• Topics: Food and Resource Economics | International Trade | Evans, Edward A | Ballen, Fredy H.

Overview of US Agricultural Trade with China¹

Introduction

The growing United States (US) trade imbalance with China has been a major cause of concern for US policy makers. From a mere $6 billion (USD) deficit in 1985, the gap has grown to over $270 billion in 2010 (US Census Bureau 2011). One bright spot in the US–China trade deficit is the trade of agricultural products, which continues to reflect a trade surplus that has grown considerably within the last decade. The Chinese economy has undergone considerable changes since accession to the World Trade Organization (WTO) in December 2001. Such changes include reductions in tariffs and monopoly power of State Trading Enterprises (STEs), and elimination of some export subsidies. In addition, there has been considerable effort to modernize China's agricultural sector, since more than half of the country's population now resides in urban areas and there is more demand for food (Lohmar et al. 2009).

The purpose of this article is to provide an overview of US–China trade of agricultural products, with special focus on produce, specifically over the period 2000 to 2010, and to highlight the main factors driving the widening of the agricultural trade surplus. The implications of modernizing the Chinese agricultural sector for the US fruit and vegetable industry are also discussed.

Trends in Bilateral Agricultural Trade between the United States and China

Historically, the United States has been a major exporter of agricultural commodities to China, particularly soybeans, cotton, and wheat. Between 2000 and 2010, the value of US agricultural exports to China rose tenfold, from $1.7 billion in 2000 to roughly $17.5 billion in 2010. In comparison, US agricultural imports from China increased from $0.8 billion in 2000 to approximately $3.4 billion in 2010. Consequently, the agricultural trade surplus increased from $904 million to $14.1 billion between 2000 and 2010, representing an average annual growth rate of about 31.7 percent (Figure 1).

Figure 1. 

US agricultural trade balance with China, 2000–2010 (US thousand dollars) [Source: US Department of Commerce, US Census Bureau, Foreign Trade Statistics, 2011]

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The United States now ranks as China's top supplier of agricultural products, a marked improvement over its seventh-place ranking in 2000. From a relative point of view, the United States has become much more important as an export market for agricultural products from China, improving its standing from twelfth position in 2000 to fourth in 2010. Several factors are responsible for these observed trends, including changes in China's trade policy; its population growth, especially in urban areas; efforts to modernize its agricultural sector; an increased and sustainable economy; and increased wealth and income in China (Lohmar et al. 2009).

US Agricultural Exports

With respect to exports, the aggregated values of US agricultural exports to China show a long-term upward trend (Figure 2).

Figure 2. 

US agricultural exports to China, 2000–2010 (US billion dollars) [Source: USDA, Foreign Agricultural Service, 2011]

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The top US agricultural exports to China include oilseeds and products, cotton, animal products, grains and feeds, fruits and preparations, and vegetables and preparations. The export value of US oilseeds and products to China increased eleven-fold between 2000 and 2010, from $1.03 billion to $11.37 billion; the biggest jump in export value for this product group was in 2008, when export value increased by 72 percent, or $3.10 billion, compared to 2007. Part of this rise in the export value for oilseeds and products was due to the agricultural commodities shortage in 2008, which led to the food global crisis that same year. US cotton exports grew from $46 million in 2000 to more than $2 billion in 2010, equivalent to an annual rate of 46.2 percent; the export value of cotton grew $1.2 billion in 2010, an increase of 150 percent, compared to the value in 2009. US exports of animals and products rose between 2000 and 2008, from $396 million to $2.2 billion, before dropping to $1.7 billion in 2010, or 31 percent less, compared to 2008. US exports of grains and feeds rose between 2006 and 2010, from $86 million to $1.1 billion. Exports of US grains and feeds to China surged in 2010, as an additional $704 million of these products reached the Chinese market, compared to 2009. US exports of fruits and preparations doubled between 2007 and 2010, from $81 million to $161 million. US exports of vegetables and preparations followed an upward trend overall, from $26 million in 2000 to $104 million in 2010, growing at an annual rate of 14 percent. US exports of other agricultural products (e.g., nuts, fruit juices, and essential oils) increased from $135 million in 2000 to over $ 911 billion in 2010, growing at an annual rate of 21 percent.

