Chinese officials are purchasing more U.S. agricultural products as part of a “phase one” trade deal with the U.S., but those imports are not likely to reach the levels touted by President Trump under current circumstances, according to people familiar with the matter who asked not to be identified.
Under the terms of the partial trade arrangement, Chinese spending on U.S. farm goods will scale to an annual figure of $40 billion to $50 billion over two years, Treasury Secretary Steven Mnuchin has said.
U.S. ag exports to China peaked at roughly $25 billion under the previous White House administration.
China wants a rollback in tariffs in the trade war before it can feasibly agree to buy as much as $50 billion of American agriculture products. China will continue to make goodwill purchases between now and mid-November, according to Politico. That is when Trump meets with Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation summit in Chile.
The intent is for China to scale up its purchases to record levels in 2020. By 2021, Beijing will have removed non- tariff barriers tied to food safety and GMO approvals, opening China’s floodgates to a surge of U.S. farm goods.
Chinese firms this year have bought 20 million tons of U.S. soybeans and 700,000 tons of pork, and that is expected to accelerate.
Also on China’s shopping list: cereals, cotton, ethanol, fertilizer, juice, coffee and meat. The country could also lift barriers on distillers dried grains and remove a ban on chicken imports.
China has also indicated that any increase in imports will depend on market demand, as well as compliance with global trade rules and the removal of U.S. tariffs.
Sources: Politico, Bloomberg