China’s biggest food company is sounding the alarm bells over escalating trade tensions with the U.S., pointing to potential suffering for the global economy and blow back for both countries if agricultural goods are used as bargaining chips in the fight.
Tit-for-tat actions on trade aren’t “going to be any good for the whole economy,” Cofco Corp. President Patrick Yu said in a Bloomberg Television interview at the state-run firm’s headquarters in Beijing. “It just creates a lot of conflicts and misunderstandings.”
“I don’t think that any government wants to take any action to block the agricultural trade because it not only benefits China and Chinese consumers, but I think it will benefit” U.S. farmers more, he said.
With President Donald Trump’s tariff’s on steel and aluminum igniting the potential for a global trade war, agriculture is emerging as a key pressure point. China is the No. 1 buyer of U.S. farm goods as a rising middle class and growing population fuel demand for imported food.
The Asian country is already probing American sorghum shipments. Last month, people familiar with the matter said the county was said to be looking at the potential impact of what some analysts see as its most powerful weapon: measures against the almost $14 billion-a-year trade in soybeans. The protein-rich crop, used to feed pigs in China, is grown in Midwestern states that helped fuel Trump’s election victory. Brazil has started to grab market share from U.S. shippers.
Nothing ‘Ridiculous’
While Yu doesn’t think the U.S. president would do “anything ridiculous” when it comes to farm trade, he is worried about Chinese companies’ activities in the U.S. being curbed.
Did Donald Trump Just Start a Global Trade War?: QuickTake
“I’m afraid with Donald Trump and the current policy that it will be very hard for Chinese companies -- especially companies like Cofco -- to further facilitate Chinese investment in agricultural areas in the U.S.” Yu said in the interview, which took place as China holds its annual National People’s Congress.
Beijing-based Cofco is one of the the world’s largest buyers of food commodities such as soybeans. China’s trade minister has sought to calm the tension, saying over the weekend there would be “no winner” in a trade conflict. Yu, a congress delegate, downplayed the prospect of the oilseeds being used as a political football.
“U.S. supply is one of the most important resources for all the soybean importers or buyers from China, because the U.S. market is very open, there’s the futures market in the U.S., the systems have been very efficient,” Yu said. “The Chinese government is still very much encouraging” companies to buy U.S. soybeans, he said, adding he expects officials to try and facilitate discussion with the Trump administration over trade issues.
--With assistance from Haze Fan
To contact Bloomberg News staff for this story: Emma O'Brien in Beijing at eobrien6@bloomberg.net, Niu Shuping in Beijing at nshuping@bloomberg.net.
To contact the editors responsible for this story: Phoebe Sedgman at psedgman2@bloomberg.net, Millie Munshi, Andrew Hobbs
©2018 Bloomberg L.P.
