China allows first US rice imports ahead of talks

China opened its rice market when it joined the World Trade Organization in 2001. (Reuters)
Updated 29 December 2018
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China allows first US rice imports ahead of talks

BEIJING: China has opened the door to imports of rice from the US for the first time in what analysts took to signal a warming of relations between the world’s two biggest economies after a frosty year marked by tensions and tit-for-tat tariffs.

The green light from Chinese customs, indicated in a statement posted on the customs authority’s website, comes in the run-up to talks between the countries in January after US President Donald Trump and Chinese President Xi Jinping agreed to a moratorium on higher tariffs that would affect trade worth hundreds of billions of dollars.

It was not immediately clear how much rice China, which imports rice from within Asia, might seek to buy from the US. But the move, which comes after years of talks on the matter, follows pledges from China’s commerce ministry earlier this week of further US trade openings.

“I wouldn’t be surprised to see importers trying to move rice into China from California but I don’t know if it will be in breathtaking quantities right away,” said Stuart Hoetger, an analyst and rice trader based in California.

As of Dec. 27, imports of brown rice, polished rice and crushed rice from the United States are now permitted, as long as cargoes meet China’s inspection standards and are registered with the US Department of Agriculture.

The USDA on Dec. 11 forecast US rice production at 6.93 million tons while Chinese rice imports were estimated at 5 million tons. Rice makes up only a small portion of US agricultural exports, which are dominated by shipments of soybeans, grain, tree nuts and meat.

“The permission for US rice suggests an improving US and China relationship,” said Cherry Zhang, an agriculture analyst with consultancy JCI. Zhang said she expected any imports would likely be ordered by state-owned companies.

Officials at a government-affiliated think tank in Beijing said the price of US rice was not competitive, compared with imports from South Asia, and said the move to formally permit imports from the US should be interpreted as a goodwill gesture.

China opened its rice market when it joined the World Trade Organization in 2001, but a lack of phytosanitary protocol between China and the US effectively banned imports, according to trade group USA Rice.

Nonetheless, in July China formally imposed additional tariffs of 25 percent on US rice, even though imports were not permitted at
the time. 


Japan: G20 summit to debate trade including WTO reform

Updated 13 min 51 sec ago
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Japan: G20 summit to debate trade including WTO reform

  • Japan, which chairs this year’s G20 gatherings, will take a neutral stance in the US-China trade row
  • More ‘concrete’ discussions on trade policy will take place at the G20 Osaka summit

TOKYO: Substantial discussions on trade, including reform of the World Trade Organization, will likely take place at a summit of Group of 20 major economies next week in Osaka, a senior Japanese finance ministry official said on Wednesday.
Japan, which chairs this year’s G20 gatherings, will take a neutral stance in the US-China trade row and urge countries to resolve tensions with a multilateral framework, said Masatsugu Asakawa, vice finance minister for international affairs.
“With regard to differences (on trade) between the United States and China, Japan of course won’t take sides. We will also not take any steps that go against WTO rules,” said Asakawa, who oversaw the G20 finance leaders’ gathering earlier this month.
“Japan will continue to take a multilateral approach in promoting free trade,” he told a news conference.
China and the United States, the world’s two largest economies, are in the middle of a costly trade dispute that has pressured financial markets and damaged the world economy.
Markets are focused on whether US President Donald Trump and his Chinese counterpart Xi Jinping can narrow their differences when they sit down at the G20 summit.
The bitter trade war has forced the International Monetary Fund to cut its global growth forecast and overshadowed the G20 meetings that conclude with the Osaka summit on June 28-29.
At the finance leaders’ gathering, the G20 issued a communique warning that trade and geopolitical tensions have “intensified” and that policymakers stood ready to take further action against such risks.
“The macro-economic impact (of the trade tensions) is an issue of concern,” Asakawa said, conceding it took considerable time for G20 finance ministers and central bank heads to agree on their communique’s language on trade.
More “concrete” discussions on trade policy will take place at the G20 Osaka summit, he added.
The row over trade appeared to spread to currency policy when Trump criticized European Central Bank President Mario Draghi’s dovish comments as aimed at weakening the euro to give the region’s exports an unfair trade advantage.
Asakawa rebuffed the view the Bank of Japan’s massive stimulus program could also provoke the ire of Trump.
He also said the G20 shared an understanding that members would accept any exchange-rate moves driven by ultra-easy monetary policies as long as the measures are not directly aimed at manipulating currencies.
“The BOJ’s ultra-easy policy is aimed at beating deflation, not at manipulating exchange rates. That’s understood widely among the G20 economies,” he said.
Fears of the widening fallout from the trade war have heightened market expectations the US Federal Reserve will start cutting interest rates this year. Draghi said on Tuesday the ECB will ease again if inflation fails to accelerate.
The dovish tone of other central banks has piled pressure on the BOJ, though many analysts expect it to keep policy steady at least at this week’s rate review.