Illustration: Chen Xia/GT

Participants in the global commodity market are closely monitoring how the intricate dynamics of tariffs and trade policies may affect the supply and demand for agricultural products. As one of the key commodities in the context of China-US trade relations, the outlook for soybeans has reignited investor concerns and uncertainties.

A Monday report published by Nikkei Asia, headlined "US-China trade spat to dull investor sentiment on soybean," said that "The soybean market remains bearish due to concerns that the US-China trade spat could kick up a gear."

Also, a recent report from S&P Global said that "A US-China trade war scenario is expected to drive global soybean markets in 2025, with analysts at S&P Global Commodity Insights anticipating a significant drop in US exports in the wake of a promising output in South America, creating opportunities for the region."

It is no secret that the US is the world's major soybean producer, while China is the biggest importer of the commodity. China imported 97.09 million tons of soybeans in the first 11 months of 2024, up 9.4 percent year-on-year, according to data from China's General Administration of Customs. The US, Brazil and Argentina are the main sources of soybean imports for China.

Nevertheless, despite bearish market sentiment, the pace of soybean purchases by China in reality has not shown significant changes. In mid-December, China's Sinograin bought nearly 500,000 tons of US soybeans for shipment in March and April, following deals China booked the previous week for about 750,000 tons for shipment from January to March, according to a Reuters report. The figures not only underscore the sustained demand of the Chinese market for American soybeans but also indicate China's stable position as a major soybean consumer.

If anything, the ongoing concerns over China-US soybean trade despite relatively stable purchasing data may be seen as a microcosm of the uncertainties the US has brought to bilateral trade. From growing protectionism to various technological blockades targeting China, the moves have put pressure on market participants, heightening uncertainty about the trade prospect. Additionally, the excessive interpretation and hype by Western media outlets and public opinion have further amplified market anxiety, rendering the prospects of China-US soybean trade increasingly ambiguous.

How to effectively alleviate market concerns regarding China-US soybean trade and foster healthy, stable development in this sector? Proactive measures from the US are crucial. This entails the US demonstrating stability and predictability in its trade policy, while avoiding unnecessary trade friction and political interference, thus creating a conducive external environment for China-US soybean trade.

The intense focus on soybean trade between China and the US has often tended to trigger discussion about their trade imbalance. Western public opinion often attributes this imbalance to China's insufficient purchases of American goods, such as soybeans and other agricultural products. However, this viewpoint is one-sided and overlooks US trade curbs on China. The root cause of bilateral trade imbalances lies not in China's purchases of American goods, but rather in the restrictions and barriers imposed by the US on exports to China. The US restricts the sale of what China wants to buy, and that's the primary issue leading to the trade imbalances.

Trade imbalances cannot be resolved merely by increasing China's purchases of American agricultural products, such as soybeans. Instead, the process necessitates positive changes in US trade policy, the removal of unreasonable export restrictions and the promotion of balanced development in bilateral trade. The US needs to recognize and face up to this fact.

China, as the world's largest importer of soybeans, has significant demand for American soybeans, but this demand is not limitless and increased imports of soybeans or other crops cannot achieve a trade balance. 

The US needs to encourage the diversification of its exports to China, while also enhancing its agricultural competitiveness and increasing the export of high-value-added goods and services. Only through these measures can a more balanced China-US trade relationship be achieved.