Soybeans were by far the largest single item exported, with fairly steady growth over the period, increasing from $1.0 billion in 2000 to over $10 billion in 2010. Cotton was the second largest US agricultural export to China during the period, with quantities varying widely from year to year (Table 1). China's demand for meat is expected to continue to expand markedly, and it is uncertain whether the demand for meat will be met primarily through domestic production or through a combination of domestic production and imports of meat. For China to meet the bulk of its future demand for meat from domestic production, it will need to export less corn and import more soybeans and other sources of protein and roughage for feed supplies. So, although there are uncertainties about the future balance between more imports of feed grains and other feeds on the one hand, and direct imports of meat and dairy products on the other hand, China's increasing demand for meat and dairy products will generate greater imports of agricultural products in one form or another (Roberts and Andrews 2005). This should bode well for US agricultural exports to China. Overall, US exports of red meats and live animals and exports of grains and feeds to China increased between 2000 and 2010, despite China's antidumping-countervailing lawsuit against the United States (Office of the United States Trade Representative 2011).

With rising income in China, the demand for food and the composition of the Chinese diet have changed due to greater demand for fresh fruits and vegetables. Although China produces and exports large quantities of fruits and vegetables, it still imports significant quantities of both fresh and processed fruits and vegetables from the United States.

US Agricultural Exports of Vegetables and Preparations

Aggregate exports of US vegetables and preparations to China increased from 42,429 metric tonnes (t) in 2000 to 140,822t in 2010, growing at an annual rate of 12.7 percent. The main export in this group was frozen vegetables, followed by pulses, prepared/preserved vegetables, dried vegetables, and fresh vegetables, respectively (Table 2). During the same period, US frozen vegetable exports to China grew at an annual rate of 9.4 percent, from 29,256t in 2000 to 72,001t in 2010. Frozen potatoes and sweet corn accounted for over 83 percent of the volume of US frozen vegetables exported to China in 2010.

Between 2000 and 2006, US exports of pulses (mainly dried peas), grew sharply, from about 500t to 20,397t. Then, due to a sharp drop in demand caused by high commodity prices, exports of pulses fell to 5,529t in 2008, before rebounding to 57,573t in 2010. Between 2000 and 2010, preserved/prepared vegetable exports grew from 1,148t to 7,169t. Within this category, tomato paste, tomato sauce, and ketchup are the main exported products. Between 2003 and 2006, US exports of dried vegetables (mainly in the form of starch) fluctuated from a low of 386t to 3,830t. In 2010, exports of dried vegetables totaled 3,633t.

In contrast to what has been the trend for other US agricultural exports to China, exports of fresh vegetables decreased sharply from 10,365t in 2000 to 286t in 2006, mainly because of an increase in available domestic supplies. Between 2000 and 2003, the main fresh vegetables exported to China were celery, onions, and broccoli, whereas in 2010, the main vegetables exported to China were peas, beans, and peppers.

US Agricultural Exports of Fruits and Preparations

US exports of fruit and fruit preparations consist mainly of non-citrus fresh fruits, followed by fresh citrus fruits, canned fruits, dried fruits, frozen fruits, other fruit preparations, and fruit juices (Tables 3 and 4). The main US fresh fruits exported to China are apples, grapes, cherries, plums and other non-citrus fruits, respectively. US apple exports to China grew significantly in the first half of the decade, from 9,104t in 2000 to 19,292t in 2005, representing an annual growth rate of about 15.6 percent. After 2005, US apple exports to China declined as domestic production in China increased. In 2010, US apple exports totaled 9,350t. Exports of US grapes fluctuated from a low of 5,277t in 2003 to a high of 29,063t in 2005. Between 2005 and 2009, US grape exports declined at an annual rate of 14 percent, but rebounded in 2010, reaching 8,932t. Exports of US cherries grew at an annual rate of 31 percent, from 172t in 2000 to 2,620t in 2010. Exports of US plums decreased from 1,903t in 2003 to 246t in 2009 before rebounding to 1,670t in 2010. Exports of other US non-citrus fruits (mainly peaches and pears) were about 511t in 2010.

Figure 3. 

