China Ag Center  ·  Publications

Summary of two Chinese retaliations on U.S. agricultural exports

Minghao Li, Wendong Zhang, and Chad E. Hart. 2018. "What Can We Learn about U.S.-China Trade Disputes from China’s Past Trade Retaliations?" CARD Policy Brief. Center for Agricultural and Rural Development, Iowa State University.

With United States exporting over $24.1 billion worth of agricultural and related products to China every year, it is difficult to overestimate the importance of the trade relationship. This is why the trade issues that are currently brewing between the United States and China are making stakeholders in the U.S. agricultural industry nervous, fearing that agricultural products will be the target for China’s retaliatory measures. Just last week, China announced that it may enact 15% tariff on ethanol and 25% tariff on pork products in response to the U.S. steel and aluminum tariffs. In this article, we hope to shed light on some key guiding principles of China’s potential actions in the future by analyzing previous agricultural trade retaliations involving the United States and other countries. We argue that China’s previous choices of retaliation targets follow three principles: targeting products that are proportional in trade value, targeting products that are substitutable, and targeting products that inflict economic and political cost. Since the U.S. steel and aluminum tariffs only affects about $3 billion-worth Chinese exports and U.S. soybean exports exceeds $12 billion, soybeans is not part of China’s response this round because of the proportional retaliation principle. However, U.S. soybean exports, despite its critical significance to China and difficulties to substitute or displace, might be brought into the trade drama if the new proposed tariff on $50 billion Chinese goods are enacted.

Agricultural land transfer to different types of entities

Minghao Li, Wendong Zhang, and Dermot Hayes. 2018. "Can China’s Rural Land Policy Reforms Solve its Farmland Dilemma?" Agricultural Policy Review. Center for Agricultural and Rural Development, Iowa State University.

China faces two challenges: (a) preserving the quantity and quality of its arable land amid rapid urbanization; and, (b) consolidating land to increase agricultural productivity. China’s recent rural land reforms on these two aspects have implications not only for China, but the entire world.

Crop land per farmer in China in acres

Wendong Zhang and Minghao Li. 2018. "Navigating the Chinese Agricultural Economy through the Lens of Iowa." Ag Decision Maker. Extension and Outreach, Iowa State University.

With one in every four rows of U.S. soybeans exported to China, the significance of China on the U.S. agricultural trade and economy can’t be overestimated. This relationship is particularly unique to Iowans with Iowa’s long-time former Governor Terry Branstad now serving as the U.S. ambassador to China. In this article, we showcase key aspects of China’s agricultural economy using Iowa as the measuring stick.

China’s corn production and consumption, history and projections

Minghao Li, Wendong Zhang, Dermot Hayes, Riley Arthur, Yantao Yang, and Xiudong Wang. 2017. "China’s New Nationwide E10 Ethanol Mandate and Its Global Implications." Agricultural Policy Review. Center for Agricultural and Rural Development, Iowa State University.

China announced the plan to implement a nationwide E10 (gasoline with 10% ethanol) mandate, by 2020. This mandate will require the fuel ethanol consumption in China to increase by four times. Even if China manages to build enough refineries in the short time, feedstock supply, which is mostly corn, will eventually run into shortage, creating opportunities for ethanol and/or corn importers.

China and US corn future prices 2005–2016

Qianrong Wu and Wendong Zhang. 2016. "Of Maize and Markets: China’s New Corn Policy." Agricultural Policy Review. Center for Agricultural and Rural Development, Iowa State University.

Before 2016, Chinese farmers is protected by a price support program that kept domestic price at about 2~3 times the US price. This support price not only incurred huge cost in payments, but also built up a corn stock that’s more than half of the world’s total stock. Starting from 2016, China switched from the price support to a producer support determined by acres planted. This is a sign that China is downplaying the strategic role of corn, which suggests the possibility of a transition towards greater involvement in the global marketplace.

The growth in the value of U.S. agricultural exports to China

Chad Hart and Lee Shulz. 2015. "China’s Importance in U.S. Ag Markets." Agricultural Policy Review. Center for Agricultural and Rural Development, Iowa State University.

There’s been a lot of news about China in the last few weeks, from their currency devaluation to significant stock market fluctuations to recent agricultural purchase agreements. Many of these news stories try to address the question of the importance of China to the US economy and assess the impact of Chinese economic shifts on the United States. For agriculture, the importance of the Chinese market has grown significantly over the past decade; however, the impact is targeted at specific sectors within agriculture.

Summary statistics of the agricultural sector in China and the United States

Wendong Zhang. 2015. "The Commonalities and Differences between Chinese and U.S. Agriculture." Agricultural Policy Review. Center for Agricultural and Rural Development, Iowa State University.

China and the US both have a multibillion dollar agricultural industry operating under market mechanism but with heavy government intervention. While the ag industries in the two countries share some common opportunities and challenges related to environment and technology, they also have drastically different natural endowments, policy environments, and market conditions. In this report, Wendong shares his observations of these commonalities and differences.