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Trade Bust? China Won’t Increase Grain Import Quotas Despite Promise To Buy More American

Tyler Durden
January 7th, 2020
Comments (5)

This article was originally published by Tyler Durden at ZeroHedge.

China has pledged to increase more purchases of U.S. farm goods but never confirmed the exact amount for the phase one trade agreement.

Han Jun, the vice-minister of agriculture and rural affairs, was quoted by Caixin on Tuesday as saying Beijing won’t increase its annual import quotas for wheat, corn, and rice, reported Reuters.

This comes at a time when the Trump administration has pressured China to double its $24 billion pre-trade war purchases of U.S. farm goods to nearly $40 billion – a move that would serve as an election win for President Trump and help alleviate pressures on struggling Central and Midwest farmers.

Han is also part of the trade negotiating team, said last month that China would increase annual quotas on wheat, rice, and corn. But as of Tuesday, Han and the trade team have changed their minds saying the quotas “won’t adjust for one country.”

Definitive data shows purchases of the three grains from the U.S. totaled around $534 million.

“Although there’s certainly types of high-quality wheat that China would look to import, maxing out the tariff rate quota would also weigh on domestic producers,” Darin Friedrichs, senior Asia analyst at INTL FCStone, said in a note Monday.

“China will be facing a tough balancing act of trying to satisfy the U.S. demands for large agriculture purchases, while also not hurting the rural population,” Friedrichs added.

Last month, we said with absolute certainty that China wouldn’t uphold the trade agreement. There’s just no way that China would increase U.S. farm good imports by 235% in 2020. It’s not just because China is protecting its domestic agricultural markets, but rather, it’s because Brazil and Argentina have ramped up shipments of grains to the Asian country.

Goldman Sachs points out in a recent note that any massive increase in Chinese purchases from the U.S. “would likely be hugely disruptive to global agriculture markets, primarily crowding out Argentine and Brazilian supplies that have taken substantial market share since 2017 due to the trade war and much weaker currencies.”

To get a sense of just how improbable such a surge in Chinese imports from the U.S. is, here is a visual representation of what this “disruptive increase” in U.S. agriculture exports to China would look like…

… and also why the assumption in exported quantities to China is, as Goldman points out, thoroughly “unrealistic.”

And while China promised a “best-effort” to purchase $40 billion in farm goods from the U.S. in 2020, it appears hard targets won’t be met. Does this mean more tariffs are on the way for non-compliance?

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Author: Tyler Durden
Date: January 7th, 2020
Website: https://www.zerohedge.com

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  1. China has always lied. That was the point of the tariffs.

  2. Anonymous says:

    操你 tyler dunder

  3. China is not USA friend. China DANGEROUS and HATES you. says:

    1. China has infiltrated all USA mass media. Controlling even Hollywood Movie scripts.
    2.. China has infiltrated most USA Colleges and Universities. China actually has offices on many USA campuses. Turning your children into pro commies.
    3. China is taking over the continent of Africa and her vital to US military weapons systems natural recources.
    4. China has control and influence over Australia politicans/corporations.

    China has openly said they will destroy the United States at technology trade shows. Animations of china missles destroying USA satelites and hitting North American cities.

    China military leaders have stated they want a war with USA.

    WHY isn’t ANYONE paying attention?

    CHINA is a very Dangerous enemy that wants World domination. US and western nations are playing checkers. China plays tri level chess.

    Stop buying China sweatshop/prison labor made goods like Apple products.

    Free Hong Kong. Notice how few stories out of Hong Kong now?

    -Why does this once great site, now censor most comments?

  4. Keep our grain and other food stuffs to ourselves. China can starve for all I care. Take care of our own for a change. Store the grain in grain bins and anything else we can. Our dairies are going bankrupt,we need to bail them out for our benefit.