It’s hard to believe trade relations between the U.S. and China began less than 20 years ago.
Today, the U.S. ag economy relies on trade with China to prop up commodity prices, and an agreement is needed between the two countries soon.
With its large and fertile farmlands, the U.S. produces a lot of ag commodities, and China has 1.4 billion people that can use a lot of them.
Building trade with China is a non-partisan topic. Presidents Richard Nixon (Republican), Jimmy Carter (Democrat) and Ronald Reagan (Republican) all helped open the door to trade relations with China.
President Bill Clinton (Democrat) signed the U.S.-China Relations Act in October 2000, giving Beijing normal trade relations with the U.S. China also joined the World Trade Organization in 2001.
By 2006, China had passed Mexico as the United States’ second largest trade partner – Canada remains number one.
China became the largest U.S. foreign creditor in 2008 and the world’s second largest economy in 2010.
In recent years, there have been serious concerns about trading with China. We hear of grain sales to “undisclosed locations,” which often turn out to be China. We see grain purchase cancellations, and sales that are transferred to the next marketing year and there hasn’t seemed to be any recourse when contracts are arbitrarily changed.
It’s difficult to trade with China, and more stability is needed in the next trade agreement between the two countries. More disclosure is needed on China’s part.
The U.S. needs to rely less on China as its banker, as China holds over $1 trillion in U.S. Treasury bonds.
The news recently has been more positive as Beijing lifted tariffs on U.S. soybeans and pork. Reuters reported that Chinese importers purchased 22 million bushels of U.S. soybeans, in late September 2019, that are slated for shipment from October to December. A similar purchase was made earlier in September too.
The U.S. farmer has long worked to build relationships with China, and the recognition of that relationship is appreciated. President Donald Trump (Republican) also postponed a planned tariff hike on Chinese goods ahead of trade talks scheduled for early October.
If an agreement with China could be reached, demand and prices should improve for U.S. commodities. Hopefully, all trade agreements include provisions to improve human rights for all people. If an agreement is not reached sometime soon, China will move toward purchasing more commodities from South America. The situation of destroying South American jungles and putting the land into farms is not desired by most people. At the same time, the U.S. too is losing its farmland to industry and urbanization because prices are not allowing farmers here to compete.
Fortunately, trade deals are in the works with Mexico, Canada and Japan. Word was received that the White House finalized a trade agreement with Japan on Sept. 25, and that was viewed as a positive by many farm groups, including beef producers. In addition, at the recent U.S. Soy Global Trade Exchange and Specialty Grains Conference in Chicago, representatives from more than 50 countries expressed an interest in U.S. soybeans.
China is not the only fish in the sea, but it remains a very important market for U.S. ag products. The U.S. needs a good trade agreement with China soon.