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China, US discuss next stage of trade talks

14 December, 2018, 09:00 | Author: Sara Gill
  • Traders work on the floor of the New York Stock Exchange in New York U.S

Trump had hailed a breakthrough on agriculture as part of the trade truce agreed in his meeting with Xi earlier this month, and tweeted "Farmers, I LOVE YOU!"

Chicago Board of Trade (CBOT) soybeans traded higher on Wednesday morning amid continued optimism on trade talks with China.

On Tuesday, Asian equities struggled again despite a bounce in NY as investors fret over a ideal storm of issues, including fears that the arrest of Meng Wanzhou, Huawei's chief financial officer, in Canada could further inflame the China-US trade row.

The soybean purchases by Chinese state-owned companies, valued at more than $500 million, will do little to reduce the $43.1 billion US trade deficit with China, which Trump wants to narrow over the long term.

"The risk right now is to the downside still, even though we had this reversal", said Gordon Charlop, managing director at Rosenblatt Securities in NY.

"Now we are seeing the possibility that China will come through with reductions of tariffs on USA autos, and that's another good, concrete step".

China has reportedly proposed cutting tariffs on US-made cars to 15%, the same tax levied on vehicle imports from other countries. According to Iowa State University's Agricultural Policy Review, 60% of all US soybean exports, which is a quarter of the entire crop, went to China.

We reported last week on Donald Trump's tweet that China would be slashing its tariffs on US-built vehicles, though at the time neither USA nor Chinese officials would confirm it, so we remained somewhat dubious on the subject.

The US has hit a total of US$250 billion worth of Chinese goods with tariffs since July, and China has retaliated by imposing duties on US$110 billion of US goods.

The arrest came the same day presidents Donald Trump and Xi Jinping agreed to a 90-day ceasefire in a tariff war over Beijing's technology policy.

China is the largest buyer of USA soy, importing about 60 per cent of all US overseas shipments past year in deals valued at more than $12 billion.

Vehicle sales in the world's second-biggest economy declined for a sixth consecutive month in November, bringing the market closer to its first annual drop in at least two decades. The United States has a long list of complaints against China on intellectual property, forced technology transfers and industrial subsidies.

China's Finance Ministry didn't respond to a request for comment.

One US trader with direct knowledge of the deals said that Chinese state-owned firms bought at least 12 cargoes for shipment from January to March.

A soybean farm outside of Salina, Kansas.

The USDA reported export sales of US corn in the week to December 6 at 903,200 tonnes for the 2018/19 crop year, below a range of trade expectations for 1.0 million to 1.5 million tonnes. The country uses the beans as feed for the large number of hogs in China and had been relying on producers like Brazil and Argentina to meet the shortfall.



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