BEIJING — China will remain committed to opening up its agricultural industries despite trade tensions with the United States, a senior Chinese official said, adding that tariffs will only have a limited impact on the country’s markets.
“China’s diversified sources of imports from a wide range of overseas markets will ensure its countermeasures against US tariffs will only have a limited influence on the domestic market,” said Han Jun, deputy director of the office of the central agricultural work leading group and vice-minister of agriculture and rural affairs, during a press briefing on Aug 9.
The government will work to minimize the impacts on industrial production and people’s everyday life, Han said.
The vice-minister’s remarks came on the heel of an escalation of a US-ignited trade war. Among rising tariffs against a wide range of goods traded in both directions, China introduced extra levies on more than 900 US agricultural product lines, including soybeans, grains, cotton and meat.
“China is not willing to engage in a trade war but was forced to implement necessary countermeasures in response to the US moves,” Han said, noting the country’s tariffs, put forward after extensive public input and a careful assessment on the impact, are “rational and restrained.”
The impact on US agriculture is foreseeable.
“American farmers are likely to lose the Chinese market that they have worked for decades to explore, despite the agricultural subsidies worth up to $12 billion announced by the White House and US Department of Agriculture,” Han said.
Soybeans, the most important agricultural product in the bilateral trade, are at the forefront of this trade war.
The US is expected to export more than 30 million tons of soybeans to China this year, according to a previous forecast, but this number is now unlikely to materialize, as Chinese companies have largely stopped purchasing US soybeans after an additional 25-percent duty took effect on July 6.
A hearing by the US House of Representatives on July 19 reflected the concerns of farmers and agri-business groups about the scenario of a shrinking market share in China. After the soybean season begins in October, the sector will face a worsening situation that features falling prices, increasing export pressure and a long export cycle.
The United States exports about half of its annual soybean production, around 100 million tons.
In a fiercely-competitive Chinese market, soybean producers from other countries will occupy the market share that belonged to US farmers if trade frictions continue to worsen, Han said.
Han cited remarks of Brazilian Agriculture Minister Blairo Maggi that the South American country is capable of doubling the cultivated area of soybeans.
“Many countries have the will and ability to replace the US presence in the Chinese agricultural market. If other countries become reliable suppliers to China, it will be difficult for the United States to regain the position.” Han said.
China is capable of dealing with the gap left by dropping soybean imports from the United States, Han said.
With limited arable land resources, it is hard for China to ensure the sufficient supply of land-intensive products including soybeans after securing enough staple grains like rice and wheat. The country relies on global markets to fill its 90 million-ton soybean demand each year.
China has made thorough preparations to prevent the impacts on domestic food prices, Han said, citing responding measures including seeking new sources, reducing the use of soymeal in animal feed, buying substitutes, and raise domestic soybean production capacity.
Despite the trade frictions, Han stressed China would promote the opening-up of the agricultural sector in an active, steady and orderly manner, with more imports from the global markets. “It is China’s established policy to actively expand agricultural imports.”
“The main issue faced by China’s agriculture is not shortage in production but structural imbalance. We must accelerate supply-side structural reform in agriculture through further reforms and opening up,” Han said.
China has become the largest importer of agricultural products worldwide and the second largest agricultural trading nation. The country is the world’s biggest buyer of soybeans, sugar, and cotton.
In fact, China and the United States are highly complementary in agricultural trade and strengthened cooperation in the area would be beneficial to the agriculture of both sides, Han said.