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China urges state-owned companies to suspend purchases of U.S. farm products

Posted by Marina

China has asked its state-owned companies to suspend purchases of soybeans and pork from the United States, two sources with knowledge of the matter said, after the US government had agreed that it would eliminate US special treatment of Hong Kong as a form of punishment. to Beijing.

Large volumes of US state purchases of corn and cotton have also been put on hold, said one of the sources.

China could expand the order to include other agricultural products from the United States if Washington takes additional measures, the sources said.

"China has asked major state-owned companies to suspend large-scale purchases of U.S. agricultural products like soy and pork in response to the US reaction to Hong Kong," said the source.

"Now we are going to follow up and see what the US will do next."

U.S. President Donald Trump said on Friday that he had directed his administration to begin a process to eliminate special treatment granted to Hong Kong, ranging from an extradition treaty to export controls. This would be a response to China's plans to impose new security legislation on the territory.

China is ready to stop imports of more agricultural products from the U.S. if the US government takes further action on Hong Kong, the sources said.

Chinese importers canceled 10,000 to 20,000 tonnes of U.S. pork shipments - the equivalent of nearly a week on orders in the past few months - after Trump's comments on Friday, according to one of the sources.

State purchases of large volumes of corn and cotton have been suspended, but the details were not yet clear.

In the worst case scenario, if Trump continues to target China, the Chinese government would have to abandon phase 1 of the trade agreement between the countries, said a second source with knowledge of the government's plans.

"There will be no way for Beijing to buy additional products from the US while it is receiving constant attacks from Trump," the person said.

China has committed to additional purchases of $ 32 billion in U.S. agricultural products over 2 years under the trade agreement signed in January by countries, with targets set on 2017 data.

China has already purchased soy, corn, wheat and soy oil from the U.S. this year, with a view to fulfilling its part of the deal. Beijing also expanded U.S. pork purchases after African swine fever decimated its herd.

The U.S. Department of Agriculture recorded that China purchased $ 1.028 billion in soybeans and $ 691 million in pork in the first quarter of 2020.

Private importers have not received requests from the government to suspend purchases from the United States, according to a third source, from a trading company, who however stressed that buyers are cautious at the moment.

"A certain portion of trade will be paralyzed" due to the growing tension between China and the United States in other areas, but it is not a total paralysis, said a fourth source, with knowledge of the government's plans.

China, however, could easily find other (agricultural) sellers, he added.

The sources refused to be named due to the sensitivity of the topic.

Source: Agrolink