Chinese lessen dependence on US farm imports

China has a trade surplus of $33.3 billion with the United States, and the largest US export of soybeans is to China. But the Chinese have been diversifying their agricultural imports, which had started in 2018, during Donald Trump’s first term as president.

There is the anticipation that a Trump win on November 5 would make China vulnerable if the US under Trump were to impose restrictions on Chinese exports, and China would have to retaliate. So, China has increased its imports of corn, soybean from Brazil, Argentina and Ukraine. China is taking precautions on the trade front. And also it is cushioning its food security.

The country to benefit most from China’s shift away from the US is Brazil. While the US’s soybean exports to China fell from 40 per cent in 2016 to 18 per cent in the January-September 2024 period, that of Brazil’s exports rose from 46 per cent to 76 per cent in the same period.

While the Chinese feel more assured that they have another big source of soybean imports, American farmers are worried. They are not just worried by Brazil, but by the fact that other countries are producing as much as soybeans as them, and they do not have a strategic advantage. Mark Tuttle, a soybean farmer from northern Illinois, said, “We are very concerned. We are not the only soybean producer in the world. South America is producing an awful lot of soybeans. If we were to institute more tariffs that would be very detrimental to our situation.”

About half the American soybean produce is exported to China. During his last term in office, Trump had to pay a compensation of $23 billion. So, the Trump idea of increasing tariffs to garner billions which then is to be spent on American citizens seems to be a simplistic strategy to protect America from being flooded with imports.

The US and China, the first and second largest biggest economies in the world, are also rivals in trade, and sometimes because of ideology, the rivalry becomes adversarial and bitter.

Experts say that China cannot move completely away from American farm exports because it would not be possible for China to requisition the large amounts that are available only in America.

Even as Brazil has become the larger exporter of agricultural produce to China, the US, though its share has fallen, the actual value of American exports remains quite high. It also shows that China continues to import huge quantities of agricultural produce. This is reflected in the agricultural produce figures of 2021, 2022 and 2023.

In 2021, Brazil’s exports were worth $46b, and from the US it was $41b. In 2022, the figure for Brazil was $53b and for the US it was $43b. And in 2023 there was a huge divergence in the figures. The US agricultural imports to China fell to $34b while that of Brazil stood at a $59b high.

While the figures show Brazil has gained over the US, they also reveal that agricultural imports for China are quite huge. It will not be able to move away from the imports as much as it would like to, and it would still need a substantial amount of American agricultural imports.

The Chinese are trying to boost their domestic agricultural produce with better varieties of seeds, but it is not going to be an easy task.

The world will remain interdependent in terms of trade.

America will not be able to keep out Chinese goods completely out of the country. It would need to import Chinese manufactures, even as China has to continue to buy American farm produce.

Each cannot shut the door completely on the other.