China proposes US$30 billion more US agriculture purchases

(Bloomberg pic)

BEIJING: China is proposing that it could buy an additional US$30 billion a year of US agricultural products including soybeans, corn and wheat as part of a possible trade deal being negotiated by the two countries, according to people with knowledge of the plan.

The offer to buy the extra farm produce would be part of the memoranda of understanding under discussion by US and Chinese negotiators in Washington, according to the people, who asked not to be identified because the plans are confidential. The purchases would be on top of pre-trade war levels and continue for the period covered by the memoranda, they said.

As part of the talks, officials are also planning to discuss removing anti-dumping and anti-subsidy tariffs on distillers dried grains, a by-product of corn ethanol production that’s used in animal feed, people said earlier. Soybeans, corn and wheat futures prices rose in Chicago in response to the news.

China has repeatedly offered to increase purchases of agricultural and energy products to shrink the US trade deficit. Since a tariff truce agreed in December, it has resumed imports of some farm goods including soybeans and President Donald Trump this week said “a lot of” corn would be next on Beijing’s shopping list.

The MoUs under discussion are also said to cover areas including non-tariff barriers, services, technology transfer and intellectual property. The enforcement mechanism remains unclear, but would likely be a threat that tariffs would be reimposed if conditions aren’t met, a person said earlier.

Nobody responded to a fax sent to China’s Commerce Ministry late Thursday. Gao Feng, a spokesman for the ministry, said at a briefing earlier that he had no details regarding any MoU being discussed with the US. He also said that he couldn’t offer any information on the results of the trade talks until the current round ends.

In 2017, China imported a total US$24.2 billion in American agricultural products, with 60% of that in oilseeds and the remaining in products such as meat, cotton, cereals and seafood. Combined purchases slumped by a third to about US$16 billion last year as China’s 25 retaliatory tariffs on American farm goods reduced imports.