Ten Reasons Why China Needs the US
CHINA - China is America’s biggest customer for agricultural products, with almost a fifth of imported goods coming from the US.
29 July 2015
4 minute read
By: Today, this is worth $25 billion in annual sales.
This was not always the case, however, according to the US Department of Agriculture’s Economic Research Service (ERS), which has seen growth in Chinese buying develop from around 2-3 per cent in the mid-1990s.
Economic reforms, urbanisation and a rapidly developing livestock sector have played a part in a major shift in Chinese demands over the last 20 years.
This began to take hold relatively recently, when US agricultural exports to China doubled between 2008 and 2012.
Soybeans and Oilseeds
Number one on the list is Soybeans, accounting for around 40 per cent of China’s imports and worth over $40 billion.
Formerly a net exporter of soybeans, China now represents 60 per cent of total world soybean imports after it cut tarrifs and abolished import quota.
Soybeans provide China's growing livestock protein sector with a high protein feed.
China is America's number one customer for soybeans, allowing China to focus on growing corn, a higher net return and yield crop, which has been China's top crop in 2013, explains the ERS.
Distiller’s Dried Grains
At 99 per cent of the import share, the US currently corners the distillers’ dried grains (DDGS) market, earning $1.1 billion. This is linked to the new forage needs of Chinese livestock, also buying a lot of sorghum and alfalfa.
Last year, China imported 5.6 mmt of DDGS.
Hay and Forage
Of all the hay and forage bought into China, 95 per cent of it comes from the US.
Cattle Hides
China’s clothing, shoe and handbag industries have grown rapidly following accession into the World Trade Organisation. According to the USDA, the subsequent rise in factory jobs has helped rural unemployment.
More than half the hides China imports are of US origin - $2.6 billion average import value.
Cereals
Arable production is developing in China but not fast enough to cope with demand. China remains a net grain importer despite heavy farm subsidy support.
Cereals are worth $4.9 billion to the US in China trade – 42 per cent of buying.
Cotton
China’s factories rely on the US for up to a third of their cotton. Economic policy to clear out stockpiles pushed the global markets lower, which the USDA says China wants to repeat for corn, sugar and rapeseed.
Meat
Although China’s livestock sector is more efficient than years ago, it still relies heavily on imported meat, a quarter of which comes from the US, worth around $5 billion.
Pork is a significant part of this, of which, 20 -30 per cent typically comes from the US. China did buy over half its pork from America and often at times of high prices, as China is commonly short itself during these times.
Low value byproducts like chicken feet and pork kidneys can be sold into the Chinese market.
A meat hygiene overhaul had made China more difficult to ship to in recent years. Requirements are higher for food standards and traceability on some meat products – some feed additives are banned in China.
Fish Meal
Around 15 per cent of China’s fish meal is bought from the US. As China’s second biggest provider, the US earns $1.7 billion on the product.
Dairy
Around ten per cent of imported dairy goods flowing into China are from the US, with the vast majority coming - around 80 per cent - from New Zealand. This makes the US China’s second dairy provider, earning the country around $4.2 billion.
A rapidly growing segment, dairy food standards are also being tightened.
Tobacco
Around 11 per cent of tobacco imports come from the US. This earns the US $1.4 billion as China’s second largest tobacco provider.
