China Soybean Agreement

14 Sep

Chad Bown, a senior fellow at the Peterson Institute for International Economics, conducted an analysis of the entire Phase One agreement and the four sub-objectives. His analysis of the agricultural sub-target shows that it will be extremely difficult for China to import enough to achieve the increases set out in the agreement. This is extremely critical, given that soybeans accounted for the bulk of agricultural exports to China. Trump says China is spending its largest orders for U.S. soybeans and corn in history. Nevertheless, there is speculation that Beijing may postpone actual imports until November or later so as not to appear pro-Trump if former Vice President Joe Biden wins the election. “I still think the talks are routine and should go smoothly as China continues to buy U.S. soybeans and other commodities,” said Terry Reilly, senior analyst at Futures International in Chicago. “In addition, they have also increased energy imports. China is a major buyer of soybeans and therefore has excessive influence on global commodity markets. So far, China has not used its enormous market power to influence the elections, but the agricultural deal with the United States is very close. Does China`s “soy power” translate into influence over the 2020 US presidential election? China seems to be hedging its bets on this bet.

China is generally the Third Largest trading partner of the United States after Canada and Mexico, but the first phase sales contracts and the economic turmoil caused by the COVID-19 pandemic put it in the lead in April. Although all of the world`s other major economies are expected to fall this year, the World Bank said China could achieve 1 percent growth. China will buy a large pile of soybeans and other U.S. agricultural and energy products and promises not to steal from U.S. companies that want to use advanced technologies and do business there. The United States will refrain from further tariff increases. It was not immediately clear why purchases continued after the Beijing embassy from state-owned enterprises, but U.S. distributors said Chinese importers still did not cover much of the soybean needs in October and November. “Meeting the deal at this late stage of the year will be difficult, but not impossible,” Peter Meyer, an analyst at S&P Global Platts, said in an email. “It seems that the U.S. government has resigned itself to the possibility that the agreement will not be concluded.” China imported 45 million tons of soybeans in the first half of 2020, an increase of 18 percent compared to the same period a year earlier.

But more than two-thirds of those soybeans came from Brazil, as Chinese customs data showed. For China`s leaders, both a Trump presidency and a Biden presidency present risks. In a recent interview, The Chinese Ambassador to the United States, Mr. Cui Tiankai, who was sent to the countryside to plant soybeans during the Cultural Revolution, noted that his government was “concerned, even alarmed” by the growing difficulties in managing disputes in China-US relations and expressed hope that the two countries would find ways to address global challenges. . . .