Posts Tagged: China

Farmers concerned about potential new tariffs

China has threatened to impose retaliatory tariffs on American exports following President Trump's plan to impose tariffs on steel and aluminum imports. Agricultural exports are in the crosshairs, reported Thaddeus Miller in the Merced Sun-Star.

China's tariffs would first hit U.S. products such as avocados and nuts with 15 percent duties, the article says.

"It doesn't really matter which one it is, whether it's alfalfa, almonds or wherever it may go," said David Doll, UC Cooperative Extension advisor in Merced County. "They're as much political as they are anything else."

The potential tariff would have a significant impact on Merced County, where almonds are the second largest commodity valued at $578.5 million in 2016.

The back and forth trade disputes happening between the U.S. and China make trade less predictable and could lead to disruptions that impact California food and wine producers, even before potential Chinese tariffs go into effect, said Dan Sumner, director of UC Agriculture and Natural Resources' Agricultural Issues Center in an interview with Julia Mitric of Capital Public Radio.

If China hits the U.S. with a 15 percent tariff on wine, that's a problem, Sumner said.

"We may think California wine is special, but not everybody does,” Sumner said. "And if it's 15 percent more expensive than it used to be because of the tariff, there'll be a substantial reduction in how much gets sold in China."

Sumner said the proposed tariffs would likely hurt California's tree nut growers more than its wine producers because a larger proportion of almonds and pistachios are exported.

In 2016, the value of pistachios sold to China was $530 million, more than three times the value of wine exports to that country, Mitric reported.

A Chinese slowdown is 'imminent'

UC Berkeley economics professor Barry Eichengren supplied three reasons in a Business Insider blog why he believes a slowdown in the growth of the Chinese economy is on the horizon.

For one, slowdowns are more likely in countries where the manufacturing sector’s share of employment exceeds 20 percent, since it then becomes necessary to shift workers into services, where productivity growth is slower, Eichengren said.

Further, slowdowns come earlier in economies with undervalued currencies. Currency undervaluation, he said, may boost economic growth in the early stages of development, when a country relies on shifting its labor force from agriculture to assembly-based manufacturing. However, it may work less well when growth becomes more innovation-intensive.

“Finally, maintenance of an undervalued currency may cause imbalances and excesses in export-oriented manufacturing to build up, as happened in Korea in the 1990s, and through that channel make a growth deceleration more likely," Eichengren was quoted.

Author of the Pragmatic Capitalism blog, Cullen Roche, concurred with Eichengren's assessment. The Chinese slowdown is not a matter of if, but when, the post concluded.

China offers California businesses opportunities and risks

The recent U.S. visit by China's president Hu Jintau has California experts considering opportunities for trade with the world's most populous country, according to an article in the Bakersfield Californian.

The story said China's manipulation of its currency is among the most significant barriers to trade between the two countries. China has resisted currency reform, but a CSU Bakersfield economist told reporter Courtenay Edelhart that the country will have to adapt if it wants to realize its superpower aspirations.

Edelhart spoke to UC Davis agricultural economist Colin Carter about agricultural trade with China. He said California farmers grow many of the same products as China, but Americans are stronger in food processing and technology, and have the advantage of a much more efficient industry structure.

"In China, the farmers still don't own the land they work, and the individual farms are pretty small," Carter was quoted. "To really compete on a global scale, the farms are going to have to get a lot bigger and more mechanized."

Interim director of CSU Bakersfield's Small Business Development Center. John Pryor, said local companies interested in the Chinese market should guard their competitive edge carefully.

"Any U.S. firm needs to be very cautious about their intellectual property risks. The Chinese have a long-standing reputation for stealing patented products or processes," Pryor told the reporter.

Chinese president Hu Jintau visited President Obama at the White House last week.

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