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August 13, 2018


US will face greater impacts than China over trade wars


While China can survive the trade war by increasing imports from other countries and adjusting domestic agricultural patterns, US may lose the Chinese markets that its farmers have taken decades to explore, according to a senior official in charge of agriculture.


Despite US President Donald Trump's US$12 billion aid for US farmersand EU agreeing to increase imports of US soybeans, the US farming sector will suffer greatly if it loses the huge Chinese market, Han Jun, deputy head of the Office of the Central Leading Group for Rural Affairs and vice-minister for agriculture and rural affairs, said in an interview.

In the midst of rising tensions, China does not want to see the escalation of China-US trade friction, and many people from respective countries do not want trade relations to reach a point of no return.

"Negotiation is the only way to resolve trade disputes between the two countries," Han added. "For China, the door for negotiation will not close. China will pay attention to US concerns in agriculture, but the US should not make unreasonably high demands."

In response to the US imposing tariffs on Chinese goods, China has since begun to levy additional 25% tariffs on 517 types of agriculture products, including soybeans, cotton and pork, imported from the US, which valued to a total of US$21 billion last year, Han shared.

Just last week, as US threatens to impose additional tariffs on Chinese goods worth US$200 billion, China announced that it might levy different levels of additional tariffs on US goods worth US$60 billion, which will include 387 kinds of agricultural products. As a result, almost all US agricultural products will face additional tariffs once the latest countermeasures by China come into force.

"China drafted the countermeasures only after extremely soliciting opinions and careful evaluations of the effects, and they are rational and restrained," Han remarked.

Han also analysed that China and the US strongly complements each other in agricultural trade. He said, "China has a huge demand for import of agricultural products. With its population growth and rising living standards of its people, it will keep expanding imports."

"We hope to see healthy agricultural trade relations between the two countries, so US farmers also get benefits. However, the US keeps escalating trade frictions, regardless of a consensus already made between the two countries," he revealed.

China will continue to closely evaluate the effects caused by its countermeasures to lessen their impact on domestic production and people's livelihood.

Han further explained: "Levying additional tariffs will cause a great decrease in the export of US agricultural products to China. But, the impact on China is very limited due to multiple import resources. If a trade war breaks out between China and the US, many other countries will be willing and able to replace the US share of agricultural products in the Chinese market."

Trade conflicts between China and the US will result in increased costs for US agricultural products entering China, and the US share of the Chinese market will be significantly reduced.

"Once other countries have become reliable suppliers of agricultural goods for China, it will be very difficult for the US agricultural producers to regain footing in the Chinese market," Han pointed out. The additional tariffs would also cause a great decrease in China's imports of soybeans from the US, which is deemed as the most important product of China-US agricultural trade.

However, China is both prepared and capable of bridging the reduced supply gap through various measures, including increasing imports from other countries, promoting alternatives to animal feed made of soybeans in the poultry and husbandry industries to reduce domestic consumption of soybeans and increasing domestic planting of soybeans, he said.

As China relies on imports for most of its soybean consumption, US is the second-largest source of imports for China, after Brazil. Between 2015 - 2017, nearly 60% of all exported soybeans from the US went to China.

This year, Chinese experts have forecasted more than 10 million tonnes decrease in soybean imports by China, which is a fall by more than 10% from last year, due to expanding domestic production and the promotion of soybean substitutes. China may also increase soybean imports from countries such as Brazil to meet its increasing demands.

Regardless of the agreement by the EU to import more soybeans from the US, the EU can only import an estimated 13 million to 14 million tonnes of soybeans each year over the next 10 years, as compared with more than 30 million tonnes imported by China last year — so it would be impossible for the US to handle all the soybeans in surplus, Han evaluated.

"People of all walks of life in agriculture in the US have expressed worries over losing the Chinese market," he concluded.


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