Contrary to what was expected after January 15, when China and the USA signed phase one of the trade agreement after almost two years of a bitter dispute, relations between the two countries once again intensified and caused concern and strangeness, with a rapid wear being recorded.
The Asian nation accused the United States of starting a new cold war. The statement came from the Minister of Foreign Affairs, Wang Yi, this Sunday (24), during the National People's Congress, in Beijing. “China has no intention of changing the US, nor replacing the US. It is also an illusion for the US to want to change China,” said the Chinese government representative. The information comes from the international news agency Bloomberg.
Even so, representatives of both governments, at certain times, again stated that phase one of the trade agreement would be intact despite all the problems and statements. Analysis and numbers, however, show another scenario and perspectives that already signal concerns.
A study carried out by Agrinvest Commodities shows that the pace of Chinese purchases in the North American market is not moving as expected and necessary to reach the financial volume agreed between the two countries.
“The trade agreement could collapse. The pace of purchases does not reach 50% of what is necessary. By the end of March, China had purchased US$20 billion in goods from the US against a target of US$43 billion”, explain analysts at Agrinvest Commodities. The graphs below illustrate the current situation:
Source: Agrinvest Commodities
North American markets will not operate this Monday (25th) in celebration of the Memorial Day holiday and, therefore, it is not yet possible to understand how agricultural markets will react to this new worsening of the scenario between the two countries. It is known, however, that North American agribusiness needs new purchases from the Asian country in order to have more security, adjust its stocks and, mainly, a recovery in the prices of its products.
“As long as Trump leads the US there is no possibility of a full trade agreement between the US and China. In other words, we do not see any chance in which Trump will return to having commercial relations with the Chinese as he had in 2017, even before the entire trade war broke out. There may be specific incentive packages like in 2019, at the beginning of 2020 – which have not yet been implemented”, explains the director of ARC Mercosul, Matheus Pereira.
Still in ARC's analysis, “China could give 'commercial crumbs' to the US, offering tariff-free purchase packages. However, these packages are superficial and may be more beneficial to China itself than to the US, since there is no reopening of free trade, and China controls what must be imported under tariff exemption, specifically speaking about agricultural products. ”.
MORE SPACE FOR BRAZIL?
Yes. Pereira believes that as long as Donald Trump remains president of the USA, Brazil should continue to benefit from the continued concentration of demand, mainly for soybeans, from the Asian nation in the national market, in addition to other products, such as meat, for example.
“And in a hypothetical scenario, even if a Democratic candidate wins this year's US elections and strikes a trade deal with China in 2021, it shouldn't happen overnight. This will take time, the Chinese will want to benefit from this possible reconstruction of trade relations and, of course, the USA, as potential as they are, regardless of the leader they have, will want to maintain their hegemony, the political and economic forces they already have, not giving in too much to China’s wishes”, concludes Pereira.
CHINA X USA X CORONAVIRUS
The new coronavirus pandemic has been the main catalyst for these new harsh statements between the two nations as they attack each other, after American President Donald Trump stated that the virus appeared following the signing of the first phase of the trade agreement between the two.
US Secretary of State Michael Pompeo even blamed China for 'hundreds of thousands of deaths' due to the coronavirus. Likewise, Trump even threatened the Chinese with new tariffs on their products due to Covid-19.
All issues related to relations between China and Taiwan are also on the agenda and could further compromise the relationship between Chinese and Americans.
Protests in Hong Kong this May 24th – Photo: Justin Chin/Bloomberg
“Mike Pompeo congratulated “President” Tsai-Ing Wen, recognizing Taiwan as an independent country”, warns Agrinvest, in addition to highlighting the fact that China is studying the approval of Hong Kong laws, “limiting the rule of law of its population. At the beginning of this year, the American Senate had approved a mechanism to verify the freedom of expression of the local population”.
Source: Notícias Agrícolas
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