Trade war: China’s refusal to lift grain quotas make Trump’s phase one import demands ‘more difficult’

China will not raise its quotas for the import of grains, according to vice agriculture and rural affairs minister Han Jun, raising the prospect of a stand-off with the US

Analysts suggest that while corn, rice and wheat were only likely to make up a small part of farm good purchases, the refusal to budge makes it more challenging

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In 2017, China imported US$900 million worth of corn, with just US$200 million coming from the US. Photo: Reuters

Orange Wang,Zhou Xinin Hong KongandFinbarr Berminghamin Brussels

Published: 12:43pm, 7 Jan 2020Updated: 8:31pm, 17 Feb 2020

China will not increase its grain import quotas to meet demands from the United States included in the pending phase one trade deal, a key member of Beijing’s negotiating team said, with analysts suggesting that this makes it “more difficult” to buy the requisite amount of American farm goods.

The US has claimed that as part of the deal – likely to be signed on January 15 – China will buy an additional US$80 billion in US agricultural goods over two years.

Some amount of this would likely be composed of corn, rice and wheat, however, China has not yet confirmed the figures, only saying it would import those with “good quality and market competitiveness”.

Despite opening the soybean market to the rest of the world, China still uses a tariff rate quota system for rice, wheat and corn, the staple grains in the world’s most populous country.

This is a global quota. We will not adjust it for a specific single country

Han Jun

“This is a global quota. We will not adjust it for a specific single country,” said Han Jun, vice-minister of agriculture and rural affairs at a forum in Beijing on Saturday, as reported by Caixin on Tuesday.

While these crops were never likely to form the bulk of the deal, a refusal to lift the quota would make the deal harder to achieve and also risks angering the US, which has long railed against China’s import quotas.

“I’ve always thought US$40 billion [per year] would be difficult. I don’t think it makes it dramatically more difficult, but it limits the options further if imports for wheat, corn and rice will still have hard quota limits,” said Darin Friedrichs, senior Asia commodity analyst at INTL FCStone.