Volume of US fresh (Fr) non-citrus fruits exported to China, 2000–2010 (metric tonnes) [Source: USDA, Foreign Agricultural Service, 2011]

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The most important US citrus exports to China in terms of volume during 2010 were oranges, lemons, temples (mandarin), grapefruit, and other citrus, respectively (Figure 4). Fresh oranges are the most important US citrus export to China. Exports of US citrus trended upward for most of the 2000–2010 period, from 16,195t in 2000 to 40,565t in 2010, at an annual rate of 9.6 percent. Lemons are the second most important US citrus export to China; lemon exports grew steadily from 422t in 2000 to 5,661t in 2010. US lemon exports increased in volume by 74 percent in 2010, compared to the previous year, when lemon exports to China totaled 3,247t. US exports of mandarin have increased steadily since 2005, from 265t in that year to 4,097t in 2010, which is equivalent to an 82 percent annual growth rate. Between 2006 and 2010, US grapefruit exports to China trended upward, from 256t to 1,151t, at an annual rate of 45.6 percent. In contrast, exports of other citrus to China have never surpassed the 250t mark; in fact, US other citrus exports decreased from 244t in 2002 to 111t 2010.

Figure 4. 

Volume of US fresh (Fr) citrus fruits exported to China 2000–2010 (metric tonnes) [Source: USDA, Foreign Agricultural Service, 2011]

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Exports of processed fruits to China represent a small but growing segment of US agricultural exports. The main US processed fruit exports to China in 2010 were canned fruits, dried fruits, frozen fruits, and other fruit preparations, respectively (Table 5). Processed fruits are sold in units (measured as C21.2, which is equivalent to 24 cans per case at 2.5 pounds each). Between 2000 and 2009, the volume of canned fruits increased significantly, from 48,201 units to 2,501,447 units, at an annual rate of 55 percent. However, in 2010, the volume of sales decreased 40 percent, with only 1,489,911 units sold in 2010. Citrus and other berries are the main US canned fruits exported to China. Between 2000 and 2010, US exports of dried fruits (mainly raisins and prunes) trended upward, from 723t to 9,119t, at an annual rate of 28 percent. Between 2000 and 2010, US exports of frozen fruits (mainly wild blueberries and strawberries) increased from 52t to 1,406t. Between 2009 and 2010, US exports of other fruit preparations decreased from 1,100t to 777t.

US Agricultural Imports from China

Between 2000 and 2010, the ASI value of US imports of agricultural products from China steadily increased, from $810 million to $3.3 billion. In terms of value, the main agricultural imports in 2010 were vegetables and preparations, fruits and preparations, grains and feeds, animals and products, fruit juices, and other agricultural products, respectively (Figure 5). US imports of vegetables and preparations from China grew from $100 million in 2000 to $561 million in 2010, equivalent to an annual growth rate of 18 percent; the biggest increase in imports occurred in 2006, when the value of imports increased by $87 million, or 30 percent, compared to the previous year. US imports of fruits and preparations also rose from $66 million in 2000 to $447 million in 2010, growing at an annual rate of 21 percent; the biggest increase in the value of imports occurred in 2003, when imports increased by 50 percent ($58 million). US imports of grains and feeds from China grew from $48 million in 2000 to $338 million in 2008, at an annual rate of 27.6 percent. The import value of grains and feeds then decreased by $6 million in 2009, before increasing 30 percent ($96 million) in 2010. Animal and products imported by the United States trended upward for most of the 2000–2010 period, with imports reaching a value of $403 million in 2010. US imports of fruit juices increased at an annual rate of 42 percent, from $39 million in 2000 to $667 million in 2008. Fruit juice imports then decreased by $315 million during 2009 before rebounding to $379 million in 2010. US imports of other agricultural products (e.g., snack foods, spices, tree nuts, tea, planting seeds, and essential oils) grew from $348 million in 2000 to over $1.1 billion in 2010, representing an annual growth rate of 12.6 percent.

Figure 5. 

