China 09.02.2024

America’s love/hate relationship with our biggest trading partner

Source: The DairyNews
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There’s a joke about my fellow Baby Boomers making the rounds that goes something like this: In the 1960s, Boomers didn’t trust anyone over 30 but as soon as they reached their 60s, they didn’t trust anyone under 30.
America’s love/hate relationship with our biggest trading partner
American farmers and ranchers have nearly the same dynamic with China. As long as its people and companies buy our soybeans, beef, pork and corn, we love each and every one of them and their dollar-stuffed wallets.

When Chinese companies or citizens start buying our farmland, technology and businesses, however, our farm leaders and politicians call them every name under the sun except “customer” or “investor.”

American farmers and ranchers aren’t alone in their sometimes sunny, oftentimes dark view of China and its political — and possibly nefarious — role in international markets. New York University business professor and popular podcaster Scott Galloway sees TikTok — the popular, China-based social media platform used by nearly 145 million Americans — as “the ultimate propaganda tool.”

Galloway, who has often described TikTok as the most addictive social media platform he’s ever seen, adds that China “would be dumb not to put their finger on the scales” to make “the West look bad.”

Over 30 U.S. states have that same concern; 10 have banned state employees from loading the app on state-owned electronic devices and 20-plus (the number keeps growing) are considering legislation to do so. India, the world’s most populous country, banned TikTok after its user numbers nationwide hit 190 million.

Many in U.S. agriculture see China’s growing presence in our business and political arenas as even more sinister. For example, in 2023, 10 states enacted “restrictions on the ability of land purchases by foreign nationals,” according to MultiState, a lobbying firm that operates throughout the U.S.

While only one of those states, Alabama, enacted its law against China specifically, five other states did direct their new laws against American “adversaries such as China, North Korea, Russia and Iran.” Presently, 19 states have “introduced some form of foreign land ownership ban…” in their statehouses.

While all this worrying and banning has been going on, China spent most of 2023 learning one of capitalism’s biggest lessons: economic growth isn’t an endless ride upward. Even though the Chinese economy did grow last year, its rise was the smallest since 1990, noted the Wall Street Journal.

Leading the slowdown was real estate. Sales, as measured by square footage, were down a calamitous 23% in 2023. Worse, in mid-January a Chinese court ordered Evergrande, one of China’s largest real estate developers, to liquidate its crumbling $300 billion “debt mountain.”

Additionally, more signs of coming weakness–deflation, falling stock markets (as U.S. stock indices hit record highs) and flagging consumer spending suggest China is well on the path to becoming the next Japan: a global powerhouse that’s about to stumble for years as it juggles too much debt, a declining population and flagging exports.

While those deepening signs of trouble suggest Xi Jinping, China’s 70-year-old president, will surely spend more time on domestic politics to maintain power and order, other experienced China watchers think Xi will work even harder to lower tensions between his nation and the U.S.

In fact, the Washington Post noted relations between the world’s two superpowers have taken a decidedly positive turn, probably because of China’s worsening economic outlook. “Much of the shift… stems from Beijing’s recognition that its own economy has been foundering while the United States’ is booming,” the Post reported on Jan. 27.

This only proves the age-old axiom that there’s nothing like a good customer — China for our ag exports and America for China’s manufactured and digital goods — to move people from pounding their fists at the negotiating table to picking up forks at the dinner table.

The opinion of the editorial board may not coincide with the opinion of the author
Lee Mielke
Lee Mielke
editor of the Mielke Market Weekly
Dairy farm milk production continues to struggle and remained below a year ago for the seventh consecutive month.
Aaron Smith
Aaron Smith
Professor of Agricultural and Resource Economics at the University of California
Every five years, the Department of Agriculture takes a census of farms, all two million of them. The most recent census occurred in 2022, and USDA released the data this week.
February 2024
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