Chinese government and industry officials see trade in agricultural products, particularly in soybeans, as a model to build on to expand broader trade between the two nations.
That's one clear message Iowa Lt. Governor Kim Reynolds explained in a conference call from China last week, highlighting the first day of an Iowa Soybean Association trade mission to China. The ISA group is also stopping by Thailand on this trip to promote U.S. soybean exports, before heading back home to Iowa.
China is the world's biggest soybean importer. About one in every four rows of U.S. soybeans goes to China. Reynolds notes that "China imports more Iowa soybeans than all other countries combined and we look forward to a strong trading partnership with them in the future."
Efforts underway to improve the image and cooperation for U.S. ag exports
Chinese officials are well aware that U.S. trade with China does not have a stellar image in the U.S. Chinese leaders sense that many Americans believe trade with China is a one-way street—the U.S. imports a lot of stuff from China and exports next to nothing to the Chinese—except for soybeans and sometimes some corn and pork.
In February Chinese Vice President Xi Jinping visited the United States, including a stop at the Iowa farm of Grant Kimberley's family, northeast of Des Moines. While in Iowa, and again last week, the high ranking Chinese official, who is expected to soon become president of China, expressed concerns over broader trade relationships with the United States. "Vice President Xi focuses on growing these markets and increasing trade more broadly, not just for soybeans, and not just in agriculture products," says Kimberley. Kimberley, in addition to farming with his father, is also the director of market development for the Iowa Soybean Association. Kimberley is among the ISA group that is on the current trade mission to China.
The U.S. buys a lot more products from China than China buys from the U.S.
Looking at the numbers, the U.S. imports from China do indeed far exceed U.S. exports to China. However, significant amounts of trade, especially in ag exports, are going to China. Chinese officials believe U.S. citizens need to know that.
"Chinese government officials and Chinese industry leaders both put a lot of value in trade in agricultural products and commodities as a good model of how trade issues ought to be resolved," says Kimberley. "Ample issues exist. One is the currency issue. Others are foreign policy issues."
Kimberley adds, "We're not in China to represent the U.S. government on those particular issues. Rather, we went to China to improve and expand our partnership relations and communications that we've been developing with the Chines for 30 years."
Ag trade set to expand--China has huge hog herd and needs corn for feed
Corn growers in the United States eye China as a huge potential export market for American produced corn. Will that happen? Will the Chinese eventually be a regular customer for large amounts of U.S. corn?
"Chinese government officials keep telling us China strives to be self-sufficient in corn production," says Kirk Leeds, chief executive officer of ISA, who is also accompanying the ISA group on its trade mission to China. "On the other hand, Chinese industry leaders have told us for years that China will eventually become a major importer of corn. It's just a matter of time."
In 2011 China bought huge quantities of pork and cotton. Chinese pork imports more than tripled to China last year as China imported pork to replace domestic supplies that were limited by hog disease outbreaks. In addition, China also was importing pork to ease food price inflation in China. "Chinese officials tell us they expect China's hog production industry will 'only' grow 5% in 2012," says Leeds. "But they have 650 million hogs. A 5% increase would be 30 million hogs."
To put that in perspective, USDA pegged the September 2011 to November 2011 U.S. pig crop at 29 million head. Yes indeed, China needs a lot of hog feed!