing freight costs are also having an impact on China’s seafood-rocessing industry, the report found

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