China Cancels Some U.S. Farm Shipments, Maritime Executives Say
Date: Thursday, June 4, 2020
Source: The Wall Street Journal
Orders, among them 23 cargoes of soybeans, are canceled as tensions rise between Washington and Beijing.
Chinese state-controlled companies have canceled some shipments from U.S. farm exporters, according to maritime officials, as tensions between Washington and Beijing rise over China’s handling of pro-democracy protests in Hong Kong and the coronavirus pandemic.
“A handful of shipments of livestock feed, corn, pork, cotton and some meat imports are pushed back,” said a senior Chinese shipping executive involved in China farm imports who asked not to be identified and who has been briefed on Beijing’s move.
“Private Chinese exporters are not part of this, but it could escalate, depending on how the relationship between the U.S. and China goes forward,” this executive said.
The cancellations, first reported by Bloomberg News, involve orders made following the phase one trade pact between the two countries signed in January. China committed in the agreement to increasing purchases of U.S. goods and services by $200 billion over 2017 levels.
U.S. officials have said China significantly stepped up purchases of American farm products since March, though purchases in other sectors have fallen short of expectations.
The agriculture purchases would improve shipping markets hurt by trade tensions between China and the U.S. But maritime-industry analysts have said they are skeptical the targets can be achieved.
“The increase is a quite ambitious target,” said Peter Sand, chief shipping analyst at BIMCO, a shipping trade body based in Copenhagen. “The phase one deal was the first non-escalation move, but since then the relationship has gone sour and trade ties have gone in reverse. The current rhetoric is a toxic cocktail that could further damage ties.”
A second Chinese shipping executive said China state importers have canceled between 15,000 and 20,000 metric tons of U.S. pork shipments, about 10 days’ worth of orders. Beijing is also holding back some U.S. shipments of corn and cotton, he said, and further actions would depend on Washington’s response to China’s tightening grip on Hong Kong.
If Washington escalates in its response, this executive said, “We could be back at another round of tariffs and limitations,” he said. “There is a lot of anger here, because Hong Kong is a red line.”
The Chinese shipping executives said state importers China Oil and Foodstuffs Corp. and China Grain Reserves Corp. had canceled their shipments.
“They were looking at 23 American soybean cargoes last week, but held off,” said the first shipping executive, whose company would have moved about a third of the cargoes on its ships. “It’s a warning shot to the Americans to ease the verbal attacks.”
As part of the phase one trade deal, China committed to raising farm imports from the U.S. by $32 billion over two years. On average, China buys more than 55% of the soybeans exported from the U.S. each year along with 80% of sorghum, 16% of cotton and around 5% of pork, according to Chinese trade data.