China to Speed U.S. Farm Purchases After Secretive Hawaii Talks

Source: By Bloomberg News • Posted: Monday, June 22, 2020

China plans to accelerate purchases of American farm goods to comply with the phase one trade deal with the U.S. following talks in Hawaii this week.

The world’s top soybean importer intends to increase buying everything from soybeans to corn and ethanol after purchases fell behind due to the coronavirus, said two people familiar with the matter, who asked not to be named because the information is private. A separate person said China’s government has asked state-owned buyers to make efforts to meet the phase one pact.

U.S. equities rose as the reports boosted risk appetites. They come at a fraught time for U.S.-China relations, with President Donald Trump escalating criticism of the Beijing government’s handling of the coronavirus crisis and signing off on Congress’s rebuke over repression of the Muslim Uighur minority group.

Trump’s personal relationship with China’s Xi Jinping also is under scrutiny. Former National Security Adviser John Bolton asserts in his new book that Trump personally urged the Chinese leader in 2019 to help him win re-election by buying more farm products.

Nobody from the commerce ministry responded to a fax seeking comment. Chinese foreign ministry spokesman Zhao Lijian said “I don’t have any further information to provide right now” when asked about the purchase plans at a briefing in Beijing.

On Thursday, U.S. Secretary of State Michael Pompeo said China’s top foreign policy official committed to honor all of his nation’s commitments under the trade deal.

“During my meeting with CCP Politburo Member Yang Jiechi, he recommitted to completing and honoring all of the obligations of Phase 1 of the trade deal between our two countries,” Pompeo said in a tweet on Thursday, using an acronym for the Chinese Communist Party.

Pompeo offered no details beyond the tweet, but that was the first substantive news out of the secretive meeting with Yang at Hickam Air Force Base in Hawaii on Wednesday. It’s still unclear how the meeting came about or who had asked for it. Both sides have said the other initiated it.

China pledged to buy $36.5 billion worth of American agriculture products under the phase one deal, up from $24 billion in 2017, prior to the trade war.

However, China purchased only $4.65 billion in the first four months of the year, data from the U.S. Department of Agriculture show. That’s only 13% of the goal set in the trade deal and almost 40% below the same period in 2017.

China had asked state buyers to halt some purchases of American farm goods including soy, Bloomberg News reported earlier this month. However, Chinese importers had continued to increase its American soy purchases, picking up 2.2 million metric tons of the oilseed in the two weeks ended June 11, according to the USDA data.

The S&P 500 Index rose 0.9% as of 9:45 a.m. in New York. Soybean futures gained 0.6% and corn added 0.2% on the Chicago Board of Trade.

— With assistance by Isis Almeida, Shuping Niu, Steven Yang, and Lucille Liu