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Ag purchases are a test of Chinese credibility, says Vilsack

Speaking to a farm conference, Agriculture Secretary Tom Vilsack said China’s adherence to its commitment to buy mammoth quantities of U.S. farm exports will be a test of the Asian nation’s place in global relations. While China has buoyed commodity prices with its purchases, it is not on track to meet the goal of importing $43.6 billion worth of U.S. food, agricultural, and seafood products by the end of December.

“I think what we will likely see is an effort to make sure that China understands it is our expectation, and it should be their expectation, that they live up to the agreements that they made,” Vilsack said on Monday, speaking remotely to the Ag Outlook Forum in Kansas City. “And once you have that relationship firmed up … you can then begin the process of knowing how all of that fits into approaches that you can make to either multilateral or bilateral trade relations.”

The “phase one” agreement that de-escalated the Sino-U.S. trade war in early 2020 obliged China, usually the No. 1 customer, to step up its imports of U.S. food and agricultural products, to $36.6 billion in 2020 and $43.6 billion this year. Imports totaled $23.6 billion in 2020 and had tallied $23.2 billion through July of this year, according to the Peterson Institute for International Economics, which tracks Chinese import data.

Those are record-level sales even if they don’t meet the phase one goals, which have no enforcement mechanism.

Moments before signing the agreement at the White House in 2020, Chinese vice premier Liu He said three factors would determine his country’s purchase levels: domestic demand, commodity prices around the world, and work by both governments to encourage trade. “As living standards of the Chinese people rise, we will import fine-quality agricultural products from countries across the world,” said Liu through an interpreter.

Through large and frequent purchases, China was pivotal in driving up commodity prices late last summer and fall. Prices remain high as the world economy recovers from the pandemic slowdown of 2020. “We will continue to press China for meeting their promised levels of sales and transactions” while recognizing the increase in sales, said Vilsack. “We are involved in a multiple-level, complex relationship with China, and every piece of that relationship impacts and affects every other piece of the relationship.”

The Biden administration has been slow to engage with China. Relations have become increasingly competitive.

China applied for membership last week in the 11-nation trans-Pacific trade bloc that was formed in 2018 after the Trump administration withdrew from the pact in 2017. Japan said it would analyze whether China meets the standards of the group, while Australia said China would have to remove tariffs imposed as part of disputes between the two countries. Malaysia said it was “encouraged” by China’s interest in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, reported the ANI news agency.

USDA chief economist Seth Meyer, who spoke at the Ag Outlook Forum, said the brightening prospects for U.S. farm income were nourished in part by larger exports to China. Exports generate roughly 20¢ of each $1 in farm income. Meyer parried the rhetorical question “Are we in a boom?” with the response, “We’ve seen a big run in commodities since August 2020.”

Produced with FERN, non-profit reporting on food, agriculture, and environmental health.
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