China stops US sorghum probe as trade talks continue | Business| Economy and finance news from a German perspective | DW | 18.05.2018
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China stops US sorghum probe as trade talks continue

Beijing has dropped an anti-dumping investigation into US sorghum, in what experts view as a conciliatory gesture aimed at averting a trade war between the two countries during ongoing talks in Washington.

China's Commerce Ministry announced on Friday that it was ending a probe because it concluded that "anti-dumping and countervailing measures" on US sorghum imports would negatively affect Chinese consumers.

Read more: Sieren's China: An audience for the arm-wrestling over trade

"The imposition of anti-dumping and anti-subsidy measures on imports of sorghum originating from the United States would have a widespread impact on consumer living costs, and does not accord with the public interest," the ministry said in a statement.

China announced last month that it was slapping provisional anti-dumping duties on US sorghum imports, ordering importers to pay Chinese customs a deposit amounting to 178.6 percent of the value of sorghum brought in.

The measure was threatening to effectively halt a trade worth about $1.1 billion (€930 million) last year, sparking fears among American farmers that they could lose their largest export market for the crop.

The ministry now says that such a measure would particularly hit Chinese livestock breeders struggling to make ends meet as domestic pork prices fall. However, a final ruling on whether to impose tariffs was to be made after a further investigation, it added.

Important market

The US shipped 4.8 million tons of sorghum to China last year, compared with 317,000 tons in 2013. The imports made up the bulk of Chinese imports of the grain used in animal feed and Chinese liquor.

Yet the average price per ton dropped 31 percent during the same period, which also caused a steep decline in prices of Chinese sorghum.

Higher tariffs for US sorghum would have hurt farmers in states such as Kansas, Texas, Colorado and Oklahoma, which are also major Republican-leaning states that make up President Donald Trump's base.

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Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney said China had shown the American president that unilateral trade action could hurt America, too.

"Now they are showing goodwill by halting its anti-dumping investigation into sorghum imports, but it is a cheap way of showing goodwill as the US doesn't have much sorghum left to export. The next US sorghum crop will be harvested in August," he told the news agency Reuters.

Under efforts to reduce a $375-billion trade deficit with China, Trump has threatened to impose 25 percent punitive duties on up to $150 billion in Chinese goods. China vowed to retaliate, targeting American exports worth $50 billion.

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Conciliatory gestures

The announcement comes as senior Chinese and US officials are meeting in Washington for a second round of trade talks aimed at averting a trade war between the world's two biggest economies.

The negotiations center on US complaints about Chinese investment restrictions, theft of American intellectual property and the overproduction of metals.

Read more: Trump believes China has 'much to give' in trade talks

China's Commerce Ministry said on Thursday that the government in Beijing hoped to resolve the trade frictions during the latest round, ending Friday. But Trump has expressed doubt they would be successful.

"China has become very spoiled... because they always got 100 percent of whatever they wanted from the United States," he said, adding a barrage of criticism against former US administrations for allowing the United States to be "ripped off" by Beijing. "We just can't do that anymore," he said.

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In the current round of talks, China is reportedly offering Trump a massive reduction of its trade surplus. Bloomberg News cited a Trump administration official as saying that Beijing sought to cut its surplus by $200 billion annually, matching a demand by the US made earlier this month. The proposals would include an increase in Chinese purchases of American goods.

In addition, China is reportedly offering to eliminate existing tariffs worth $4 billion on US products such as fruit, nuts, pork, wine and sorghum.

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uhe/tr (Reuters, dpa, AFP, AP)

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