At each end of Pacific, skepticism over China farm purchases
PRESIDENT DONALD Trump likes to joke that America’s farmers have a nice problem on their hands: They’re going to need bigger tractors to keep up with surging Chinese demand for their soybeans and other agricultural goods under a preliminary deal between the world’s two largest economies. But will they really? From Beijing to America’s farm belt, sceptics are questioning just how much China has actually committed to buy – and whether US farmers would be able anytime soon to export goods there in the outsize quantity that Trump has promised. It amounts to $40 billion a year, according to Trump’s trade representative, Robert Lighthizer. If you ask the exuberant president himself, though, the total is actually “much more than’’ $50 billion. To put that in perspective, US farm exports to China have never topped $26 billion in any one year. What’s more, since Trump’s trade war with Beijing erupted last year, China has increased its farm purchases from Brazil, Argentina and other countries. As a result, Beijing may now be locked into contracts it couldn’t break even if it intended to quickly increase its purchases of American agricultural goods to something approximating $40 billion. “History has never been even close to that level,” said Chad Hart, an agricultural economist at Iowa State University. “There’s no clear path to get us there in one year.” “The figure of $40 billion,” added Cui Fan, a trade specialist at the University of International Business and Economics in Beijing, “is larger than I expected, and I wonder whether the United States can ensure the full supply of the products.” America’s farmers would surely like to. The farm belt has endured much of the impact from Beijing’s retaliatory tariffs since July 2018, when the Trump administration imposed taxes on $360 billion in Chinese imports. Beijing struck back by taxing $120 billion in US exports, including soybeans and other farm goods that are vital to many of Trump’s supporters in rural America. The impact from China’s retaliatory tariffs was substantial: US farm exports to China, which hit a record $25.9 billion in 2012, plummeted last year to $9.1 billion. Soybean exports to China fell even more – to a 12-year low of $3.1 billion, according to the Department of Agriculture. (Farm imports to China have rebounded somewhat this year but remain well below pre-trade-war levels.) The so-called Phase 1 deal that the two sides announced December 13 did manage to de-escalate the stand-off and offer at least a respite to American farmers. Yet the truce put off for future negotiations the toughest and most complex issue at the heart of the trade war: The Trump administration’s assertion that Beijing cheats in its drive to achieve global supremacy in such advanced technologies as driverless cars and artificial intelligence. The administration alleges – and independent analysts generally agree – that China steals technology, forces foreign companies to hand over trade secrets, unfairly subsidizes its own firms and throws up bureaucratic hurdles for foreign rivals. Beijing has rejected the accusations and contended that the administration is instead trying to suppress a rising competitor in international trade. Under the preliminary US-China deal, Trump suspended his plan to impose new tariffs and reduced some existing taxes on Chinese imports. In return, Lighthizer said, China agreed to buy $40 billion a year in US farm exports over two years, among other things. (Beijing also committed to ending its long-standing practice of pressuring foreign companies to hand over their technology as a condition of gaining access to the Chinese market.)
Farmers hopeful
Many farmers say they’re hopeful but restrained in their expectations. “At this point, we have to wait to see more details,” said Jeff Jorgensen, who farms about 3,000 acres in southwest Iowa. Yet the Trump administration has released no text of the agreement. And a fact sheet that Lighthizer’s office issued didn’t specify the target for increased Chinese farm purchases. What’s more, Beijing has so far declined to confirm the $40-billion figure. “After the agreement is officially signed, the contents of the agreement will be announced to the public,” said Gao Feng, a spokesman for the commerce ministry. Still, Chinese imports of US soybeans more than doubled in November after the Phase 1 agreement was initially announced in mid-October – a sign that reduced tensions might have begun to ease the strain on American farmers, according to AWeb. com, a news website that serves China’s farming industry.