Northwest Arkansas Democrat-Gazette
Don’t roil trade, China urges U.S.
On steel, aluminum disputes, negotiate, Trump is advised
BEIJING — China appealed to President Donald Trump on Wednesday to avoid disrupting trade and to settle steel and aluminum disputes through negotiation after Trump said he would decide whether to impose tariffs or quotas.
U.S.-Chinese trade is “mutually beneficial” and disagreements are inevitable, said Foreign Ministry spokesman Geng Shuang. He said all governments should “spare no effort to avoid negative impacts” on the global recovery.
Trump said Tuesday that he is “considering all options” in response to complaints Chinese steel and aluminum being sold at improperly low prices threatens American jobs. Speaking to legislators, the president said he might take action on national security grounds.
“We should see these differences in a reasonable and objective manner and properly handle and manage them through dialogue and consultation following the principle of mutual respect, equality and mutual benefit,” said Geng.
Trump’s government has raised tariffs on Chinese-made aluminum foil and stainless steel to offset what Washington says are improper subsidies. Last month, Trump also approved higher tariffs on solar cells and washing machines from China.
Steel and aluminum are among industries in which China is trying to reduce excess production capacity other governments say are flooding their markets and threatening jobs. Despite that, steel output has risen while aluminum producers are setting up new, more efficient smelters.
Trump said the U.S. aluminum and steel industries are “being decimated by dumping.” He said that if the U.S.
● were ever in a military conflict, “we don’t want to be buying steel from a country that we’re fighting.”
The U.S. Commerce Department announced in November that it would investigate whether Chinese aluminum producers receive improper government subsidies. It estimated prices were 56 to 60 percent below the proper level.
As trade tensions escalate, the soybean is emerging as a powerful weapon in a potential trade war.
China is the biggest buyer of American soybeans, picking up about a third of the entire U.S. crop, which it uses largely to feed 400 million or so pigs. President Xi Jinping’s administration is studying the effects of restricting soybean imports in retaliation for the U.S. tariffs on washing machines and solar panels, people familiar with the situation told Bloomberg last week.
Any China soybean curbs would directly hit farmers in Midwestern U.S. Yet they would also pose a big risk for Xi: His nation is the world’s largest pork producer and consumer, and higher costs for pig farmers could increase prices of meat for his nation’s 1.3 billion citizens.
Food prices have long been a politically sensitive issue for China’s ruling Communist Party, which rose to power in 1949 in the wake of economic mismanagement that led to hyperinflation. A surge in the cost of everything from pork to electronics in the late 1980s also stoked dissatisfaction in the run-up to the Tiananmen Square protests.
“Using soybeans to retaliate against the U.S. would be a worst-case scenario” for China, said Li Qiang, chief analyst with Shanghai JC Intelligence Co., a private grains consulting firm. “Pork is a staple meat for Chinese people.”
On pig farms in rural Tianjin, some 67 miles from Beijing, concern is growing. Standing next to a sow delivering piglets, Shi Ruixin said his costs would increase sharply if China squeezed U.S. soybean imports.
“Hog feed prices will rise as well as pork prices,” the
68-year-old farmer said.
The seasonality of the soybean trade is one reason that China can’t easily replace U.S. supply, even though authorities in Beijing have sought to diversify.
Sun Chao, the president of Tianjin Tianjiao Group — the hog feed producer that supplies Shi — said that U.S. soybeans meet Chinese demand from October to February, when the South American crop is still growing.
“U.S. supplies can’t be replaced,” said Sun, a 20-year veteran in the animal-feed industry who manages a cooperative with 150 farmers and 30,000 pigs. “We rely on each other.”