December 11, 2003

 

 

China Premier Say Possible Purchase of Wheat, Soybean From US

 

Chinese Premier Wen Jiabao said the country might buy U.S. wheat and cotton, as well as soybeans, when purchasing teams from the country visit next week on a trip to U.S. to help ease trade friction between the two nations.

 

The purchases would be part of $10.7 billion in contracts China is signing for U.S. products, Wen told students at Harvard Business School in Boston. China last month signed agreements for planes from Boeing Co. worth $1.7 billion and a $3 billion contract for jet engines with General Electric Co., Wen said, without detailing the other $6 billion of purchases.

 

The U.S. had a record $103 billion trade deficit with China last year, leading U.S. manufacturers and labor unions to say China's currency is too cheap, hastening a loss of U.S. jobs. The trade imbalance prompted the U.S. last month to place limits on Chinese textile exports to the U.S. and to propose duties on $450 million worth of Chinese televisions.

 

"We need to find a solution to the trade deficit issue through the expansion of trade,'' Wen said during a question-and- answer session with students after his speech. "To cut back on China's exports is not the way; we must find a way to expand U.S. exports, and China is sending trade delegations to the U.S. to accomplish this."

 

Conflict Resolution Team

 

China and the U.S. have also agreed to establish a high-level trade-conflict resolution team to include U.S. Commerce Secretary Donald Evans, U.S. Trade Representative Robert Zoellick and China's Vice-Premier Wu Yi, who had previously served as the country's trade minister, Wen said.

 

U.S. President George W. Bush agreed to set up the team during talks on trade and other issues at the White House yesterday, Wen said. He didn't provide further details on how the team would operate.

 

Earlier this week, a Chinese official accompanying Wen on his visit to the U.S. said there was a "good possibility" the trade mission would result in increased purchases of soybeans by China, the biggest buyer of U.S. beans.

 

Traders in Chicago have also been expecting China to make a big purchase of U.S. wheat, up to 1 million metric tons. Earlier this week the Department of Agriculture said China had recently purchased 200,000 tons of U.S. wheat, an order that had previously been reported as coming from an unidentified buyer.

 

New Orders Expected

 

The American Soybean Association last week said a Chinese Commerce Ministry team would visit the U.S. for five days beginning December 15. It said the team would sign import orders with soybean suppliers including Cargill Inc., the world's largest grain trader, Bunge Ltd., the biggest oilseed processor, Louis Dreyfus & Cie. and Archer Daniels Midland Co.

 

Imports of U.S. soybeans by China could reach 9 million metric tons, or 330.7 million bushels, in the year ending September 30, 2004, the Beijing-based China National Grain & Oils Information Center said in a report last month. That would be up from 7.5 million tons in the prior year, according to the American Soybean Association.

 

China's imports of U.S. soybeans may be worth about $2 billion based on this year's average futures price.

 

Wheat imports by China may rise fivefold in 2004 as a decline in planted areas of the crop reduce domestic supply, the Beijing Orient Agribusiness Consultant Ltd. an agricultural ministry affiliate, said last month.

 

Imports by China, the world's biggest wheat producer, may increase to 2 million tons in the year ending May 31, from 373,000 tons a year earlier, Beijing Orient said in a report.