Monday, June 4, 2018

China Says Ag Imports from U.S. Are Now Good

Last month Chinese officialdom decreed that imports of agricultural products from the United States are now a good thing, a reversal of past anxiety about unfair U.S. prices and threats to China's food security. A new round of tariff cuts scheduled for July 2018 backs up the rhetoric.

A May 17 Economic Observer article by a Ministry of Agriculture and Rural Affairs official proclaimed that "moderate imports" are a necessary feature of China's new stage of openness. With growing population, changing consumer demand, limited natural resources, and pollution constraints, agricultural imports are a necessity, the author said. He further asserted that agricultural imports do not conflict with domestic agricultural development as long as imports are steady, controlled, spread out over time, and spread over different sectors.

New in this article is its blessing of agricultural imports from the United States. The Ag Ministry author acknowledges that the United States is the leading agricultural exporter because of its abundant resources, large farms, and production capacity--without the usual complaints about U.S. farm subsidies, ABCD companies, trade barriers and hegemony over markets. The author concludes that agricultural trade between the United States and China benefits both Chinese consumers and American farmers.

The article was posted in various forms on dozens of Chinese news sites--including a May 19 version on the official Chinese Government web site--indicating that the new "ag imports are good" story is being pushed by propaganda authorities. A version of the article in the official propaganda mouthpiece Peoples Daily refers to China's commitment to import more U.S. products made in bilateral consultations completed May 19, suggesting the new rhetoric is at least partly a product of those negotiations. The Peoples Daily version emphasized that imports give China's consumers more choice, proclaiming China's "huge middle class" as the world's biggest market.

The rhetoric about opening the agricultural economy and giving consumers greater choice has been gaining momentum over the past year. 

On May 31 Chinese officials announced a new set of tariff cuts for imports of consumer items that will take effect July 1, 2018. Among the products scheduled for cuts, the average tariff on a select group of fish and seafood products, mineral water, and processed foods will be reduced from an average of 15.2% to 6.9% in July. These are reductions in MFN tariffs that apply to all trading partners. The pro-import propaganda blast may have been meant to notify local officials of the new party line in advance of the new round of tariff cuts.

This is not the first move to cut taxes on imports. Authorities cut value added taxes on imported agricultural products from 13% to 11% last year and sliced the VAT again to 10% as of May 2018.

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