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MNI (London)
BEIJING (MNI)

The Phase One trade agreement between China and the U.S. remains on track underpinned by Chinese demand for agricultural products despite delayed bilateral talks, sources across government and industry told MNI, with one source noting that Beijing had purposely boosted soybean purchases to help meet commitments under the deal.

While a surge in Brazilian soy imports looks set to provide a growing share of China's demand, the government could step in to keep up U.S. shipments, topping up state reserves of the crop, a person familiar with the matter said, requesting anonymity.

"China has recently increased soybean purchases to make the deal look better," the source said. The state may become the largest importer of U.S. soy later in the year, the source said, adding that it was impossible to make precise forecasts.

China imported 10.51 million tonnes of soybeans from Brazil in June, up 91% year-on-year and some in China think South American supply could dent commercial demand for U.S. soy during the September-November harvest.

But sources said China's view of meeting its commitments to the U.S. is in line with recent remarks from White House Economic Advisor Larry Kudlow, who noted China has picked purchases of U.S. agricultural products and that the two sides continue to engage regarding the phase one deal, despite other differences.

MEETING DELAYED

A government source told MNI that Kudlow's comments were enough to satisfy Beijing that the deal was on track, despite the delayed weekend meeting between China's chief trade negotiator Liu He and the U.S. Trade Representative Robert Lighthizer to review the deal's progress.

"The meeting itself would only have a limited impact, though they could have one whenever the two wish," said the source, who added that the meeting has been delayed for scheduling issues, as Liu was tied up with domestic decision-making meetings and traveling.

President Donald Trump on Tuesday told a campaign event crowd that he called off the weekend meeting over China's role in the Covid-19 pandemic.

Both the government source and a senior industry leader dismissed Trump's claim, with the latter saying the comments were "nonsense".

"If Trump walked away from the deal, the farmers would bear the first and direct consequences. He clearly does not want to see it happen, especially now," the government source said, highlighting the upcoming U.S. election.

MNI London Bureau | +44 203-865-3829 | jason.webb@marketnews.com
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MNI London Bureau | +44 203-865-3829 | jason.webb@marketnews.com
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