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US-China tensions

China doubles US soybean contracts ahead of November election

Beijing uses possible delays and cancellations in diplomatic game with Washington

A farmer harvests soybeans in Indiana. China purchases about 40% of U.S.-grown soy.   © Reuters

BEIJING/WASHINGTON -- China has more than doubled its planned soybean purchases from the U.S. since August, as the commodity emerges as one of the few diplomatic tools left for Beijing to exert pressure on Washington.

China had agreed to buy 9.89 million tons of American soybeans between September 2020 and August 2021 as of Tuesday, according to the U.S. Department of Agriculture. Of that total, 3.27 million was booked in August, and another 2.07 million this month.

China buys roughly 40% of American-grown soy. The boost was likely intended to highlight China's economic clout, especially as U.S. President Donald Trump courts farm votes ahead of the November election.

China can also choose when the actual shipments will be made, or cancel them altogether. The Asian nation backed out of buying about 800,000 tons of soybeans in February 2019, triggering a drop in the crop's price. Beijing may use the bookings as a way to counter U.S. trade pressures, as well as for leverage in other diplomatic flashpoints such as the Hong Kong security law, the sanctions on Huawei Technologies and the countries' decoupling on cutting-edge technology.

Trump claims that China is placing its biggest orders for U.S. soybeans and corn in history. Still, there is speculation that Beijing may delay actual imports until November or later to avoid appearing too pro-Trump should former Vice President Joe Biden win the election.

Under their "phase one" trade deal, China is supposed to boost imports of American goods and services by $200 billion from 2017 levels -- before their trade war began -- by the end of 2021.

In order to meet this goal, Chinese imports needed to total $100.7 billion in the first seven months of 2020, according to the Peterson Institute for International Economics. But the actual figure was $48.5 billion, or 48% of that goal.

The U.S. and China affirmed their progress on the phase one deal at a cabinet-level meeting in late August, but numbers on the ground indicate they are still far behind.

Chinese imports of agricultural goods in particular have only achieved 46% of year-to-date targets, down from 58% in February, when the trade deal took effect.

Industrial goods, which account for 40% of the $200 billion import boost promised by China, also only met 56% of their year-to-date targets. China has blamed this partly on stronger U.S. restrictions on technology exports to China. Energy imports lagged behind even further at 17%, due to a global decline in the price of liquefied natural gas and other resources.

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