U.S. Ag Stopping China from Invading Taiwan?

Can U.S. agriculture stand between China and a war in Taiwan? According to economists, it can and is. “China’s own military released a report approximately two months ago that said the single main reason for China not to intervene in Taiwan directly is that the U.S. might see this as an excuse to impose sanctions and not allow food into the country. If China cannot bring in food from outside, they cannot survive,” Chris Kuehl, Armada Corporate Intelligence Chief Economist said in a recent interview.

China acknowledged that they are only 20% self-sufficient in soybeans, therefore needing to import 80% of their soybean requirements. China’s military report comes as the country grapples with a protein shortage.

Also, in October, China sold 200,000 metric tons of pork from their state sponsored reserves to help ease surging domestic pork prices. Jim Wiesemeyer, Pro Farmer policy analyst, says, “China announced it now plans to release yet another batch of frozen pork from reserves.”

Increasing pork production might be the country’s main tactic to tackle low pork numbers. China’s sow herd grew 2% in September versus the prior month to 43.62 million head, according to the country’s ag ministry. The hog herd increased 3.1% from the prior month to 43.94 million head, and was up 1.4% from a year ago.

Will History Repeat Itself?

With the herd increase and reserves low, will the resources be enough to curb China’s imports of U.S. protein and allow the country to invade Taiwan? Kuehl isn’t convinced. He says the choice to hold off on war in Taiwan is based on a page from China’s history books.

“In the last 2,500 years, every Chinese government that has fallen, has fallen over food-related issues,” says Kuehl. “They need those import markets - be it from the U.S, Canada, Brazil, Argentina or Australia.”

China can likely “get along” without U.S. imports, as Kuehl thinks they would seek out other countries. However, he doesn’t feel their exports could handle a riff with the U.S. due to its sales stake in stores such as Walmart and Target.

Exploring Other Avenues

Any hope for becoming less dependent on imports is challenging in China, according to Kuehl, who says almost two-thirds of its land is useless. “As far as ag, China is desert, mountains and simply not up for this - they’re actually quite resource poor,” he says. “They import oil and many precious metals that they need. Some things they have independence with, but not many.”

U.S. Trade Tactics

The news in China comes as the Office of the U.S. Trade Representative (USTR) announced next steps in its four-year review of tariff actions in China. USTR will open an electronic portal on November 15 to gather information on the impacts of China’s acts, policies and practices in technology transfer, intellectual property and innovation.  According to USTR, the electronic portal will be open to the public, with the questions in the portal made available to respondents.

EDITOR’S TAKE:

Although it has been quite some time since your AIR Editor last visited China, I can say that much of what is stated in this article about their capability to produce enough food to be self-sufficient – is true!

I have personally witnessed their grain production, harvesting, transportation, storage and processing systems. Very inadequate would be putting it mildly. I saw first-hand the lack of dairy production and marketing capabilities. Technology could help some, but the lack of arable land is an obstacle that is virtually insurmountable.

It will obviously be a gamble if they decide to invade Taiwan. That decision will be more driven by politics and ego of their leader, and we can only hope cooler heads prevail.

In the meantime, China is a major customer in world markets. Their purchases help drive prices for many commodities even higher. Whether those exports come directly from the U.S. or not, our farmers/ranchers still benefit. American farmers are the best in the world and will be your best customers for some time to come!