China: Trade and Agricultural Commodity Imports

Published on May 6, 2019

China’s State Council reviewed and approved commodity import and industrial output plans submitted by the relevant planning departments for Q2 of 2019. Those plans are based on China hitting a 6.4% – 6.5% year on year GDP growth rate, and a 7.0% domestic industrial output rate.

*** Our understanding is that even if a trade deal were to be struck with Washington, China’s imports from the US would be expected to rise just 10% from last year’s levels. As negotiations have dragged on into the year, sources indicate that China would not be able to hit the $200 billion import level discussed with the US for 2019, but would instead be able to buy closer to $160-170 billion of goods — assuming a deal is reached. ***

Pressure on Agriculture

And in a thinly veiled message to the US, sources point out that the trade war has significantly dented the US share of agricultural imports into China.

Specifically, China’s imports of corn, wheat, and cotton increased by 76.2%, 60.8%, and 92.4% respectively in the first quarter of 2019 from the same quarter in 2018, according to the review conducted at the end of last month. But imports of corn, wheat, and cotton from the US amounted to only 10%, 9%, and 15% respectively of those agricultural commodities.

In addition, China imported no sorghum at all from the US in Q1 of 2019, compared with 1.53 million tons in the same quarter last year. And since the trade wars, Ukraine has displaced the US as China’s largest source for corn.

China did import 2.55 million tons of soybeans from the US in Q1, a down payment so to speak that was highlighted in the trade discussions between Beijing and Washington. But China’s total imports of soybean were down 14.4% year on year for the quarter, at 16.75 million tons.

For Q2, indications are China’s soybean imports could rise to 25 million tons, about the same as last year’s imports for the same period, but the main source will still be Brazil. If the US and China were to reach an agreement, Beijing believes imports from the US could reach last year’s levels, but are unlikely to exceed 20 million tons.

As a point of reference, in 2018 China imported 88.03 million tons of soybeans worldwide, of which 19%, or 16.64 million, came from the US.

Going back to 2017, total imports were 95.54 million tons, with the US accounting for 34%, or 32.9 million tons, of the total.

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