Recently, the Chinese proposed buying $30 billion USD of US agricultural products according to a report:
More details about the multiple memorandums of understanding that have reportedly become the focus of this week’s round of trade talks in Washington leaked Thursday morning, and it more or less confirms previous reports that Beijing is trying to assuage US demands about IP theft and force tech transfers by offering to buy more US agricultural products, which would help narrow the US-China trade deficit and deliver, for Trump, a concrete accomplishment that he could take to his red state voters and rightfully proclaim that “I did this.”
To that end, one trading desk offered some insight about why these purchases are so important to Trump, even if they won’t do much to transform the US economy. Because as long as China buys a few billion dollars more in US agricultural products, the traders said, it won’t matter if China goes back to its old ways after the agreement has been reached – because Trump will have achieved his big political win. But buying more soybeans won’t help revive America’s rusted-out manufacturing base: “It matters for electoral states that matter to trade negotiators, but this nation will not solve the issue of rusted out factories, scattered like tombstones across the across the landscape of our nation, by selling more soybeans.”
According to Bloomberg, China has proposed that it buy an additional $30 billion of US agricultural products a year, including soybeans, corn and wheat, as part of the trade pact. The offer would be included in one of the memorandums. The purchases would be added to pre-trade war levels of goods for the period covered.
In 2017, China imported a total $24.2 billion in American agricultural products, 60% of which was oilseeds, with the remainder including meat, cotton, cereals and seafood. But purchases slumped by one-third to about $16 billion in 2018 – adding to the strains already facing US farmers – as China’s retaliatory tariffs mainly targeted agricultural products.
Amid the flurry of reports, Secretary of State Mike Pompeo kept the flow of positive trade headlines going by claiming that talks are making “real progress.” (source, source)
In January 2019, I reported that China declared she wants to reduce the US trade deficit, which is a sign that she is preparing for a war and is attempting to “balance” her trade debt with the US so that she can massively expand here economy. While most people are for reducing the debt with China, the US will not, and for a strategic reason that I pointed out:
or years, many people have warned about the rise of the US trade deficit with China. They correctly point out that as debt is used to enslave and control people, that China may attempt to “call” her debts with the US and attempt to place the US into economic bondage to her.
This would be true in almost all cases. However, this does not apply to the US because the US both possesses control of the world’s reserve currency while at the same time she also has made herself the primary source of China’s wealth through intentionally destroying her own manufacturing base.
As Alan Greenspan notes, there is no debt which the US cannot pay because she has control over the printing power of the currency that the entire world uses.
China cannot actually make the US pay any debt because the ability to make a person pay his debt is the admission of the possession of force to be able to do this. China cannot force the US at gunpoint to pay, and if she was stupid enough to try this, the US would market this as an act of war, which would receive immediate public support and she would then proceed to use nuclear weapons against China. The Chinese know this.
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China may have a large army, but they are stuck right now because aside from the already existing problems with her military, such as poor training, internal division, and a reliance on stolen or copied technologies with little to no successful and original innovation or inventions, the Chinese are in economic bondage to the US and they know it. The only serious option they have is to attempt to balance the trade deficit, and as they cannot do this through reducing sales to the US in a meaningful way, they have to spend money to attempt to bring about some sort of equilibrium.
The US may agree to all or part of this in name, but not in practice because she knows China’s intentions. If there is any nation the US will seriously spend money on, it will be her ally in Japan as well as the nations of southeast Asia, and in particular Myanmar as those areas provide a large quantity of the rice and other foodstuffs that China imports to feed her people. (source)
That last sentence is critical to pay attention to.
China has a very large population which she does overall a poor job of providing food security for the most of them. Most of her rice and other imports come from her neighbors in Southeast Asia. It is in China’s strategic interest to keep these nations secure and as she has repeatedly stated, to divest of US agricultural interests, as she boldly proposed last year and started doing.
This is not in itself a bad strategy and is not one that could not be figured out. However, China’s open declaration of doing this, then talking about buying US assets knowing that she and the US are preparing for war and she needs to reduce her trade deficit, then going to the US with a massive debt offer is not going to work. The US has been aggressively opening relations with Myanmar, as well as building diplomacy all throughout Southeast Asia for this reason, because by preparing alliances with them and using these nations’ historical fear of a Chinese invasion, something that is legitimate and based on precedent, they can help cut off China’s food supply and starve them into submission.
To that, do not expect the US to sell to the Chinese, unless they have another plan in the works. In addition, anybody who is involved in soybean farming and to a lesser extent, rice farming may want to buy crop insurance because there is a chance they may be unwittingly pulled into a geopolitical trade war with the Chinese using them as pawns. Essentially, to refuse or give the appearance that such a deal with the Chinese, which would make money for US farmers, was refused in order to use said decision to incite anti-Chinese sentiment, essentially with the phrase that “Those Chinese who once bought our products aren’t anymore and they are hurting American farmers,” and then to take said anger and to channel it towards more militarism against China.
It does not mean that this will happen, but since agriculture and food is a much a tool of policy as it is nutrition, and given how the US was quick to destroy her own manufacturing based in order not to make herself dependent on China, but rather the Chinese dependent on US consumption with the intention of preparing for a future war using her status as the world’s reserve currency as a lever of influence, the farmer should not expect to receive special or different treatment. The US would quickly force her own people- farmers and business owners alike -into bankruptcy by her own design if she believes it may be a viable strategy for her foreign military objectives.
It is also a reason why the common man should work on learning to grow his own food, for while most people cannot provide for themselves absolutely from their own labors, even small amounts help to reduce one’s dependency on others while giving one important skills that can be used anywhere one goes.