Under the deal – reached in an effort to put the brakes on a trade war that started in July 2018 – Beijing promised to buy an additional US$200 billion worth of American agricultural products over the next two years.
For European firms, who had made some inroads into Chinese markets during the trade war – as Beijing sought alternatives to its usual US suppliers – the phase one deal, as the January agreement is known, came as a body blow.
“China’s focus on imports from the US will negatively affect other suppliers,” he said.
Those concerns appear to have been borne out by official Chinese figures.
EU sales of agricultural products to China in 2019 rose 38 per cent from the previous year to €15.3 billion (US$17.1 billion).
But then things began to change. In the first 10 months of 2019, Beijing granted no new approvals to American meat exporters, only to give almost 350 of them the go-ahead in November and December.
The trend has continued in 2020, with 1,024 US companies getting the green light to sell to China, compared with just 24 from the EU.
“The phase one deal has meant far less space for European firms to get access to the Chinese market,” said an EU diplomat, who asked not to be named.
“The deal has effectively sucked most of the air from the room when it comes to agricultural deals, and left firms and governments frustrated.”
In the first three months of 2020, China bought more than US$1 billion worth of soybeans from America – one of the world’s biggest suppliers of the crop – and US$691 million worth of US pork.
The promises made by Yang in Hawaii were most likely designed to appease Donald Trump – who is hoping to win a second term as president in November – he said.
“Given the political importance of agricultural producing states for Trump, it seems highly plausible that this was an attempt by the Chinese leadership to show its willingness to uphold the agreement.”
Meanwhile, European sales of agricultural goods to China are set to take a further hit after officials in Beijing said the new outbreak of Covid-19 in the city was linked to a “European strain” of the coronavirus.
Chinese buyers have halted imports of European salmon after traces of the pathogen were found on cutting boards used to prepare the fish at the Xinfadi wholesale food market where the outbreak was first identified.
Source: South China Morning Post