China is picking up the pace, but still a long way from meeting Phase One goal

New trade data shows China buying more U.S. commodities. However, those sales are not on pace with trade commitments.

The Department of Agriculture this week updated trade data tracking export sales to China. American Farm Bureau Federation economist Veronica Nigh says that China has increased purchases of U.S. farm products, but is not on pace to reach commitments made in the Phase One trade agreement.

“China’s picking up the pace on their purchases, just as we were expecting them to, but there’s still a long ways to go before they’re on pace to actually meet their goal,” Nigh states. “So far, sales to China are nearly $8 billion dollars, that’s January through July, but unfortunately, that’s still 44 percent below the pace needed for them to reach the Phase One goals.”

The additional sales to China are not increasing U.S. ag exports this year.

“It’s basically just shifting where our exports are going. So, January thought July of 2020, our total exports are around $75.9 billion dollars. That compares to January through July of 2019, where our sales were $78.6 billion dollars,” Nigh adds. “So, we’re down about $2.6 billion dollars in exports this year compared to last year, which is about a 3 percent decline.”

Additionally, she notes that trade talks with Taiwan, a top ten market for U.S. ag, provides opportunity for U.S. farmers to expand their trade in the future.

According to Nigh, “Being able to get back into that market would be very beneficial for the U.S. Taiwan has also said that they are willing to consider accepting beef from the United States, from cows that are 30 months or older, which most of the world has already moved to, but that certainly would be a big benefit to U.S. beef producers. So, there’s lots of things like that that could certainly be improved in the U.S./Taiwan relationship.”

Farm Bureau economist John Newton says that sales should be close to $14 billion dollars to be on target.

The only time they came close to that, during the first seven months of the year was in 2012. The total then was more than $13 billion dollars.

China’s Phase One commitments could be kept with ethanol.

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