Tied by trade
Lobster industry illustrates China and US’ interwoven economies
“It is this new consumer class that will change China’s trade patterns with the rest of the world. It is also likely to help reduce the US’ trade deficit with China.” Wang Jun senior economist at the China Center for International Economic Exchanges
In the run- up to the 2017 Spring Festival holidays, online retailer JD. com Inc saw its sales of imported US lobsters surge. The tasty crustaceans have become vogue in China over the last few years. China imported $ 108 million worth of lobsters from the US in 2016. The lobster trade shows just how interconnected the two countries’ economies have become at a time when trade tensions are flaring. Still, experts said a trade war remains unlikely because the two economies depend heavily on one another. China surpassed Canada to become the US’ largest trading partner in 2015, according to media reports.
Dumplings, pork, beef and chicken have usually been the traditional festival dishes in Zhang Yuan’s home, but the 31- year- old brought a bit of exoticism to the table for the Chinese lunar new year in 2017 – lobsters from the US.
In early January, the white- collar worker in Shijiazhuang, capital of North China’s Hebei Province, bought six live Maine lobsters from JD. com Inc, China’s second- largest online retailer by sales.
“I was surprised that I could get fresh Western seafood the day after I ordered it,” Zhang told the Global Times on Saturday.
Maine lobsters are native to the Atlantic coast of North America. The species, which can grow up to 64 centimeters long, is sometimes called the king of crustaceans.
Yet, Zhang didn’t consider the lobsters expensive on jd. com, where they sold for 325 yuan ($ 47.1) a kilogram.
It was the first time Zhang bought lobsters from the US, but she didn’t think it would be the last. Besides being affordable and delicious, the lobsters turn a deep red when boiled, which makes for a nice trapping for holidays and celebrations, she said.
Plus, they were a hit at her family’s lunar new year dinner. “My entire family raved about them,” Zhang noted, beaming with pride.
It turns out that the Zhang family was far from the only Chinese family to buy fresh food from the US before the lunar new year.
“In the month leading up to this year’s Spring Festival, sales of fresh produce from the US increased eightfold versus a year ago, with sales of American lobsters up over fifteenfold,” Josh Gartner, a spokesman of jd. com, said in an e- mail to the Global Times on Wednesday.
From US nets to Chinese doorsteps
It appears that most Chinese consumers had never heard of Maine lobsters before 2010, when China imported about $ 7.4 million worth of the clawed crustacean, according to an Associated Press report in late March this year.
As China’s middle class has developed more cosmopolitan tastes, the demand for lobsters from the US has grown, said a Shanghai- based businessman surnamed Xia, who has been selling imported lobsters from the US both online and at his own stores in the city for the last four years.
Xia told the Global Times on Thursday that his lobster sales have been rising 10 percent to 20 percent a year.
In January, Chinese importers like Xia bought 777 metric tons of live whole lobster from the US, worth $ 14.1 million – up 281 percent year- on- year, according to a report released on Saturday by Norway- based seafood information provider IntraFish.
Affordable prices and improved logistics were also responsible for US lobsters’ rapid entry into the Chinese market.
It takes less than 72 hours by air to deliver a live Maine lobster from fisherman’s net to Shanghai doorstep, Xia said.
Mutual interests
Businessmen like Xia have certainly benefited from the rising Chinese demand for American products, but so has the lobster industry in Maine, one of the largest aquaculture states in the US.
The Chinese market has been vital to the revival of Maine’s lobster industry, which took a hit from fall prices in 2012 amid a supply glut, the Washington Post reported in 2016.
It produces more than 45 million kilograms of lobsters each year, the most in the US, according to a press release issued in late March by the Maine Intern at ion al Trade Center ( MITC).
Jeff Bennett, senior trade specialist with the MITC, said Maine has opened an office in Shanghai to chase more Chinese investment, the Xinhua News Agency reported on Wednesday.
The lobster industry demonstrates that the US and China have a lot of mutual economic interests, which suggests the two government ought to pursue a policy of cooperation, said Wang Jun, a senior economist at the Beijing- based China Center for International Economic Exchanges.
Trade between China and the US hit $ 519.6 billion in 2016, according to data from China’s Ministry of Commerce. By the end of 2016, mutual in- vestment surpassed $ 170 billion.
China surpassed Canada to become the US’ largest trading partner in 2015, according to media reports.
Tough trade talk
It was inevitable that there would be some friction over trade between the two countries, given that Trump has been complaining about the US’ trade deficit with China, Wang said.
Still, neither Wang nor businessman Xia sees the situation degenerating into a trade war.
“China- US trade is highly complementary, so the two countries’ governments will work hard in their discussions to settle their disputes and avoid a trade war,” Wang told the Global Times on Sunday.
During a meeting Thursday and Friday with US President Donald Trump in Florida, Chinese President Xi Jinping urged cooperation on trade and investment, and the two sides engaged in a comprehensive dialogue, according to Xinhua.
Chinese and US officials involved in the dialogue said China is willing to rescind a ban on US beef imports and purchase more US agricultural products, the Financial Times reported on Monday.
Importing more agricultural products would help meet the needs of China’s growing middle class.
“It is this new consumer class that will change China’s trade patterns with the rest of the world,” Wang said. “It is also likely to help reduce the US’ trade deficit with China.”
Driven by strong domestic demand for overseas products, China reported a rare trade deficit in February – amounting to $ 9.15 billion – its first monthly trade deficit since 2014, according to the latest official customs data.
Imports surged 38.1 percent year- onyear.
For the first two months of 2017, imports from the US jumped 41 percent year- on- year, while exports rose at an annual rate of 11.5 percent.
The US’ politically sensitive trade deficit with China narrowed to $ 23 billion, down 26.6 percent from the January, according to data from the US Department of Commerce.
As China pushes ahead with supplyside structural reforms and maintains sound development momentum, China- US trade and economic cooperation will enjoy bright prospects, Xi was quoted by Xinhua as saying during the meeting with Trump in the US.