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 U.S. government said it would eliminate U.S. special treatment of Hong Kong as a form of punishment. to Beijing.
Large volumes of state purchases of U.S. corn and cotton have also been put on hold, one of the sources said.
China could expand the order to include other U.S. agricultural products if Washington takes additional steps, the sources said.
“China has asked major state-owned companies to suspend large-scale purchases of US agricultural products such as soybeans and pork in response to the US backlash over Hong Kong,” the source said.
“Now let’s watch and see what the US does next.”
US President Donald Trump said on Friday that he had directed his administration to begin a process to eliminate special treatment given 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 U.S. agricultural products if the U.S. government takes further action on Hong Kong, the sources said.
Chinese importers canceled 10,000 to 20,000 tons of U.S. pork shipments—nearly a week's worth of orders in recent months—following Trump's comments on Friday, according to one of the sources.
State purchases of large volumes of corn and cotton were suspended, but details were still unclear.
In a worst-case scenario, if Trump continues to target China, the Chinese government would have to abandon the countries' Phase 1 trade deal, said a second source with knowledge of the administration's plans.
“There will be no way for Beijing to buy additional goods from the US while it is receiving constant attacks from Trump,” the person said.
China has committed to purchasing an additional $32 billion in U.S. agricultural products over 2 years under the countries' January trade deal, with targets set based on 2017 data.
China has already purchased soybeans, corn, wheat and soybean oil from the US this year, aiming to fulfill its side of the agreement. Beijing also increased purchases of US pork after African swine fever decimated its herd.
The US Department of Agriculture reported that China purchased $1.028 billion worth of soybeans and $691 million worth of pork in the first quarter of 2020.
Private importers have not received government requests to suspend purchases from the US, according to a third source, from a trading company, who highlighted however that buyers are cautious at the moment.
“A certain amount of trade will come to a halt” due to rising tensions between China and the U.S. in other areas, but it is not a total shutdown, said a fourth source with knowledge of the administration’s plans.
China, however, could easily find other sellers (of agricultural products), this person added.
The sources declined to be named due to the sensitivity of the topic.
Source: agrolink
READ TOO:
{module 441}
{module 442}
