China pulls back on ag purchases as Hong Kong commits to free trade

The Hagstrom Report

The Chinese government has told state trading companies to pause purchases of some farm goods including soybeans as Beijing evaluates President Donald Trump’s statement Friday, May 29, that the U.S. will no longer consider Hong Kong separate from China, Bloomberg reported.

Bloomberg also said Chinese buyers had canceled an unspecified number of U.S. pork orders, but Reuters reported state-owned Chinese firms bought at least three cargoes of U.S. soybeans on June 1 after the government had told them to stop purchases.

Meanwhile, the Hong Kong Economic & Trade Office in Washington said in a statement that Hong Kong remains “a separate customs territory” that “will continue to pursue the policy of free trade.”

The statement also noted Hong Kong was the United States’ fourth-largest market by value for beef and beef products exports, ninth largest market for agricultural products, and third largest market for wine.

Here is the full statement by the Hong Kong Economic & Trade Office:

“The Hong Kong Special Administrative Region (SAR) government regrets unfounded allegations about erosion of the Hong Kong SAR’s high degree of autonomy and the legitimate rights and freedoms enjoyed by the people of Hong Kong. The Hong Kong SAR government does not believe sanctions or trade restrictions against Hong Kong are justified.

“Hong Kong remains a separate customs territory as enshrined in the city’s constitutional document, the basic law. Hong Kong will continue to pursue the policy of free trade. As a separate member of the World Trade Organization, Hong Kong will continue to work fairly with her trading partners.

“In exercising our high degree of autonomy under ‘One Country, Two Systems,’ Hong Kong is resolutely committed to upholding its international responsibilities and agreements with all countries in areas such as trade, investment protection, mutual legal assistance, the fight against transnational crime and terrorism, as well as education and cultural exchanges.

“Hong Kong has established mutually beneficial cooperative relationships with various trade partners around the world, including the U.S. Hong Kong is a reliable and responsible trading partner of the U.S.

“The U.S. enjoys its highest trade surplus with Hong Kong among all economies. According to U.S. statistics, over the past decade from 2009 to 2018, the aggregate merchandise trade surplus that the U.S. enjoyed over Hong Kong reached US$297 billion. In 2019, the U.S.’s trade surplus in goods with Hong Kong was valued at US$26.4 billion.

“Hong Kong in 2019 was the U.S.’s 15th largest export market. Hong Kong was the U.S.’s fourth largest market by value for beef and beef products exports, and ninth largest market for agricultural products. Hong Kong was also the third largest export market for U.S. wine.

“Hong Kong is an attractive destination for U.S. investment. In 2018, U.S. foreign direct investment in Hong Kong was over US$82 billion. In return, Hong Kong’s direct investment in the U.S. amounted to nearly US$17 billion.

“Hong Kong is home to over 1,300 U.S. corporations, over half of which have set up their regional offices and regional headquarters in Hong Kong. About 85,000 American citizens call Hong Kong home.

“Hong Kong and the U.S. have a long history of mutually beneficial cooperation in a broad range of areas — from business and trade to anti-money laundering and counter-terrorism. U.S. policy toward Hong Kong has historically reflected our unique relationship which has been in the interests of both places. Any change of U.S. economic and trade policy towards Hong Kong would hurt local and U.S. businesses alike in Hong Kong and the people working for them.”

“The dispute threatens to kill the U.S.-China ‘phase-one’ trade deal, under which Beijing said it would buy an additional $32 billion in U.S. agricultural goods over two years,” Washingon Trade Daily said on June 1. ❖