The U.S. Department of Agriculture is urging the Biden administration to take a more proactive approach to improving trade with China. Agricultural groups and trade advocates have asked the Biden administration to consider removing tariffs on China, arguing that tariffs are a remnant of the U.S.-China trade war and of no benefit
After two years of trade war, the new crown epidemic has caused labor shortages and industrial chains, and American farmers hope to see the light at the end of the tunnel in the Chinese market. Photography / Jin Yan
Text | Caijing special correspondent Jin Yan sent from Washington
Edit | Su Qi
Trade is one of the areas where the United States and China are likely to reach some kind of consensus, and this sign is becoming more and more obvious. On October 28, local time, U.S. Trade Representative Dai Qi said at the meeting of the American Chicken Breeding Association that her purpose of contact with China is to ease tensions between the United States and China, because the current trade relationship between the two countries is like a "pile of dry wood", which may "cause a fire" at any time because of a misunderstanding, which will have a very serious impact on the two countries. Dai Qi said she hoped that through hard work, the United States and China could have a "calm dialogue" on the current trade relationship.
On October 9, Liu He, member of the Political Bureau of the CPC Central Committee, vice premier of the State Council and leader of the Chinese side of the China-US Comprehensive Economic Dialogue, held a video call with US Trade Representative Dai Qi. The Chinese side negotiated the lifting of tariffs and sanctions, and clarified its position on China's economic development model and industrial policies. The two sides agreed to continue communication in an attitude of equality and mutual respect to create good conditions for the healthy development of economic and trade relations between the two countries and the recovery of the world economy.
A number of experts pointed out to the Caijing reporter that the United States and China are slowly moving out of the vicious circle of tariff diplomacy that former President Trump began in March 2018.
U.S. agricultural exports to China have increased in recent years, and after the truce of the U.S.-China trade war last year, American farmers shipped record amounts of crops and meat to China across the Pacific. For U.S. farmers and ranchers, their dependence on the Chinese market is increasing. Surges in agricultural exports have led to an upturn in the U.S. agricultural economy, pushing up commodity prices and profits for agribusinesses, and raising expectations that farmers will spend more land on certain crops than ever before.
According to the U.S. Department of Agriculture, U.S. agricultural exports to China rose to 55.5 million tons in 2020, accounting for a quarter of all agricultural exports. The U.S. Department of Agriculture expects China to import $39 billion in agricultural products from the United States by 2022, up from the $37 billion expected in 2021. At the same time, U.S. agricultural exports have helped mitigate the blow from COVID-19. Among them, the U.S. poultry industry relies heavily on its ability to continue exporting to China. Jim Sumner, chairman of the U.S. Poultry and Egg Export Council, said they have been worried about possible friction in the U.S. relationship over the past few years.
The nutritional characteristics of chicken are more in line with the concept of modern healthy food consumption, which has promoted the sustained and stable growth of Chicken consumption in China. U.S. chicken exports to China are expected to grow 3 percent next year to 930,000 metric tons as Chinese consumer demand for meat increases, according to the U.S. Department of Agriculture' forecasts. "China has a huge market, a huge population -- they all need food. It needs to import agricultural products. This is something we can offer," Dai Qi added.
Chicken feet: A pioneer in U.S.-China trade
The U.S. Department of Agriculture's Foreign Agricultural Service recently released the "China Annual Poultry Meat and Its By-Products Report", which expects China's domestic chicken prices to rise in 2022, international shipping and port disruptions to improve, and chicken demand to support China's expansion of imports, because for now, imported chicken prices are still 20% to 50% lower than domestic chicken prices.
The report forecasts China's chicken import and export trade in 2022. Among them, in 2022, the import volume of chicken meat (excluding chicken feet) will increase by 3% to 930,000 metric tons, and the import volume of chicken feet will reach 800,000 metric tons; in addition, China's chicken exports will also harvest a 4% growth to 440,000 metric tons.
China's huge demand for chicken feet, chicken thigh meat and other chicken products are not so popular among Western consumers, and without Chinese purchases, many American chicken companies will only be able to send chicken feet to processing plants to make pet food ingredients, usually only a few cents per pound. Therefore, the Chinese market is particularly important for American chicken processing companies.
From January to June this year, total U.S. chicken exports reached an all-time high. Specific data show that in the first half of this year, the total export volume of U.S. chicken meat was 1.856 million tons, an increase of 6.8% over the same period last year, and the export value reached 2.136 billion US dollars, an increase of 21.1%, of which more than half of the transaction volume came from chicken feet. The main exporting countries are Mexico, China, Cuba and the Philippines, which together account for 49.2% of total U.S. chicken exports. Among them, Cuba and the Philippines have both set historical records for the volume and amount of imported U.S. chicken, while Mexican and Chinese imports have also set their own historical records.
In the first half of 2021, China imported 217,000 metric tons of U.S. chicken meat, of which chicken feet accounted for 59.6%, reaching 129,400 metric tons, and China's annual chicken claw imports this year are expected to exceed 250,000 metric tons. The Chairman of the Asia-Pacific Economic Cooperation (APEC) said: "Although our industry has faced many difficulties in the past year, it has weathered the difficulties with record export volume and export volume. "This is a testament to the strength and efforts of our industry and to the huge demand for U.S. poultry meat and eggs in markets around the world."
