China will make good on a pledge to purchase more than US$40 billion per year of U.S. agricultural products under the recently agreed Phase 1 trade deal between the two countries, China’s top agriculture consultancy said on Friday.
Chinese purchases of agricultural goods are expected to increase to US$40 billion to US$ 50 billion annually over the next two years under the deal aimed at resolving the long-running trade war between the world’s top two economies, according to U.S. Trade Representative Robert Lighthizer.
The deal has yet to be signed, fuelling skepticism over whether China will be able to import such a large amount of U.S. farm products.
“Most foreign media don’t believe that China can fulfill the commitments,” Shanghai-based consultancy JCI wrote in a note. “But as a Chinese consultant company on (the) agricultural market, JCI strongly believe that China has the ability and will fulfill its promise.”
JCI estimates China can buy a total of roughly US$41.3 billion worth of U.S. farm products annually, including around US$ 18.7 billion, or 45 million tons of soybeans.
Soybeans have been hit heavily by Chinese tariffs on U.S. goods in the tit-for-tat trade row, hurting U.S. soy farmers who depend heavily on the Chinese market.
China’s soybean imports from the United States last year halved from 2017 to 16.6 million tons, the lowest annual total since 2008.
JCI’s projections were based on a “careful study” of China’s import volume of U.S. farm products in the past and assume favorable weather and pricing throughout, said the company. It noted that China’s U.S. soybean imports hit a record high of 33.66 million tons in 2016.
JCI expects another US$ 2.1 billion will come from 1 million tons of frozen pork and offal imports, while sorghum, corn and distillers’ grains imports will reach about US$ 1.8 billion each. It did not include volumes bought for state reserves.
Wheat shipments will hit US$ 1.4 billion, chicken feet imports will reach US$ 1.1 billion, which would mark a 257% increase from the previous record, and nut purchases will rise to US$ 2.5 billion, it said.
The biggest amount of nuts China ever bought from the United States was US$ 391 million in 2012, according to U.S. export data.