Agencies
Grant Kimberley has been more hopeful about the trajectory of US-China trade relations since he met with Chinese President Xi Jinping in San Francisco in November.
Kimberley, 48, was one of a small group of Iowa farmers who received a special dinner invitation to discuss economic ties with Xi on the sidelines of the Asia-Pacific Economic Cooperation summit.
“There’s genuine interest on both sides to try to reset the relationship and, you know, hopefully improve things a little bit,” Kimberley, marketing director at the Iowa Soybean Association, said, calling the meeting a good one.
Xi told his guests – representing the “old friends” who hosted him in Iowa nearly 40 years ago, when he was a low-level Communist Party official on an exchange visit – that his meeting with US President Joe Biden had been positive and that Beijing remained committed to strengthening trade with the US.
For Kimberley, it was personal: when Xi made a return visit to Iowa as vice-president in 2012, his family hosted the Chinese leader at their farm. Xi even operated one of their tractors. Recalling that time, Kimberley has described Xi as “normal and human”.After years of tension, the US and China are picking up the pieces of their relationship in sectors like military dialogue and policing narcotics traffic. At the same time, one overlooked aspect of the otherwise strained relationship is also easing – agricultural trade between the world’s two biggest economies is picking up.
Leading up to the San Francisco summit, Iowa soybean producers signed deals worth billions of dollars with a Chinese delegation that included officials and agribusinesses – the first such bulk signing since 2017.
Chinese buyers purchased over 3 million metric tonnes of soybeans, China’s biggest single-day order in months, according to the US Agriculture Department.Around the same time, dozens of American agriculture industry representatives also travelled to Beijing and Shanghai. Nicholas Burns, the US ambassador to China, told the delegation that in the “big, complicated” US-China relationship, agriculture acted as the “ballast”.
In December, China made the largest single commitment to buy US wheat since 2020, of over 700,000 metric tonnes. Since June, the commitments have surpassed 2 million metric tonnes.
Before the US-China relationship plunged to its current low point primarily due to geopolitical competition and a trade war started by then-president Donald Trump in 2018, agricultural cooperation had for decades been seen as a sign of both countries’ interest in working together in trade, science, technology and person-to-person diplomacy.Even with bitter geopolitical differences between the two nations in the past year, US agricultural exports to China hit US$36 billion in 2023, the Agriculture Department estimates – though that was a drop from US$40.9 billion in 2022.
Agriculture leaders in the US are optimistic that such recent goodwill gestures have restored the sector as a stabilising force amid strained diplomatic ties. Mutual suspicion and mistrust still dominates the discourse about doing business with China, but these leaders say relationships built through agriculture can help restore trust.
Other analysts cautiously agree, noting that agriculture remains an area of strong mutual dependence that can help identify paths for the two nations to rebuild their ties – provided they don’t use foodstuffs as political tools.
Given the thick wave of anti-China rhetoric in the US this presidential election year, though, analysts do not expect any dramatic improvements in the relationship.
Even so, after the Xi-Biden talks, openings have reappeared.US Agriculture Secretary Tom Vilsack met with his Chinese counterpart Tang Renjian last month, the first session by leaders of the two departments since 2015. The forum was established under the Joint Committee on Cooperation in Agriculture in 2003 to coordinate bilateral exchanges and cooperation in agriculture.
The US Agriculture Department said that along with addressing “outstanding market access issues”, the two sides also discussed approaches to “tackling climate and food security challenges”.
China has been one of the most important US trading partners in agriculture since 2001, when it joined the World Trade Organization. According to a 2021 report by the US Heartland China Association and the Carter Centre, China’s share of US agricultural exports increased from 2 per cent in 2000 to more than 17 per cent in 2020.
The increases in 2020 resulted from the phase-one trade agreement during the Trump administration, which had imposed tariffs on Chinese imports worth US$300 billion in 2018, to address the bilateral trade deficit. Under the deal, China agreed to expand the purchases of certain US goods for a period of two years starting on January 1, 2020.
Beijing failed to meet the pledged target of US$200 billion, and the new administration under President Biden kept in place the Trump-era tariffs. But data shows that agriculture remained an area where Beijing tried to fulfil the terms of the deal.Beijing more than doubled its soybean purchases in 2020-21 compared to the previous year. About 55 per cent of US soybean exports went to China in 2020.
China also imported a record 707,600 metric tonnes of US pork and 43,700 metric tonnes of US beef in 2020, much higher than the levels in 2017.
Even as the trade war drags on, China remains one of the largest markets for US feed grains like soybeans and poultry products like chicken feet.
For more than four years, China had a flu-related ban on all US poultry, and when it lifted it in 2019, demand skyrocketed. From 2019 to 2022, US poultry exports to China soared by more than 10,000 per cent. Indeed, in 2022, chicken feet accounted for over 85 per cent of all US poultry exported to China.
However, last year, China reimposed bans on import of poultry from 40 US states in 2023 again due to flu outbreaks. During Xi’s November trip to the US, Beijing removed seven US states from its ban list though 33 remain.
