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Farmers harvest soybeans in Heilongjiang province, in China’s northeast. The country is seeking to diversify suppliers, and it’s also increasing domestic production. Photo: Xinhua

China calls for ‘soybean industry alliance’ with strategic partner Russia

  • Commerce minister urges closer cooperation in all areas of the supply chain during talks with Russian counterpart
  • The world’s biggest soybean importer also says it will continue buying more of the oilseed from the US

China has proposed a “soybean industry alliance” with Russia as it seeks to deepen economic ties with its strategic partner – despite its commitment to buy more of the oilseed from the US.

Commerce Minister Zhong Shan called for closer cooperation with Russia in all areas of the soybean supply chain during a videoconference with Russian Minister of Economic Development Maksim Reshetnikov on Tuesday.

Zhong also said Beijing and Moscow should “match up” the countries’ major soybean production areas and build an industry alliance, according to a statement from the Chinese ministry.

Separately, the agriculture ministry said at a press briefing on Wednesday that China’s soybean purchases from the United States would continue to increase under the phase one trade deal, and they would drive up the total soybean imports in the second half of the year.

China is the world’s biggest soybean buyer, and its imports have become a barometer of trade relations with the US amid their increasingly rancorous disputes. But that reliance on imports from individual countries is a risk to food security, and Beijing has sought to diversify suppliers while increasing domestic soybean production.

Soybeans are used as a key source of protein in animal feed in China. Photo: AFP

Russia was unlikely to replace America as a major soybean exporter to China in the short term, according to analysts. But they said China’s proposed alliance was a gesture to strengthen cooperation with Russia, which Beijing sees as strategically important.

Chen Bo, a professor of economics and trade at Huazhong University of Science and Technology in Wuhan, said an alliance would help reduce uncertainty for both China and Russia as the Beijing-Washington trade turbulence continued.

The agriculture ministry also said China’s soybean imports were expected to remain high and the country would continue to expand suppliers.

China faces ‘grain supply gap’ by 2025 as rural workforce dwindles

Soybean imports remained at 80-90 million tonnes a year, with Brazil and the US the two largest exporters to China, accounting for about 90 per cent of the total imports.

Domestic soybean crops had also expanded – they covered 9.3 million hectares in 2019, after dropping below 6.7 million hectares in previous years.

China consumes an average of 110 million tonnes of soybean a year – it is a key source of protein for animal feed and edible oil for the country – but only produces about 16 million tonnes annually.

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Soybean farmers in the US among worst hit by ongoing US-China trade war

Soybean farmers in the US among worst hit by ongoing US-China trade war

The alliance proposal comes after Beijing and Moscow signed a cooperation agreement on soybeans in June last year, aiming to increase imports from Russia to 3.7 million tonnes by 2024. Russian soybeans at present account for less than 1 per cent of China’s imports.

Chen said that small share of imports made it unlikely Russia would take over as a key supplier in the near term, but noted China was “fighting for long-term security”.

“Any country faces national security risks if it is overly reliant on an individual nation in crucial sectors such as grains and pharmaceuticals,” Chen said. “China is hoping to deepen cooperation with various countries to secure its interests in soybean supply over the long term, and Russia is one of them.”

US-China trade war: both sides cling to phase one deal as wider relationship crumbles

Russia halted grain exports, including soybeans, for three months from April because of the coronavirus pandemic, but supply of soybeans resumed in June. Most Russian soybean exports go to China.

Pan Dawei, a researcher on Russia with the Shanghai Academy of Social Sciences, noted many countries had adjusted their grain exports during the pandemic.

“But the supply chain cooperation between Russia and China is an indication of the political mutual trust between the two countries, and it will cement bilateral ties,” Pan said. “China and Russia have also found new strategic cooperation amid the current situation – they’re sending a clear signal that relations won’t be influenced by the US.”

This article appeared in the South China Morning Post print edition as: China calls for ‘soybean industry alliance’ with strategic partner Russia
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