Strong consumer demand for chicken breast and wings in the U.S., coupled with increased demand for exports, has led to persistent historically low U.S. poultry stocks. U.S. frozen chicken stocks fell 3 percent from July and 20 percent from a year earlier in late August. In addition to the labor force, chicken hatchability remains a major factor constraining the growth of chicken production in the United States. Weekly hatching rates in the U.S. this year are up 3%-5% from last year, but production is down 1% from last year.
In the first half of this year, U.S. egg exports hit an all-time high, with exports reaching the second highest in history. In the first half of this year, U.S. egg exports to South Korea and exports hit record highs, and exports to Mexico and Hong Kong reached the second-highest level in history.
The U.S. business community has said that since the Biden administration has been in power for more than half a year, they have become increasingly disappointed in the White House's attitude toward China, the confrontational policies imposed by the Trump era still exist, and President Biden has not provided much clear information on economic engagement with the world's second-largest economy.
The U.S. Department of Agriculture is urging the Biden administration to take a more proactive approach to improving trade with China. Agricultural groups and trade advocates have asked the Biden administration to consider removing tariffs on China, arguing that tariffs are a remnant of the U.S.-China trade war and of no benefit. Multiple organizations in the U.S. dairy industry say retaliatory tariffs have dampened U.S. dairy sales in China, where market share lags behind other countries in cheese and milk powder sales.
On October 26, Vice Premier Liu He expressed concern about the removal of tariffs and sanctions from the United States in a video call with Treasury Secretary Yellen. China believes that under the current circumstances, the abolition of tariffs is in the fundamental interests of consumers and producers in China and the United States, and is conducive to the recovery of the world economy.
The Chinese market that is constantly "long meat"
The U.S. meat industry is facing its worst supply chain tension to date, and a lack of labor supply will continue to affect U.S. meat productivity, a problem that is expected to remain unresolved by 2022. With the U.S. meat supply chain facing multiple headwinds, the Chinese market is becoming an important channel for U.S. meat consumption growth.
According to CoBank's latest quarterly report from The Knowleg Exchange, the U.S. food supply chain is in its worst shape since the pandemic began. U.S. poultry supply fell 20 percent year-over-year in August; beef reserves fell 7.7 percent year-on-year; and pork reserves fell 44 percent year-on-year, their lowest level since 2017.
In contrast to this set of data, from July to August this year, the United States exported more beef to China than in 2020 combined. In the two months ended Aug. 31, U.S. beef exports to China totaled $240 million, $45 million more than the total beef exports to China for the full year of 2020.
According to the US Department of Agriculture, the amount of pork eaten by The Chinese people is expected to reach 40.3 million tons in 2020, more than double the sum of all countries in the European Union. From the analysis of import data in 2020, the top five main source countries of China's imported pork (excluding pork offal) are Spain, the United States, Brazil, Germany and Canada. U.S. pork exports to China in September last year had surpassed pre-trade war levels. According to statistics, about 27% of the pork in the United States is used for export. Despite weaker demand than a year ago, China/Hong Kong remains the largest destination for U.S. pork in 2021, with pig by-product exports up 3% to 136577 tonnes and a value increase of 9% to US$332 million as of May. But a decline in pork products reduced total exports by 22 percent to 408896 tonnes, worth $952.7 million (down 24 percent).
The continued decline in pork and hog prices in China has prompted this trend to accelerate in recent months. This year's U.S. pork supply to China reflects the expectation of increased domestic production and reduced imports in China, and the U.S. pork export forecast to China in the third and fourth quarters of 2021 has been lowered by 25% and 110 million pounds, respectively.
On September 16, China formally applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). A decade ago, its predecessor, the Trans-Pacific Partnership (TPP), was a U.S.-led trade club designed to limit the impact of China's economic model. Now that the United States has withdrawn from the TPP, China wants to join as its largest member. The American Meat Export Federation (USMEF) pointed out that China is the world's largest meat consumer, the Chinese market still has great growth potential in the future, and China's application to join the CPTPP is of great significance to all relevant countries that supply meat to China.
Jeff Schott, a senior fellow at the Peterson Institute for International Economics, told Caijing that "former U.S. Trade Representative Michael Froman has repeatedly said that when China can meet the high standards of the TPP, he welcomes China to join the TPP." Since the signing of the TPP, the U.S.-China relationship has experienced considerable ups and downs, with the U.S.-China trade war, tariffs and economic sanctions, and high-tech export controls increasing friction in the bilateral relationship. To rebuild trust, the two countries should cooperate in areas where they share important objectives. ”
On the morning of October 26, Liu He held a video call with US Treasury Secretary Yellen at the request. The two sides talked for about an hour and a half and had pragmatic, professional and in-depth exchanges on a wide range of topics in the economic and trade fields.
The content of the Sino-US call includes: First, the two sides exchanged and discussed the macroeconomic situation and policies of China and the United States, including the growth situation, inflationary pressure, financial stability, supply chain and other issues. Both sides believe that the world economic recovery is at a critical juncture, and it is very important for China and the United States to strengthen macroeconomic policy communication and coordination; second, the two sides exchanged views on specific cooperation in multilateral and bilateral fields such as financial market supervision and cooperation under the G20 framework; third, the two sides raised their own concerns, and China expressed concerns about the removal of tariffs and sanctions by the United States and the fair treatment of Chinese enterprises.