The Visit of Chinese Vice President Xi Jinping


The visit to Iowa last week by Chinese Vice President Xi Jinping, who will become President, highlighted the importance of agricultural trade for both nations.  Having a Chinese President with first-hand knowledge of agriculture may help keep some agricultural trade and food security issues from being caught up in wider trade policy differences at a time of political transition for China.

Current agricultural trade between the two countries is simply too big to ignore.  For the U.S. in the fiscal year ending last September 30, China was the largest buyer of agricultural exports at $20.0 billion, 14.5 percent of total U.S. agricultural exports.  Exports to China are projected at $17.0 billion for this fiscal year, 12.9 percent of U.S. exports, and tied with Mexico for number two after Canada at $19.0 billion.  In the 2010/11 soybean marketing year, China purchased 24.1 million metric tons (MMT) of whole soybeans from the U.S., 59 percent of U.S. soybean exports, and total exports were 45.8 percent of U.S. soybean use.  Chinese purchases of U.S. cotton were 38.9 percent of U.S. cotton exports on a volume basis and all exports were 78.7 percent of total U.S. cotton use.

Imports from the U.S. are also important to China. The 24.1 MMT of soybeans imported from the U.S. in the 2010/11 marketing year were 46.1 percent of total Chinese soybean imports, and 68.1 percent of vegetable oil consumed came from imported oilseeds and other vegetable oils.  In the 2010/11 marketing year China imported 12.0 million bales of cotton, with 5.3 million bales, 44.2 percent, coming from the U.S.  Chinese cotton imports from all sources are expected to be 16-17 million bales in the 2011/12 marketing year.  In calendar year 2010 China imported about 1.8 MMT of pork with 20 percent coming from the U.S.

These trading relationships are likely to increase in the immediate years ahead.  The growing middle class in China will increase demand for food and the U.S. remains one of the world’s most reliable suppliers for a wide range of agricultural and food products, including those not now purchased by China.  Reliable suppliers of high quality products are important as food security remains a key policy issue.

The U.S. is not alone in efforts to supply the Chinese market.  Argentine and Chinese trade officials announced last week that a phytosanitary agreement has been worked out allowing Argentina, the world’s number two corn exporter, to sell corn to China.  The agreement will likely be signed during the first half of the year.  The two countries have previously had disagreements on industrial product sales from China to Argentina.  Recent weather problems in Argentina will likely hold down the size of the soon to be harvested corn crop and allow the U.S. to supply most of the corn imports.  China imported 1.3 MMT of corn in the 2009/10 October through September marketing year and 1.0 MMT in 2010/11 year.   The Foreign Agricultural Service of USDA believes that China will import 4.0 MMT this marketing year, while the Food and Agriculture Organization of the UN projects 4.5 MMT.

Agricultural trade has already been entangled with wider policy issues.  After President Obama placed tariffs on tire imports from China, it reacted by restricting chicken meat imports from the U.S.  That was part of a wider issue of not allowing cooked chicken imports from China to the U.S.  Last year China started an investigation on imports of distillers dried grains, a high protein co-product of corn ethanol used in dairy, beef, hog and chicken feed.  That investigation was to end late last year, but has been extended to June of this year.  China has refused to import beef from the U.S. since 2004 when BSE was found in the U.S., despite findings by the World Animal Health Organization that the U.S. is a controlled risk country and all U.S. beef is safe for human consumption.  Other major markets for U.S. beef allow for beef imports from young animals, with Japan accepting beef from animals 20 months and younger and S. Korea 30 months and younger.  China has recently reached agreement with Canada for imports of beef.

China often immediately retaliates in kind to trade policy challenges from the U.S. or any other country, like Argentina.  They also restrict imports on items such as beef when there appears to be no reason to do so.  Chinese officials complain about the trade deficit in agriculture when it is totally consistent with the high production capacity of the U.S. and a much smaller population compared to China.  Perhaps Mr. Xi will conclude that treating U.S. agricultural trade in the same manner as other trade is not in the best interest of China.

For all the talk of China being the number one, two or three buyer of U.S. agricultural products, the reality is that China buys only a narrow group of agricultural products from the U.S.  Of the $20.0 billion of U.S. agricultural exports to China in calendar year 2011, 53.0 percent, $10.6 billion, were for soybeans and products.  That is more than aircraft and parts at $6.4 billion, automobiles at $5.3 billion and semiconductors at $4.6 billion.  The second largest category was cotton at $2.6 billion, 13.0 percent of trade.  Hides and skins were number three at $1.2 billion, 6 percent of trade, followed by coarse grains, $0.8 billion, 4 percent of trade.  These four total $15.2 billion, 76 percent of U.S. agricultural exports.  These are all bulk, raw material products.  Value-added products are further down the list with fish and seafood at $750 million dollars and red meats, mostly pork, at $640 million.  The U.S. has many more agricultural export products that can meet the needs of the growing Chinese middle class.

The visit of the Vice President was more of a listening tour than a hard negotiating time.  He will be elected by the Communist party this fall, but will not take office until March of 2013.  Now is the time for him to begin thinking about agricultural trade policy and what can be done to keep it out of the limelight.  President Obama’s announcement that he is forming a task force within his Administration to more aggressively pursue trade disputes is believed to be targeted at China.  That makes it even more important to separate broad issues like intellectual property rights, currency values and government procurement programs from the task of feeding 1.3 billion people.  Agricultural trade policy will not change overnight, but a more market driven policy would benefit both Chinese consumers and U.S. producers.

Ross Korves is an Economic Policy Analyst with Truth About Trade and Technology (

Ross Korves

Ross Korves

Ross Korves served Truth about Trade & Technology, before it became Global Farmer Network, from 2004 – 2015 as the Economic and Trade Policy Analyst.

Researching and analyzing economic issues important to agricultural producers, Ross provided an intimate understanding regarding the interface of economic policy analysis and the political process.

Mr. Korves served the American Farm Bureau Federation as an Economist from 1980-2004. He served as Chief Economist from April 2001 through September 2003 and held the title of Senior Economist from September 2003 through August 2004.

Born and raised on a southern Illinois hog farm and educated at Southern Illinois University, Ross holds a Masters Degree in Agribusiness Economics. His studies and research expanded internationally through his work in Germany as a 1984 McCloy Agricultural Fellow and study travel to Japan in 1982, Zambia and Kenya in 1985 and Germany in 1987.

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