Whole Farm > Other > International Ag

November 2020

A brief argument for healthy US-China agricultural trade relations despite deglobalization pressures

Even before the COVID-19 pandemic, ongoing deglobalization efforts, a prime example of which is the possible decoupling of US-China economic and trade relations, was fueling a rise in economic nationalism. The onset of the pandemic added delays and created uncertainty surrounding China’s food imports and the realization of US-China Phase 1 trade deal goals. In a recent academic paper (Zhang 2020a), I provided extensive discussions on the growing significance of healthy US-China agricultural trade relations for both countries, and this article is a brief summary.

In particular, I argue that Chinese consumers represent an even more important customer base for US agriculture that increasingly rely on global demand. Furthermore, the Phase 1 trade deal could possibly lead to a more balanced bilateral agricultural trade portfolio, one in which China imports a greater share of US protein and retail food products. Additionally, despite the ongoing pandemic and mounting deglobalization pressures, recent surveys show US farmers are optimistic about the future of agricultural trade relations with China and welcome healthy US-China economic relations.

Figure 1 shows monthly US exports of agricultural and related products to China from January 2017 to August 2020. The flat red line for February and March 2020, which is lower than the same period from 2017 to 2019, clearly demonstrates the initial challenges posed by China’s COVID-19 lockdowns.

figure 1

COVID-19’s rapid global spread created a pending global economic recession and led to a flight-to- safety sentiment among investors. The result was a rapid rise in the US dollar from February to May 2020, stemming from rising investor demand for safer investment options (Miller 2020). From March to early May, the Brazil real depreciated more than 20%, which, coupled with the strengthening of the US dollar, significantly boosted the price competitiveness of Brazil soybeans. In June 2020, Brazil’s soybean sales to China reached a record high 10.51 million tons – up 91% from June 2019 and close to 95% of all of China’s June soybean imports (Gu, et al. 2020). Overall, in the first seven months of 2020, China imported almost 70% of its soybeans from Brazil – much higher than the 2017 annual share of 52.8% (Zhang 2020).healthy US-China economic relations.

The impacts of COVID-19 on US agricultural exports to China

The origin of COVID-19 and the optimal control measures raised public debate among US and China officials, exacerbating a fraught, bilateral relation that was already deteriorating on multiple fronts from technology to national security. China sought to control COVID-19’s spread using lockdowns and country-wide transport restrictions; however, the resultant labor shortage created challenges for China’s imports and exports. Furthermore, worries about COVID-19 in China’s ship crews led to further logistical challenges and tighter phytosanitary measures at both US and China ports.

Deteriorating bilateral relations during the COVID-19 pandemic make the Phase 1 trade deal even more significant, as evidenced by China’s recent progress in purchasing US agricultural products – China has imported a record 2.1 million metric tons of US corn for the 2019/20 marketing year; and, as of October 22, 2020, has bought or ordered 10.5 million metric tons of US corn for delivery in the 2020/21 marketing year. China also bought 10.2 and pre-booked another 15.9 million metric tons of soybeans for delivery for the 2020/21 marketing year, and imported a record 581,500 metric tons of US pork and 21,600 metric tons of US beef as of October 22, 2020, much higher than levels in the full 2017 marketing year (USDA 2020).

The Office of the U.S. Trade Representative released a report saying that as of October 23, 2020, China has purchased $23 billion in agricultural products, approximately 71% of its Phase 1 trade deal target. This quickly drew some criticism because it counted the commitments and pre-orders the same way as actual purchases. Chad Bown, Peterson Institute of International Economics, argues that the actual purchases as of September only represented about 40%, not 70%, of total agricultural purchase commitments. However, the USTR number shows that both countries are eager to push forward this politically-significant trade deal. In other words, both countries realize the paramount importance of healthy US-China agricultural trade relations especially when other parts of bilateral relations have deteriorated.

China’s significance is also elevated due to the economic challenges of other US trading partners during the pandemic. Many other major US partners such as Mexico, Europe, and India are still experiencing rising COVID-19 infections and suffering from major economic shocks, which could limit their ability to boost purchases of US agricultural products in the latter half of 2020. Even though China’s total imports as of September 2020 are just comparable with the 2017 levels, rather than substantially higher, the recent momentum offers more hope for a strong US-China agricultural trade despite the pandemic.

A more balanced trade portfolio
In 2017, China’s total agricultural imports exceeded $140 billion; however, the United States only accounted for very small fractions of China’s meat, seafood, and retail food product demand (He, et al. 2020). The Phase 1 deal offers an opportunity for both countries to move away from agricultural trade dominated by feed grains, especially soybeans, to a more balanced portfolio with long-term growth in US meat, seafood, and retail food product exports to China (Zhang 2020a).

China is the world’s largest meat buyer and is currently battling an unprecedented pork shortage due to an African swine fever outbreak, which continues to result in rising demand for US pork, beef and poultry products (He, et al. 2020). Furthermore, Germany is currently China’s third-largest pork supplier; however, China is now banning imports of Germany pork after Germany confirmed its first case of African swine fever. As Germany is a key US competitor in the global pork market, the United States is now poised to ship more pork to China (Reuters 2020).

