Caixin
Aug 06, 2019 04:39 AM
ECONOMY

Chinese Companies Halt U.S. Farm Goods Purchase

After Trump and Xi met in June in Osaka, 2.27 million tonnes of U.S. soybeans were loaded and shipped to China in July. Photo: VCG
After Trump and Xi met in June in Osaka, 2.27 million tonnes of U.S. soybeans were loaded and shipped to China in July. Photo: VCG

China said it will not rule out levying import tariffs on American agricultural products purchased after Aug. 3 and Chinese companies have suspended new purchases.

The move was a response to President Donald Trump’s plan to impose 10% tariffs on an additional $300 billion of Chinese goods starting Sept. 1, the Commerce Ministry said early Tuesday in an online statement (link in Chinese). Trump’s new round of tariffs represents “a serious violation” of the consensus he reached in June with Chinese President Xi Jinping in Osaka at the G-20 summit, the ministry said.

“China has large market capacity and bright prospects for importing high-quality U.S. agricultural products,” the Commerce Ministry said. It said it hoped the U.S. would keep its promises and create the “necessary conditions” for bilateral cooperation in the agricultural sector.

Trump disclosed the expansion of tariffs Thursday in a tweet in which he also complained that China failed to increase agricultural purchases as promised.

A senior Chinese official rejected Trump’s assertion, saying China has made progress in purchasing goods and certain deals haven’t been completed because the prices were too high.

China is continuing to honor previously signed accords on soybean imports from the U.S., state broadcaster CCTV reported Monday, citing Cong Liang, Secretary-General of the National Development and Reform Commission (NDRC).

After Trump and Xi met in June in Osaka, 2.27 million tonnes of U.S. soybeans were loaded and shipped to China in July, and an additional 2 million tonnes are expected to ship in August, Cong told CCTV.

Chinese companies have made price inquiries about purchasing U.S. soybeans, wheat and other agricultural products since July 19. As of Aug. 2, they have bought 130,000 tonnes of soybeans, 120,000 tonnes of sorghum, 60,000 tonnes of wheat, 40,000 tonnes of pork and pork products, and 25,000 tonnes of cotton from the United States, according to Cong.

China also purchased 75,000 tonnes of hay, 5,700 tonnes of dairy products, 4,500 tonnes of processed fruits, and 400 tonnes of fresh fruits from the U.S. during the same period, Cong said.

China and the U.S. are highly complementary in the agricultural sector, and the trade of agricultural products is in line with the mutual interests of both countries, Cong said. China has actively displayed sincerity in cooperation and has made good progress in purchasing American agricultural products since the Osaka meeting, he said.

Certain U.S. agricultural products, including ethyl alcohol, corn, soybean oil, wine and beer, failed to enter China because the trade war initiated by Trump has made their prices too high and less competitive in the Chinese market, Cong said.

For example, to counter U.S. tariffs, China levied two rounds of tariffs on ethyl alcohol imported from the U.S., increasing the current duties on such products to 70%. Based on prices offered by American exporters, the costs of imported ethyl alcohol are 30% higher than local products.

This demonstrates that the trade war is a “double-edged sword” that harms both countries, Cong said.

“We hope the United States will do more to clear obstacles and create conditions for China’s purchase of U.S. agricultural products,” Cong said.

After two days of high-level trade talks ended last week in Shanghai without any progress, Trump blasted Beijing for failing to fulfill a promise to buy large volumes of U.S. agricultural products and proposed new tariffs on the additional $300 billion of Chinese goods even though both parties agreed to continue talks next month in Washington.

Contact editor Han Wei (weihan@caixin.com)

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