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— This is the script of CNBC's news report for China's CCTV on August 7, Monday.
Many insiders revealed to CNBC that the reason behind Trump's delay in China's trade investigation is the pressure of American agricultural lobbyists on the Trump's administration. They are afraid that once the Sino-US trade relations deteriorate, many US exporters, especially the agricultural sector enterprises, will face a major blow. Let's take a look at the data on Sino-US agricultural trade.
Last year, U.S. agricultural exports to China amounted to USD21.4 billion, of which soybean accounted for two-thirds of it. About 60% of U.S. soybeans are exported to China, making her the largest US soybean customer. Therefore, a trade war between China and America would possibly cause soybean farmers to take a hit. Furthermore, China does not rule out turning to South American agricultural suppliers, such as Brazil, Argentina, Paraguay and Uruguay, once Sino-US trade relations deteriorate.
In addition, the outlook of U.S. beef and rice exports, which have just been recently approved for exporting to China, is also facing great uncertainty. Jim Miller, Chairman of the U.S. Soybean Export Commission, said that there are hopes that the agricultural lobbyists, who had been putting pressure on the Trump's administration, understand the kind of impact sanctions would have on America's agriculture industry. Therefore an uncertain outlook for U.S to adopt trade sanctions can be implied from the delayed Trump's speech. Nonetheless, all these uncertainties are driving the American business community into a state of panic.
[Steve Quirk, TDAmeritrade] "The business community is very nervous about this right now because their goal is a global economy which is free and open borders. The idea that some of these sanctions might change their economic outlook in terms of, you know, imports and exports is quite frightening."
In the face of a recovering global economy, another worry emerging from the American business community is Trump advancing American's trade policies as a political agenda. This will only cause Sino-US trade relations prospects to delve into further uncertainty.
After the forecast of decline in global trade for two consecutive years, analysts have claimed that the global economy would pick up this year, in 2017 and the driving forces for the growth include energy stock prices and acceleration in its economic growth. However, if trade relations between the world's first and second largest economies were to deteriorate there will be no doubt that other economies in the world will also be affected negatively.
Besides, Section 301 has long been regarded as unilateral and unfair. If the United States were to formally pursue it, a chain reaction may be triggered such as making it difficult for U.S. companies to do business in China and causing dissatisfaction within in international community. With such, China will almost certainly appeal to the World Trade Organization (WTO), and the appeal's outcome will make further strained the whole situation.
CNBC's Qian Chen reporting from Singapore.