China set to import less U.S. soy
USDA sees first drop in 15 years as tit-for-tat tariffs kick in
China has been gobbling up the world’s soybeans at breakneck speed over the past decade. But as the trade dispute with the U.S. escalates, its imports of the oilseed are set to decline for the first time in 15 years.
China will import 95 million metric tons of soybeans in the 2018-2019 season, the U.S. Department of Agriculture said on Thursday in its monthly World Supply and Demand Estimates report. That’s down from the USDA’s June forecast for 103 million tons and would mean a drop of 2.1 percent from the previous crop year.
China imposed duties on U.S. soybean shipments earlier this month in response to President Donald Trump’s tariffs. As a result, the Asian country will pay more for the oilseed, slowing its use of soybean meal — a product used to feed hogs. China could turn to using more of its stockpiles, as the USDA forecasts an 18 percent decline for China’s inventories in 2019.
China has been avoiding U.S. soybeans and shifting its purchases to other countries. The changing trade flows and lower consumption will probably drive global soybean inventories up to a record and boost U.S. stockpiles as American shipments drop. Farmers in Brazil, the world’s biggest exporter, may increase production in response as China’s purchases from the South American country rise, the USDA said.
Officials in Beijing appear to be toning down their responses to the tariff threats, in a slowing economy, a falling stock market and a weakening currency.
Evidence of the shift continued Thursday when the Commerce Ministry held off detailing how it plans to retaliate against Trump’s latest threat to impose tariffs on $200 billion worth of Chinese-made goods.
Commerce Ministry spokesman Gao Feng said the government will take “necessary” steps to hit back, but when pressed he stopped short of repeating a previous pledge to respond with “quantitative” and “qualitative” measures and didn’t
outline specifics about which measures China would retaliate with.
To observers, the ever-soslight change of tone suggests China could be playing for time with the aim of restarting stalled negotiations for a solution that would limit the need to unleash punitive measures that could hurt its own economy. For President Xi Jinping, gathering problems at home and abroad may be prompting a less confrontational course.
“China may be moving gradually from the current tit-for-tat mode of retaliation toward a controlled, selective retaliation,” said Chang Jian, chief China economist at Barclays PLC in Hong Kong.
Gao did try to step up pressure on Washington by suggesting U.S. companies lobby American leaders.
“We hope American companies do more to lobby the U.S. government and work hard to safeguard their own interests,” said Gao at a news conference.
While some U.S. companies and lawmakers have criticized Trump’s tactics, Gao’s statement was an unusually direct attempt to rouse domestic American opposition. Beijing frequently rejects foreign comments about its own
policies as improper interference in its affairs.
Gao gave no details. His remark about lobbying was missing from an official transcript on the ministry’s website, suggesting officials recognized its potential sensitivity.
The Trump administration imposed a 25 percent tariff on $34 billion of Chinese goods July 6 in response to complaints Beijing steals or pressures companies to hand over technology. Beijing responded by imposing similar duties on the same amount of imports from the United States.
Washington announced a second possible round of tariff increases Tuesday targeting a wider range of $200 billion in goods. Beijing vowed “firm and forceful measures” in response, but China’s lopsided
trade balance means it cannot match the full scale of American tariff increases. That has prompted concern regulators might expand retaliation to trying to hamper operations of American companies in China.
Chinese leaders have tried to deflect criticism by pointing to the benefits of trading with the world’s second-largest economy, a theme Gao repeated Thursday. He noted Tesla Inc.’s announcement this week of plans to build a factory in Shanghai.
As for negotiations, Gao said, “the two sides have not been in touch about restarting talks. Information for this article was contributed by Shruti Date Singh of Bloomberg News and by Joe McDonald and Youkyung Lee of The Associated Press.