IN THIS EDITION: Chinese rebuilding pork supply, German softwood lumber exports increase to China, Saskatchewan pea exports up and the U.S. sends mixed messages on China trade

China actively works to rebuild pork supply

Chinese imports of meat products have ballooned in the aftermath of the African Swine Fever (ASF) with beef, pork and poultry imports at $2.2 billion a month compared to $750 million a month pre-ASF. Brett Stuart, CEO of Global AgriTrends, estimates 60% of China’s herd, roughly 30% of the total global herd, was lost as a result of the outbreak.

China has taken significant steps to rebuild their herds; Chinese authorities predict a return to 2018 sow herd levels by the end of 2020. There are reports that the herds will not be as high quality as a result of accelerated herd growth and there is skepticism that China can produce the numbers it predicts so quickly. The Chinese government opened its reserves in July and released 48,000 tons of frozen pork to help meet demand.

The bulk of the imports to meet increased Chinese demand are from South America, where China has entered into a US$3.8 billion investment deal in Argentinian pork production. This would add 300,000 to Argentina’s herds, effectively doubling Argentina’s production capabilities.

Canadian pork exports to China have hit a temporary setback. Maple Leaf Foods has halted exports to China as there is a COVID-19 outbreak at its Brandon, Man. plant which processes pork. The move was proactive as China has previously banned beef imports from Cargill following outbreaks in Alberta and has put strict protocols in place for imports from facilities where there is an outbreak (see China Brief 048 for more).

China accepts softwood with pests – from Germany

In June, the Chinese government blocked imports of Canadian softwood lumber due to concerns over pest infestation (see China Brief 047) in a move that some saw as political retaliation. Now, the Chinese have expanded softwood lumber imports from Germany from a region which has dealt with bark beetle infestations in its lumber. The deal means a 143% increase from the previous year. Canada has seen a 61% drop in softwood lumber exports to China between April to June 2020.

Pea exports, mushroom imports

Saskatchewan reports a 160% increase in pea exports to China over the past six months of the pandemic. Overall, yellow pea exports to China have remained fairly stable despite trade tensions, while green peas have seen a bit of a drop.

Farmmi, a Chinese mushroom company, reports that its subsidiary Zhejiang Forest Food Co., Ltd has signed a deal for dried whole mushrooms and dried mushroom slices for export to the U.S. and Canada.

Navigating mixed messages from the U.S. on China

How does Canada negotiate within a US-China trade war? The Western Producer editorial team has some thoughts.

While Canada struggles to get its energy products to Asia, Chinese imports of American oil are set to reach record levels in September; some estimates predict a total of 37 million barrels. The increased imports help meet Chinese commitments under the Phase One trade agreement between the U.S. and China. American and Chinese officials also reaffirmed their commitment to the agreement in a call, which provided a boost to global markets and helped contribute to the slight growth of Canadian dollar.

The Trump Administration has released its plan for the second term ahead of the Republican National Convention. The plan focuses on supports for the repatriation of manufacturing jobs from China and China’s accountability for COVID-19. The plan suggests President Trump’s second term could focus on decoupling from China.

As part of decoupling, the US government has told American post-secondary institutions to consider a divestment of their endowments from Chinese listings; the government foresees a total delisting of Chinese companies by the end of 2021.

Everything Else

• What can we learn about moving away from Chinese supply chains? Rare earth minerals could teach us a lesson in this deep-dive from the Globe and Mail.

Yanjiao International Trade City, a joint China-B.C. Government warehouse under construction in Surrey, has drawn renewed attention for its connections to China’s Belt and Road Initiative. The warehouse would allow Canadian producers, primarily small and medium food processors, access to the Chinese market but some are concerned what strings will be attached to gain this access.

• The CanSino Biologics vaccine trial held up in Chinese customs was developed with Canadian licensed medical technology under an agreement with the Canadian federal government. The Prime Minister’s Office (PMO) has drawn criticism on the decision to partner with CanoSino as other vaccine projects have shown more promise and CanoSino has not had a vaccine approved outside of China.

• The Meng Wanzhou hearings continued on August 17. A summary of the latest developments, including closed door hearings on whether to allow the defence to view sensitive, intelligence documents, can be found here.

– Stephany Laverty, policy analyst

The China Brief is a compilation of stories and links related to China and its relationship with Canada’s West. The opinions expressed in the links are those of the articles’ authors and don’t necessarily reflect the views of the Canada West Foundation and our affiliates.