It would be “colossal mistake” for any country or business to have China at the centre of its future growth strategy, according to an analyst with a U.S.-based think-tank.
“China - and access specifically to the Chinese market - should not be the core of your business,” Jason Shapiro, director of analysis for Geopolitical Futures, warned an audience at the Grain World conference in Saskatoon this week. “You need to get used to the thinking of what you can sell to China as a bonus, not as the core of what you’re doing.”
Shapiro’s remarks come as China continues to shun Canadian canola in the wake of its anger over the arrest of Huawei executive Meng Wanzhou at the Vancouver airport late last year. China also remains locked in a bitter trade feud with the U.S. that has resulted the world’s No. 1 oilseed buyer avoiding American soybeans, mainly in favour of Brazilian supplies.
Up until the trade problems, China had been a major market for Canadian canola, accounting for approximately 40% of all canola seed, oil and meal exports. Canola seed exports to China were worth $2.7 billion in 2018. In 2017, the last full year before import tariffs, China purchased $14 billion worth of U.S. soybeans. In the wake of the trade issues, canola and soybean prices have both suffered.
And while Shapiro admitted the U.S. and China may be close to an agreement on resolving at least some of their trade differences, he said any deal is not likely to result in any major breakthroughs that will once again get goods flowing more freely between the two countries.
“There may be a cosmetic short-term trade deal in the offing, but the United States and China are locked in a long-term strategic competition,” he said. “The U.S. isn’t going to give up on it. China isn’t going to give up on it. Their trade war is just the beginning. There’s no end to this really in sight.”
To that end, he recommended exporters set their horizons on a new opportunity – India, a country primed to explode on the world scene just as China did during the 1980s.
However, Shapiro cautioned that India cannot be treated as an unequal partner, as Trump was said to have done during Indian Prime Minister Narendra Modi’s recent visit to Texas. The U.S. and India were expected to sign a trade agreement, but despite all of the hoopla surrounding Modi’s visit, the Indian prime minister allegedly refused to do so, he said.
Source: DePutter Publishing Ltd.
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