China’s importers plead for help as trade tumult deepens
BEIJING SLAPS 178.6% DEPOSIT ON US SORGHUM, FORCING RUSH TO SELL CARGOES AT A LOSS
Some Chinese sorghum importers have asked Beijing to waive the hefty anti-dumping deposit imposed last week on US imports already at sea, as companies rushed to sell stranded China-bound cargoes that were on the water at big discounts.
China’s Commerce Ministry slapped a 178.6 per cent deposit starting from April 18 on imports of sorghum from the United States in a trade row between the world’s two biggest economies.
Sorghum is a grain used in animal feed and to make beverages.
One sources said his company was asking Beijing to impose the new tariffs only on cargoes loaded at US ports after April 18, in a bid to protect almost a dozen vessels carrying US sorghum that have already started sailing.
A second source at a private importer based in eastern China said a group of companies, including at least one stateowned firm met Commerce Ministry officials to discuss concessions for the new tariff, but did not disclose details of the meeting.
Traders have said it was not clear if the deposit would be refunded in future, after being paid to the government.
But they said that, even if it was returned at some point, raising the funds now was adding crippling costs to the business.
The scramble to secure government concessions underscores concerns among Chinese firms that the trade dispute between Washington and Beijing will inflict financial pain on China, as well as the United States. It threatens to disrupt supplies of critical ingredients for China’s vast agriculture sector. Chinese importers will likely have to pay the deposit and face the biggest risk from the levy. With the deposit, an average cargo of 60,000 tonnes of sorghum is now worth about $27 million (Dh99.17 million), almost double the value before the scheme.
Multiple grain traders based in Asia said importers are rushing to sell stranded shipments at big discounts. Prices were as low as $150-$160 per tonne, well below the $230-$240 before Beijing’s move last week to impose the deposit.
Buyers in the Middle East and south-east Asia were in the market looking for bargains. A ship carrying 69,842 tonnes of sorghum from the US bound for China switched its destination yesterday to Dammam.
China’s leaders are signalling concern that growth in the world’s secondlargest economy could slow due to trade and financial risks — and that they’re prepared to tweak policy to avoid a sharp deceleration, economists said.
Hard work is needed to meet this year’s economic targets amid an increasingly complicated geopolitical situation, according to a statement released by state media Monday following a Politburo meeting led by President Xi Jinping. Though growth remained robust in the first quarter, forecasters still see the economy slowing this year as trade tensions with the US and the campaign to clean up the financial sector remain as downside factors.
As the Politburo statement mentioned the need to boost domestic demand for the first time since 2015, and dropped a reference to deleveraging, investors are interpreting the change in tone as a signal that the government may ease off tightening measures if warranted.
“There’s a deep sense of risk underlying the calm surface, and the leadership’s attitude has changed greatly,” Deng Haiqing, chief economist at JZ Securities Co. in Beijing, wrote. “The attention attached to stabilising economic growth is the greatest since 2015.”
While trade tensions with the US have been easing, the statement indicates that leaders are preparing to pre-empt any potential economic turbulence. US Treasury Secretary Steven Mnuchin hinted at a truce Saturday in Washington, saying he’s considering a trip to China and is “cautiously optimistic” about bridging differences over trade issues.
“Against the backdrop of uncertain trade and investment tension with the US, the Chinese government has realised the difficulty of reaching the predetermined growth target,” said Xu Jianwei, a senior greater China economist at Natixis SA in Hong Kong. “This is a significant change of tone.”
Economists forecast growth will slow this year to about 6.5 per cent.