China reportedly allowed tariff-free imports of US soybeans - a sign trade-war tensions may be thawing
- Ahead of trade talks at the start of next month China is encouraging its own companies to buy more American soybeans tariff-free.
- Bloomberg reported that the Chinese companies received new waivers from the government to import 2-3 million tons of US soybean.
- One economist said that this could help in achieving an interim deal between the two parties.
- China is also facing rising consumer prices and pressure on food supplies after African swine fever hit Chinese pork supplies, pushing up prices ahead of China's holiday season.
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China has allowed 2 to 3 million tons of soybeans to be imported from the US, tariff-free - a possible sign of easing tensions in Donald Trump's trade war.
Bloomberg reported the development, citing unnamed sources familiar to the situation, saying the Chinese government had encouraged private and domestic companies to import the foodstuff ahead of China's holiday season, as the country faces rising consumer prices due to hikes in food prices.
Julian Evans-Pritchard, China economist at Capital Economics told Business Insider that this development could help in "trying to get an interim trade agreement next month."
"It's certainly a positive move, as it means that progress is being made on these issues, but when they do meet things could still fall apart we'll have to wait and see on that," he added.
He also said that it should be taken with a pinch of salt as China is also trying to lower food prices for its own consumers.
"It would be beneficial for China itself to import more soybeans as food inflation is rising rapidly in China due to African swine fever," said Evans-Pritchard. "China imports a lot of soybeans and ahead of the holiday season, they will want to push down prices for its own consumers," he added.
Top negotiators are to meet at the start of next month, in an attempt to solve the trade dispute - China's commitment to buy American farm goods is expected to be one of the key talking points as Trump attempts to win support from America's farming states.
Soybeans have also been one of the focal points of the trade war, as China is the world's biggest importer of the foodstuff, and a large portion of that comes from the US. But due to the trade conflict, soybeans imports from the US have been hit hard, with the Financial Times reporting that in the first five months of 2019 4.3 million tonnes was imported from the US to China compared to 15.2 million in the same period last year.
In doing so, American soybean farmers have been hurt badly with exports drying up, despite receiving $28 billion in bailouts from the Trump administration.