Nation & World

Skepticsd question outsize China trade promises

Trump vow would see farm sales double from previous high

In this April 12, 2018, file photo, visitors walk by U.S. soybean companies' booths at an international soybean exhibiti
In this April 12, 2018, file photo, visitors walk by U.S. soybean companies’ booths at an international soybean exhibition in Shanghai, China. President Donald Trump likes to joke that America’s farmers have a nice problem on their hands: They’re going to need bigger tractors to keep up with Chinese demand for their soybeans and other agricultural goods under a preliminary deal between the world’s two largest economies. Yet skeptics are questioning how much China has committed to buy. (Andy Wong/Associated Press)

OMAHA — President Donald Trump likes to joke that America’s farmers have a nice problem on their hands: They’re going to need bigger tractors to keep up with Chinese demand for their soybeans and other agricultural goods under a preliminary deal between the world’s two largest economies.

But will they really?

From Beijing to America’s farm belt, skeptics are questioning just how much China actually committed to buy and whether U.S. farmers would be able anytime soon to export their goods there in the outsize quantity that Trump has indicated.

It amounts to $40 billion a year, according to Trump trade representative Robert Lighthizer. If you ask the president himself, though, the total is “much more than” $50 billion. To put that in perspective, U.S. farm exports to China have never topped $26 billion in any one year.

“History has never been even close to that level,” said Chad Hart, an agricultural economist at Iowa State University. “There’s no clear path to get us there in one year.”

What’s more, since Trump’s trade war with Beijing erupted last year, China has increased its farm purchases from Brazil, Argentina and other countries. As a result, China may now be locked into contracts it couldn’t break even if it intended to quickly increase its purchases of American farm goods.

“The figure of $40 billion,” said Cui Fan, a trade specialist at the University of International Business and Economics in Beijing, “is larger than I expected, and I wonder whether the United States can ensure the full supply of the products.”

America’s farmers would surely like to. The farm belt has endured much of the impact from China’s retaliatory tariffs since July 2018, when the Trump administration imposed taxes on $360 billion in Chinese imports. Beijing struck back by taxing $120 billion in U.S. exports, including soybeans and other farm goods that are vital to many of Trump’s rural supporters.

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The impact was substantial: U.S. farm exports to China, which hit a record $25.9 billion in 2012, plummeted last year to $9.1 billion. Soybean exports to China fell even more to a 12-year low of $3.1 billion, according to the U.S. Department of Agriculture. Ag sales to China have rebounded somewhat this year, but remain well previous levels.

The “Phase 1” deal the two sides announced Dec. 13 did de-escalate the standoff. Yet the truce put off negotiations the toughest and most complex issue at the heart of the trade war: the Trump administration’s assertion that Beijing cheats in its drive to achieve global supremacy in such advanced technologies as driverless cars and artificial intelligence.

The administration alleges and independent analysts generally agree that China steals technology, forces foreign companies to hand over trade secrets, unfairly subsidizes its own firms and throws up bureaucratic hurdles for foreign rivals. Beijing has rejected the accusations, contending the administration is trying to suppress a rising competitor.

Under the preliminary U.S.-China deal, Trump suspended his plan to impose new tariffs and reduced some existing taxes on Chinese imports. In return, Lighthizer said, China agreed to buy $40 billion a year in U.S. farm exports for two years, among other things. China also committed to ending its practice of pressuring foreign companies to hand over technology as a condition of gaining access to the Chinese market.

Many farmers say they’re hopeful but restrained in their expectations of the deal.

“At this point, we have to wait to see more details,” said Jeff Jorgensen, who farms 3,000 acres in southwest Iowa.

The Trump administration has released no text of the agreement. A fact sheet Lighthizer’s office issued didn’t specify the target for increased Chinese farm purchases. What’s more, China has so far declined to confirm the $40 billion figure.

“After the agreement is officially signed, the contents of the agreement will be announced to the public,” said Gao Feng, a spokesman for the Commerce Ministry,

Still, Chinese imports of U.S. soybeans more than doubled in November after the Phase 1 agreement was initially announced, a sign that reduced tensions might have begun to ease the strain on American farmers, according to AWeb.com, a news website that serves China’s farming industry.

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Beijing insists, though, that its farm purchases will be based on consumer demand and market prices, pointedly implying it won’t buy more than it needs just to satisfy Trump.

Some analysts suggest it’s at least theoretically possible for the United States to boost its farm exports to China to something close to the figures the administration has promised. Flora Zhu, associate director of China corporate research at Fitch Ratings, calls the $40 billion “achievable.”

She notes, for example, that China’s overall demand for soybeans amounts to $40 billion a year. Even before the trade war, the U.S. supplied about a third of that total suggesting, Zhu said, that “there is still large room for China to increase its purchases of soybeans from the U.S.” In addition, China’s demand for imported pork has intensified because its own pig herds have been decimated by an outbreak of African swine fever.

But achieving $40 billion a year would likely require diverting market share away from other countries that export sizable quantities of farm goods to China.

U.S. farmers sound wary. Some worry that the prolonged trade war will brand the United States an unreliable trade partner in China.

“I’d love to see $50 billion, but I don’t think it will ever happen,” said Bob Kuylen, who grows wheat and sunflowers and raises cattle near South Heart, N.D.

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