Similarly, it is also reasonable to expect the United States to capture a larger share of China’s imports as it buys more consumer products such as nuts, fruits and vegetables, wine, seafood, and dairy products. A more balanced portfolio will allow China to strengthen economic ties with agricultural states outside the US Midwest, such as California and Florida, and also fits China’s diversification objectives of not solely relying on soybeans when buying US agricultural products.

US farmers’ views on China

The US public’s opinion on China fluctuates with current events - a decline in negative views in the late 2010s probably reflects cooperation combating the Great Recession, while an uptick in unfavorable opinions since 2017–2018 reflects the ongoing US-China trade war. However, as a whole, the US public’s view of China has become increasingly negative, especially over the past decade (see Figure 2). The share of US adults harboring an unfavorable opinion of China jumped from 35% in 2005 to almost 66% in 2020. Furthermore, a recent Harris poll shows that the COVID-19 pandemic is turning both the US Republican and Democratic Parties against China - both now largely agree on issues such as what responsibility China bears for the spread of the pandemic and the US government maintaining a tough position on trade with China (Rogin 2020).

figure 2

In a recent survey, crop farmers in Minnesota, Iowa and Illinois voiced concerns about China’s trade and economic practices in the middle of the trade war (Qu, et al. 2019). These farmers’ views also showed negative feelings toward China about current debt deficits and job losses and China’s governmental practices regarding intellectual property protection and currency. These perceptions, along with the recognition of income support from the Market Facilitation Program (Glauber 2019), explain the finding that over 56% were still somewhat (34%) or strongly supportive (22%) of President Trump’s tariffs on Chinese products (Qu, et al. 2019).

The pandemic did lead to more pessimistic views among producers, especially in the summer months. A recent Ag Economy Barometer survey led by Purdue University and CME Group also shows the share of producers expecting an increase in US agricultural exports over the next five years dropped from 70% to 58% in September due to the pandemic, and the percent of producers who think the trade dispute with China will ultimately be resolved in a way that benefits US agriculture dipped by 20 percentage points to less than 60% as well.

However, strong CFAP2 (Coronavirus Food Assistance Program) payments, good yields, and a fall rally in commodity prices led to an all-time high in farmer sentiment in October. This optimism could also be seen when asked about future US agricultural exports and the prospect of trade with China: the percent of producers expecting increasing exports spiked to 67% in August and 65% in October, reflecting, in part, rising export sales to China in recent months (Mintert and Langemeier 2020). Furthermore, farmers became more optimistic about trade with China as nearly six out of 10 respondents said in October that they expect China to fulfill Phase 1 trade deal commitments.
In addition, despite the negative views farmers expressed in the Qu, et al. (2019) survey, 92% of those respondents also agreed or strongly agreed that it is important for the United States to maintain a healthy economic relationship with China (see Table 1). Although farmers split equally on whether or not China is an economic ally, only 20% of respondents disagreed or strongly disagreed that China’s growing economic strength is good for the world.

These more optimistic views of China’s importance for US agricultural markets and the importance of maintaining a healthy bilateral economic relationship are important to recognize, especially because they were made during the thick of trade tensions. In a world with rising economic nationalism and growing distrust, stressing healthy US-China trade relations, for the well-being of both US farmers and China’s consumers, is paramount.


J. W. Glauber. Agricultural trade aid: Implications and consequences for US global trade relationships in the context of the World Trade Organization. Technical report, American Enterprise Institute (AEI), 2019.
H. Gu, P. Li, and D. Patton. China’s soybean imports from Brazil rise to record in June. Reuters, 2020.
X. He, D. J. Hayes, and W. Zhang. China’s Agricultural Imports under the Phase One Deal: Is Success Possible? CARD Policy Briefs 20-PB 29, Center for Agricultural and Rural Development, Iowa State University, 2020.
W. Martin and J. W. Glauber. Chapter 6 - trade policy and food security. In R.E. Baldwin and S.J. Evenett, editors, COVID-19 and trade policy: Why turning inward won’t work, pages 89–101. CEPR Press, 2020.
C. Miller. The Dominance of the US Dollar During the COVID-19 Pandemic. 2020.
J. Mintert and M. Langemeier. Ag Economy Barometer rises to record high on improving financial conditions. Purdue University/CME Group Ag Economy Barometer, November 2020.
S. Qu, W. Zhang, M. Li, L. Rodriguez, G. Han, E. Cork, and J. M. Gbeda. Midwest crop farmers’ perceptions of the US-China trade war. CARD Policy Briefs 19-PB 26, Center for Agricultural and Rural Development, Iowa State University, 2019.
Reuters. China bans German pork imports after African swine fever case. Reuters, 2020.
USDA. US Export Sales Report (Data for Week Ending September 10, 2020).
W. Zhang. The Case for Healthy US-China Agricultural Trade Relations Despite Deglobalization Pressures. Applied Economic Policy & Perspectives. 2020a.
W. Zhang. US-China Phase 1 Trade Deal and US agriculture: A big win for farmers or too good to be true? February 2020b.


Wendong Zhang, extension economist, wendongz@cornell.edu