Will China Turn to Argentina to Fill Its Agricultural Import Gap?

Argentine companies have expressed interest in increasing their agricultural exports to China, which is good news for Beijing, as it looks for alternative sources of its staple crops amidst ongoing tensions with the United States. These tensions appear unlikely to ease any time soon.

Argentina’s first shipment of wheat – one of the world’s largest exporters – will soon begin its journey to China, according to local economic newspaper Ambito Financiero on Monday (09). The newspaper did not provide an exact date for departure; this will be Argentina’s first wheat export to China since the 1990s, following an authorization granted in January for the product’s shipment to the Asian country. Argentina’s Ministry of Agriculture, Livestock, and Fisheries called the approval “a significant step for Argentine exports,” as noted in its press release at the time.

According to customs data, China is the third-largest importer of wheat in the world, receiving 12.1 million tonnes in 2023, worth $4.42 billion. The United States is the third-largest grain supplier to China, having sent 4.3 million tonnes in the first 10 months of this year, accounting for 10.3% of China’s total wheat imports.

However, as incoming U.S. President Donald Trump threatens to impose a 10% tariff on Chinese goods – with further punitive measures likely to follow – analysts say this could present an opportunity for countries in the Global South to expand their trade with China, particularly in the agricultural sector.

“China has been seeking to diversify its trade partners for years, especially during Trump’s first term. Trump’s return for a second term will only accelerate this need,” said Nick Marro, Chief Global Trade Analyst at the Economist Intelligence Unit.

In retaliation for the heavy tariffs imposed during Trump’s first term, China levied a 25% tariff on U.S. agricultural products in 2018, targeting key items such as soybeans, beef, pork, wheat, corn, and sorghum.

As a result, imports of U.S. agricultural products into China dropped, and other countries that had abundant supplies of these goods – notably Brazil – filled the gap.

In the first 10 months of 2024, only 16.7% of China’s soybean imports, by volume, came from the U.S., compared to 34.3% in 2017.

Conversely, Brazil accounted for 75.5% of China’s soybean imports so far in 2024, a significant increase from 53.3% in 2017.

The chart below shows which products were the most exported in containers from Brazil to Chinese ports in 2024. The data is derived from DataLiner, a Datamar product.

Most Exported Cargo to China | 2024 | TEUs

Source: DataLiner (click here to request a demo)

China is Brazil’s largest trading partner, with bilateral trade value rising by 6.1% year-on-year to $181.5 billion in 2023. Similarly, Argentina is looking to expand its trade relationship with China, a move that could bring significant economic benefits to the South American nation.

By the end of May, China had broadened its market for Argentine corn exports, as reported by agricultural authorities.

Although Argentina’s $6.7 billion in exports to China in 2023 represented a 21.7% decline compared to the previous year, China remains Argentina’s second-largest trading partner. Most of Argentina’s exports to China are agricultural products, primarily soybeans, beef, and barley.

Analysts noted that the rise in U.S. tariffs could push China to accelerate the development of its domestic market and further reduce its dependence on the U.S.

China could shift from being a ‘global factory’ to becoming a ‘global factory and market,’ a transformation that could reshape the global economic landscape, wrote Lin Hongyu, Dean of the School of International Relations at Huaqiao University, in an article published on Monday.

However, Marro cautioned that this transformation would depend on China’s economic situation. Domestic demand has, at times, needed to be increased, affecting import volumes.

“Efforts to boost domestic demand and encourage consumption will be far more important than any political promises regarding increased imports,“ Marro stated.

The value of China’s imports fell by 5.5% year-on-year to $2.6 trillion in 2023. However, in the first 10 months of this year, that value increased by 1.7% to reach $2.1 trillion, compared to the same period in the previous year, demonstrating the resilience of China’s economy in the face of trade tensions.

Source: South China Morning Post

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