According to many people briefed on the talks, the demand of the President of the United States, Donald Trump, that China commits to big purchases of farm goods of America, now become the main sticking point in negotiations to end the U.S.-China Trade war. Trump openly said that Beijing could buy as many as fifty billion dollars of the United States farm goods, over doubled the yearly amount it did the year before the trade war started. The officials of the United States continue to emphasize that in the negotiations, whereas China is hesitating to commit heavy figure along with a specific time frame. The buyers of China would like the option to buy because of the market conditions.
A Chinese state-owned company’s official explained that China doesn’t want to purchase too many products that the Chinese people don’t or to buy something at that time when it not in demand. If the agricultural products of the United States brilliantly passed in China, it might harder for the local market to digest. He said the surplus of agricultural products in the Chinese market would hit domestic prices very hard as well as break the balance of supply-demand. Furthermore, a huge rash of African swine fever destroyed the Chinese pig herd, beating demand for soybeans, the main feed ingredient, and the massive agricultural import from the U.S.
Chinese Agricultural Buyers on Matter
The agricultural buyers of China, representative of a mix private and state enterprise, especially imported from the economy source. The demand of the United States that China agreed to buy a massive volume of products, irrespective of whether economical or in demand, would require state involvement to execute. That opposes a major demand of the U.S. is making of China in the trade dispute and a United States policy goal for decades: that China becomes an economy based on market and stop backing state firms and favoring local companies at the expense of external competitors.
Some trade expert says that the upside and down nature of the condition is striking. The former acting United States Trade Representative under Obama and advisor to President Clinton, present senior vice president at Sard Verbinnen, Miriam Sapiro, said that the government of the United States doesn’t usually regulate the pricing or timing of agricultural exports, a private sector role. In contrast, in this case, the President already took this step. A former assistant secretary of Commerce at Kroll, a risk management firm, Nicole Lamb-Hale, expresses that it is caustic that China is pushing back and say that we want the market to deal with this.
Lamb-hale said that the heavy agricultural product purchases Trump is demanding for are market distortive. China is telling the American President that they are not feasible for that. White House spokesman says that Trump is clear that he desires real structural changes that yield verifiable, actual, and enforceable results, leading to reasonable trade, more effective markets, and improved prosperity for both nations. Gao Feng, the spokesman of Commerce ministry, told reporters on October-17 that China would increase farm purchases of the United States based on local demand and principles of the market, though the U.S. would provide advantageous conditions.
Farmers of the United States to face exports Plummet
The farmers of the United States faced their exports fall after the start of the trade war. An official of the United States administration said on Tuesday that both countries might not agree to a Phase One deal by the meeting of Asia Pacific Economic Cooperation in Chile in mid-Nov. China imports a massive amount of soybeans from Brazil in recent weeks; after prices of the United States’ soybeans jumped as investors bet on China buys.