Trump’s attempt to force-feed China with US farm produce blocks trade talks

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WASHINGTON / BEIJING (Reuters) – U.S. President Donald Trump’s demand for Beijing to commit to buying large U.S. agricultural products has become a major sticking point in talks to end the China-U.S. Trade war, according to several people informed of the negotiations.

Trump has publicly said that China could buy up to $ 50 billion worth of U.S. agricultural products, more than double the annual amount in the year before the trade war began.

U.S. officials continue to push for it in the talks, while Beijing is reluctant to commit to a large number and a specific timeframe. Chinese buyers would like to have the discretion to buy according to market conditions.

“China doesn’t want to buy a lot of products that people don’t need here or buy something when there is no demand,” said an official at a Chinese state-owned company.

If US agricultural products “enter China in a concentrated manner, it could be difficult for the domestic market to digest,” the Chinese official added.

An oversupply of agricultural products in China would hit local prices very hard, he said, “and upset the supply-demand balance.”

What’s more, a massive outbreak of African swine fever has decimated China’s pig herd, crushing demand for soybeans, a key food ingredient and the United States’ largest agricultural import.

Chinese agricultural buyers, representing a mix of public and private companies, usually import from the cheapest source. The demand by the United States that China commit to purchasing a huge volume of products, whether economical or in demand, would require the implementation of state intervention.

This contradicts a basic demand that the United States is making of China in the current trade war, and a goal of American policy for decades: that China become a more market-based economy and stop subsidizing companies. State and favor local businesses to the detriment of foreign competitors. .

The upside-down nature of the situation is striking, according to some trade experts.

“The US government does not normally regulate the prices or timing of agricultural exports – a role of the private sector – but in this case the president has already taken that step,” said Miriam Sapiro, former acting representative of the United States. trade under Barack Obama and advisor to President Bill Clinton, now Managing Director of Sard Verbinnen.

“It’s ironic that China is backing down and saying ‘We want the market to solve this,'” said Nicole Lamb-Hale, former assistant secretary of commerce and chief executive of Kroll, a risk management firm.

The big farm purchases Trump demanded is distorting the market, Lamb-Hale said. China tells Trump they are “just not feasible.”

FILE PHOTO: US President Donald Trump and Chinese President Xi Jinping pose for a photo ahead of their bilateral meeting during the G20 Leaders’ Summit in Osaka, Japan, June 29, 2019. REUTERS / Kevin Lamarque

Asked specifically about concerns that the administration’s pressure for large agricultural purchases contradicts the long-standing American free trade message, a White House spokesman said: “The president has made it clear that he wanted real structural changes that produce real, verifiable and enforceable results, leading to fairer trade, more efficient markets and increased prosperity for both countries.

Commerce Department spokesman Gao Feng told reporters on Oct. 17 that China “will increase U.S. agricultural purchases based on domestic demand and market principles, while the United States will provide favorable terms. “.

American farmers saw their exports drop after the start of the trade war.

A US administration official said on Tuesday that the two sides may not agree to a “phase one” deal at the Asia-Pacific economic cooperation meeting in Chile in mid-November.

In recent weeks, China has bought large quantities of soybeans from Brazil, after US soybean prices jumped as investors bet on Chinese big purchases.

(This story corrects the title of Sapiro in the 11th paragraph)

Additional reporting by Andrea Shalal, Dominique Patton; Editing by Tom Brown and Kim Coghill


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