The two countries signed the deal on Jan. 15, 2020
By Diego Flammini
A trade deal between the world’s two largest economies celebrated its first anniversary this month.
Jan. 15 marked one year since President Trump and Chinese Vice Premier Liu He put pen to paper on the phase one trade agreement in Washington, D.C.
Among other commitments, China promised to purchase $12.5 billion of additional ag goods on top of the 2017 baseline amount of $23.8 billion in year one of the agreement.
Has China followed through on its end of the deal?
As of November 2020, China had purchased about $19.4 billion of U.S. ag products. This figure represents about 76 percent of its intended targets, a report from the Peterson Institute for International Economics said.
What China has purchased, however, has been positive for the U.S. ag industry.
“What they did buy helped the overall ag economy and sent prices higher to ration demand on small supplies in the U.S. and record strong demand for corn and soybeans,” said Moe Agostino, chief commodity strategist with Farms.com Risk Management. “I could just imagine prices and demand would be much higher if we did not have COVID.”
Corn and soybean prices have been the biggest beneficiaries of the trade deal.
China has been rebuilding its swine herd since African swine fever affected its pig population.
Nearly 300 million pigs in China died or had to be culled because of ASF, the World Organization of Animal Health reported.
As of December 2020, China’s pig population is at about 90 percent normal, Reuters reported.
With swine populations up, Chinese farmers will need feed for their herds.
“Too many (people) underestimated demand last year, particularly from China, and the same could happen in 2021,” Agostino said. “They actually need the corn and soybeans.”
Future projected economic growth in China could also benefit the U.S. ag sector.
The Chinese “economy is expected to grow at 7.9 percent in 2021 versus 2.3 percent in 2020. That is a big plus for global ag demand,” Agostino added.
While President Trump signed the agreement with China, it’ll be a different U.S. president overseeing the deal’s future.
But President-elect Biden may be able to use some of President Trump’s tactics to ensure China follows through on its future ag purchases.
“Biden has the leverage to use against China with pending tariffs left behind by Trump,” Agostino said.