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China says U.S. farmers may never regain market share lost in trade war

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This story is being published by POLITICO as part of a content partnership with the South China Morning Post. It originally appeared on scmp.com on Aug. 11, 2018

China can easily find other countries to buy agricultural goods from instead of the U.S., its vice agriculture minister said, warning that American farmers could permanently lose their share of the Chinese market as a result of the trade war.

“Many countries have the willingness and they totally have the capacity to take over the market share the U.S. is enjoying in China. If other countries become reliable suppliers for China, it will be very difficult for the U.S. to regain the market,” Han Jun told official Xinhua news agency in an interview on Friday.

He also warned that American farmers could lose the position in the Chinese market they have spent several decades building up. Han said they may not be able to make up the losses brought by retaliatory tariffs, even with the White House’s planned $12 billion aid package for farmers caught in the dispute.

He said Beijing had imposed duties on 90 percent of the agricultural goods the country imports from the United States since the trade war kicked off at the start of last month, with limited impact on China.

“Levying additional tariffs will cause a great decrease in exports of U.S. agricultural products to China,” Han said. “But the impact on China is very limited, due to the diversified import sources.”

China and the U.S. have been locked in a tit-for-tat trade war since early last month. Beijing unveiled its latest retaliatory tariffs on $16 billion of American goods on Wednesday, matching Washington’s move to slap 25 percent duties on the same value of Chinese imports.

The vice agriculture minister also said Chinese companies had “basically stopped” importing soybeans from U.S. farmers since July 6 and would deal with the impact by finding alternative ingredients for animal feeds.

China is the world’s biggest importer of soybeans, which it uses to make cooking oil, biodiesel and the meal to feed livestock.

Han said the country was expecting soybean imports from the U.S. to drop dramatically this year and that preparations had already been made. “China is totally able to handle the shortfall created by a drop in American soybean imports,” Han told Xinhua.

China has been buying more soybeans from other countries and promoting alternatives to soybeans to feed livestock, as well as pushing farmers to plant more domestic crops. Before the trade war erupted, China was on track to import 300 million tons of soybeans from the United States this year.

The country imported about $24.1 billion of agricultural products from the United States last year, accounting for 19 percent of its total farm imports worth some $125.86 billion, according to the Ministry of Agriculture and Rural Affairs.

Han said that starting from July 6, Beijing had imposed 25 percent tariffs on 517 types of American agricultural products — including nuts, soybeans, cotton, fruit and meat. Their combined value last year was about $21 billion, he said.

He also warned that additional duties on American agricultural goods were in the pipeline.

Beijing has said it is ready to impose tariffs on $60 billion of American products if President Donald Trump — who has accused China of amassing a huge trade surplus through unfair trade practices — goes ahead with plans to slap extra duties on $200 billion of Chinese goods.

The next list will include 387 types of agricultural products – including coffee, vegetables and vegetable oils – which last year had a total value of around $2.9 billion.

As a result, almost all agricultural products China buys from the U.S. will face additional tariffs once Beijing’s latest countermeasures take effect, Han said.

The European Union would not be able to make up the losses for U.S. soybean producers, who will be left with a huge surplus without China buying the grain from them, according to Han. He said although the EU had agreed to import more soybeans from America, it would only buy 13 million to 14 million tons of soybeans a year over the next decade, according to estimates — compared with the more than 30 million tons of the grain China bought from the U.S. last year.

But Han admitted that Washington’s tariffs would impact China’s fruit, vegetable and seafood producers because it would not be easy for them to find alternative export destinations in the short term. He said Beijing would help exporters find other countries to sell their products to and try to boost domestic consumption instead, to minimize the impact of the tariffs.

The United States was the third largest market for Chinese fruit and fifth largest for vegetables last year, with the exports valued at a combined $1.84 billion.

Source: https://www.politico.com/story/2018/08/11/farmers-china-soy-bean-market-share-734773