U.S. agricultural exports to China have increased substantially over the last fifteen years. Annual sales to China increased from $1.7 billion in 2000 to $24.2 billion in 2014. From 2012 to 2014, U.S. agricultural exports to China exceeded the sales to Canada, Mexico, and Japan (see Figure 1).
Sales of U.S. agricultural products to China reached $25.2 billion, on average, from 2012 to 2014, representing about 17.3% of the U.S. export sales to the world ($145.3 billion, on average) during that three-year period (Table 1). China’s reduction in tariffs and elimination of import quotas on soybeans have made soybeans the main agricultural product exported to China by the U.S., with average sales of $14.2 billion, during 2012 to 2014. Some other important U.S. agricultural products exported to the Chinese market are grains and feeds, livestock and meats and dairy products.
Among other factors, the strength of the U.S. dollar relative to other major currencies has been hampering U.S. exports, as a stronger dollar rises the relative price of U.S. products abroad. Overall, U.S. exports of agricultural products from January to June 2015 declined 11% to $67.7 billion compared to the same period last year ($75.7 billion). For the first six months of 2015, U.S. agricultural exports to China, Canada, Mexico, and Japan declined year-over-year, and sales to China ($8.9 billion) were behind those to Canada ($10.7 billion), the main market for U.S. agricultural products so far this year.
The latest (August 27, 2015) USDA’s Outlook for U.S. Agricultural Trade, indicates that China’s economy is forecasted to grow 6.6% in 2015, the lowest rate since 1990 (3.9%). Chinese authorities announced on August 11 (2015) a change in policy that would allow the Chinese yuan to be more responsive to market forces. The yuan depreciated about 3% against the U.S. dollar in the course of the next three days after the announcement. The yuan is expected to continue depreciating, but it is also expected that Chinese authorities will step in to avoid a swift devaluation of their currency. Devaluation of the Chinese’s yuan can contribute to promote Chinese exports and spur the country’s economic growth, but at the same time, a weaker yuan can induce lower Chinese imports, including imports of U.S. agricultural products, which could further decrease the value of U.S. agricultural exports to China this year.