US agricultural imports from China, 2000–2010 (US billion dollars) [Source: USDA, Foreign Agricultural Service, 2011]

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US Agricultural Imports of Fresh and Processed Vegetables from China

Between 2000 and 2010, US imports of prepared/preserved vegetables increased more than doubled, from 97,741t to 250,467t (Table 6). The top five imports in this category are water chestnuts, canned mushrooms, preserved bamboo shoots, soups and sauces, and tomato paste/sauce. Between 2000 and 2010, US imports of water chestnuts decreased slightly, from 36,600t to 32,440t. US imports of canned mushrooms grew at an annual rate of 33 percent between 2000 and 2008, while US imports of preserved bamboo shoots grew at an annual rate of 4 percent between 2000 and 2006. US imports of soups and sauces followed an upward trend, from 4,639t in 2000 to 11,693t in 2010, at an annual rate of 9.8 percent. US imports of Chinese tomato paste/sauce oscillated between a low of 121t in 2004 and a high of 12,323t in 2007 before declining to 2,375t in 2010, which is about four times less than the volume exported in 2007.

Between 2000 and 2009, US imports of frozen vegetables from China grew significantly, from 15,228t to 100,002t, before decreasing to 95,630t in 2010 (Figure 6). The main frozen vegetables imported from China are beans, cauliflower, and peas, respectively. Between 2000 and 2008, US imports of Chinese frozen beans sharply increased from 1,957t to 14,316t, growing at an annual rate of 28 percent, before decreasing to 12,085t in 2010. Imports of frozen cauliflower and broccoli from China surged from 52t in 2000 to 15,228t in 2010, growing at an annual rate of 76 percent. Between 2000 and 2010, imports of Chinese frozen peas doubled, from 3,668t to 8,035t.

Figure 6. 

US imports of Frozen (Frz) vegetables from China, 2000–2010 (metric tonnes) [Source: USDA, Foreign Agricultural Service, 2011]

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Between 2000 and 20007, imports of Chinese fresh vegetables grew rapidly, from 5,237t to 92,794t, increasing at an annual rate of 50.7 percent, before declining to 80,471t in 2010 (Figure 7). Fresh garlic is by far the most important fresh vegetable imported from China; fresh garlic imports grew from 165t in 2000 to 62,353t in 2010, at an annual rate of 81 percent. Between 2000 and 2007, the volume of US imports of fresh onions fluctuated substantially, from 392t to 6,185t, before trending downward to 2,834t in 2010. While US imports of other fresh vegetables also increased, it is not possible to extract specific information since the data were aggregated.

Figure 7. 

US imports of Fresh (Fr) vegetables from China, 2000–2010 (metric tonnes) [Source: USDA, Foreign Agricultural Service, 2011]

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US Agricultural Imports of Fresh and Processed Fruits from China

Table 7 shows the main categories of fruits and preparations imported from China during the period 2002 to 2010. All categories reflect an upward trend, with a noticeably sharp rise in the volume of fruit juices imported from China in 2010, compared with that of 2000.

With respect to fresh fruits, citrus fruits are the major fresh fruit imported from China, followed by deciduous fruits (e.g., apples and grapes), and other fruits. The volume of citrus fruits imported increased from 17,341t in 2000 to 51,588t in 2010. Within this category, oranges are the main citrus fruit imported (Figure 8), while apples and grapes are the most important deciduous fruits imported. The quantity of apples imported grew significantly during the first half of the decade, from 4,493t in 2000 to 19,292t in 2005. Apple imports were down between 2006 and 2009, but recovered in 2010 to reach 9,350t. Imports of fresh grapes were on the rise during the first half of the decade, from 9,104t in 2000 to 29,063t in 2005. During most of the period, US grape imports declined substantially, reaching just 6,416t in 2009, but then increased to 8,932t in 2010 (a 39 percent increase). Imports of other fruits increased markedly during the last two years of the period, reaching 12,569t in 2009 and 18,801t in 2010.

Figure 8. 

US imports of Fresh (Fr) fruits from China, 2000–2010 (metric tonnes) [Source: USDA, Foreign Agricultural Service, 2011]

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Imports of prepared and processed fruits remained relatively low for most of the decade, while imports of miscellaneous fruit preparations grew rapidly, reaching 40,811t in 2010 (Table 8). Imports of processed fruits grew for most of the decade, reaching a maximum of 51,089t in 2009, but fell significantly during 2010 to 30,463t. Between 2003 and 2009, imports of citrus-based processed products grew significantly, from 3,297t to 49,271t, but by the end of 2010, imports of these products dropped considerably, to almost half of the volume imported in 2009. Berry-based processed products have increased on the US market since 2006, with 1,459t imported by the end of 2010.

