Main effects of China trade bill will come down the road
This week the United States Senate began to review the China trade bill that passed the House of Representatives last week.
Although there will be the usual political wrangling, most American political commentators believe the bill will pass the Senate.
On the surface the bill appears limited. For years the U.S. Congress has annually given China most-favored trading partner status. This bill will simply make that status permanent.
The real impact will be what follows. An extensive China-U.S. trade liberalizing agreement will come into force and the momentum of China’s bid to join the World Trade Organization will build.
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Although it is hard to assess what role China will play as a food importer in the future, the world’s most populous country weighs in every long-term forecast. And with fewer trade restrictions, there is a greater likelihood of increasing food imports.
Take oilseed trade, for example.
China became a net importer of soybeans and meal in 1993-94.
With market reforms and increasing affluence of the urban population, the demand for vegetable oils and for meat will increase.
The meat demand increase is also forcing a change in China’s traditional method of livestock production. Instead of families feeding one or two pigs with table scraps, specialized livestock farms that use prepared feed are spreading.
China’s feed production almost doubled between 1991 and 1998, to about 65 million tonnes.
The U.S. department of agriculture said that last year China produced about six million tones of soybean meal from domestically produced beans, far short of the country’s estimated demand for 20 to 30 million tonnes of oilseed meal annually over the next decade.
It is small wonder then that exports of Canadian canola and American soybeans have risen so much in the last few years.
Chinese imports of Canadian canola are down a little from last year, but are still remarkable given that just three years ago it imported almost none.
It has imported about 3.9 million tonnes of American soybeans this year, about double last year’s total.
The American Soybean Association believes the best is yet to come. With the new trade deal in force, soybean trade with China could more than double in four to five years, it says.
