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U.S. Seeks Big Payoff from Trade with China

Chinese government and industry officials see trade in agricultural products, particularly in soybeans, as a model to build on to expand broader trade between the two nations.

That's one clear message Iowa Lt. Gov. Kim Reynolds explained in a conference call from China Monday morning highlighting the first day of an Iowa Soybean Association trade mission to China.

China is the world's biggest soybean importer. About one in every four rows of U.S. soybeans goes to China. 

Efforts underway to improve image and cooperation

In February Chinese Vice President Xi Jinping visited the United States, including a stop at the Iowa farm of Grant Kimberley's family. While in Iowa, and again yesterday, Xi expressed concerns over broader trade relationships with the U.S.  "He focuses on growing markets and trade more broadly, not just soybeans, and not just agriculture," says Kimberly who is director of market development and is among the ISA group in China.

Looking at the numbers, U.S. imports from China do far exceed U.S. exports to China. However, significant amounts of trade, especially ag exports, are going to China. Chinese officials believe U.S. citizens need to know that.

"Chinese government officials and Chinese industry leaders both put a lot of value in trade in ag as a good model of how trade issues ought to be resolved," says Kimberley. "Ample issues exist. One is the currency issue. Others are foreign policy issues.

"We're not in China to represent the U.S. government in those issues," he adds. "Rather, we're here to improve and expand partnership relations and communications that we've been developing for 30 years."

Ag trade to expand

U.S. corn growers eye China as a huge potential export market. Will it happen?

"The Chinese government tells us China strives to be self-sufficient in corn," says Kirk Leeds, ISA CEO, who is also on the trade mission. "Chinese industry leaders have told us for years that China will become a major importer of corn. It's just a matter of time."

In 2011 China bought huge quantities of pork and cotton. Chinese pork imports more than tripled to China as China imported pork to replace domestic supplies that were limited by disease outbreaks and to ease food price inflation.

"Chinese officials tell us they expect China's hog production industry will 'only' grow 5% in 2012," says Leeds. "But they have 650 million hogs. A 5% increase would be 30 million hogs."

To put that in perspective, USDA pegged the September 2011 to November 2011 U.S. pig crop at 29 million head. China needs a lot of hog feed.