Dried fruit imports have also showed an upward trend. Raisins (dried grapes) are the main dried fruit imported from China. Imports of raisins grew from a modest 251t in 2000 to 7,901t in 2006 before decreasing to 6,690t in 2010. Since 2006, imports of dried prunes have been on the rise, reaching 1,832t in 2010.

During the decade, imports of frozen fruits greatly fluctuated with 1,935t in 2003, 617t in 2008, and 1,763t in 2010. Almost 60 percent of the volume imported in 2010 was frozen wild blueberries.

Imports of fruit juices grew at an annual rate of 24.8 percent, from 52.2 million gallons in 2000 to 482.8 million gallons in 2010. The vast majority of juice imports are apple juice, which by the end of 2010 reached 453.2 million of gallon, equivalent to 94 percent of the juice imported from China in 2010.

Conclusions

The United States and China are important agricultural products trade partners. Strengthening bilateral trade cooperation would be a win-win situation for both countries. As part of its effort to modernize its agriculture and increase production efficiencies (given resource constraints), China has shown great flexibly in adjusting its agricultural production patterns away from land-intensive crops (e.g., grains, soybeans, and cotton) and more toward labor-intensive products (e.g., fruits, vegetables, and meat) for greater comparative advantage. As such, China is more likely to become a larger importer of feed grains in the future (Lohmar et al. 2009). China is also likely to increase its imports of wheat and oilseeds. Since milk production is unable to keep pace with demand, milk imports (mainly in the form of powdered milk) should increase considerably in the near future.

With continued adjustment of its agriculture toward labor-intensive farming activities, China could become an increasingly important global competitor for horticultural and processed agricultural products. China has already overtaken the United States as the largest processed apple juice exporter, accounting for more than 80 percent of the global trade (FAS/USDA 2011).With its comparatively abundant low-cost labor force, China has a natural advantage in labor-intensive crops, with price being the principal driver behind its increase in exports. While rising labor costs and concerns about commodity price inflation may constrain China's agricultural product export growth, its relatively low production costs and the push by exporters into the western regions of China may enable the country to maintain its status as a low-cost supplier for many products in the global market.

Spikes in fuel prices may limit the future growth of Chinese exports of both fresh and processed fruits and vegetables to the United States because of the long transit time, thus making these products less competitive, compared to other suppliers from the Americas region. As a result, Chinese exports of fruits and vegetables will likely be re-directed as necessary within the Asian region, as the transit times are considerably shorter. Further development of Chinese agriculture is restricted by a limited land base and environmental concerns. We conclude that as a result, China will have to import large amounts of agricultural products over the long term. Land-intensive crops in the United States will therefore have the greatest opportunities in the Chinese market.

References

FAS/USDA. 2011. Fresh Deciduous Fruit (Apples, Grapes, & Pears): World Markets and Trade. Foreign Agricultural Service, United States Department of Agriculture, Washington, D.C. http://www.fas.usda.gov/psdonline/circulars/fruit.pdf

FAS/USDA. 2011. Global Agricultural Trade System Online. Foreign Agricultural Service, United States Department of Agriculture, Washington, D.C. http://www.fas.usda.gov/gats/default.aspx

Lohmar, B., F. Gale, F. Tuan, and J. Hansen. 2009. China's Ongoing Agricultural Modernization: Challenges Remain after 30 Years of Reform. Economic Information Bulletin 51, Economic Research Service, United States Department of Agriculture, Washington, D.C. (April).

Office of the United States Trade Representative. 2011. USTR Seeks Fairness for American Chicken Producers. Executive Office of the President of the United States, Washington, D.C. http://www.ustr.gov/about-us/press-office/press-releases/2011/september/united-states-files-wto-case-against-china-prote

Roberts, I., and N. Andrews. 2005. Developments in Chinese Agriculture. Abare eReport.

US Census. 2011. Trade in Goods with China. Bureau of Foreign Trade, United States Census, Washington, D.C. http://www.census.gov/foreign-trade/balance/c5700.html

Tables

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U.S. Department of Agriculture, Cooperative Extension Service, University of Florida, IFAS, Florida A. & M. University Cooperative Extension Program, and Boards of County Commissioners Cooperating. Nick T. Place, Dean.

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