Wang Xiaohui [L], an agricultural analyst at Orient Securities Futures, told CGTN that companies have been taking the news of higher tariffs rationally and actively seeking alternatives to US soybeans. (Photo: CGTN)
The largest American agricultural export to China is soybeans. In 2017, total US soybean exports to China topped 20 billion US dollars. With the US imposing tariffs on Chinese goods, the US soybean industry has emerged as a target for Chinese retaliation.
In order to tame the effects from the higher tariffs, Chinese firms started to diversify where the country’s total annual demand for some one hundred million tons of imported soybeans come from.
“In the long term, it is necessary for China to reduce its reliance on American soybeans. And the country has made adjustments already to expand import channels,” Said Li Yang, an associate professor from the School of Maritime Economics and Management of Dalian.
US soybeans now account for about one third of China’s total demand for imported soybeans — only half of the level seen in 2014.
In addition, import volume from Brazil has increased in recent months — breaking a record high in May and jumping over 10 percent year-on-year in June.
Meanwhile, China has waived taxes on soybean imports from neighbors such as India and the Republic of Korea (ROK).
“If we only look at soybeans, impacts on Chinese companies are relatively smaller than on the American soybean industry,” Said Wang Xiaohui, an agricultural analyst at Orient Securities Futures and an external council to the Dalian Commodity Exchange.
Wang says domestic soybean futures have returned to fundamental levels and soybean prices will not rise too swiftly in China this year.
Nevertheless, she pointed out that the trade conflict has forced Chinese firms to spend ample time finding replacement sources for American soybeans. And now, US soybean farmers may face gaping losses from the Chinese market.