How Chinese consumers can help fight back against US tariffs

July 26, 2018 12:42
American farmers produce 40 percent of the world’s soybeans. If China abandons this source, other large producers of soybeans such as Brazil will be unable to fill the gap. Photo: Bloomberg/Reuters

China’s decision to fight back against American tariffs levied on Chinese goods raises issues that extend far beyond the obvious economic implications to matters associated with personal health and the environment. On the surface, China’s decision to target US commodities such as agricultural and aquatic products seems sensible because the tariffs on these goods will result in a drop in their sales in China, leading to pain among US President Donald Trump’s strongest rural supporters in a year of mid-term elections.

Among the products most mentioned are soybeans, on which China has levied a 25 percent tariff. Until the present retaliatory measures were put into effect, China was buying about one-third of the American soybean crop. Presently, American farmers produce 40 percent of the world’s soybeans, the largest in the world. In dollar terms, soybeans are second only to aircraft among US exports to China.

Because the United States is such a large supplier of soybeans to the world market, if China abandons this source, other large producers of soybeans such as Brazil will be unable to fill the gap, which means China is likely to continue buying soybeans from the US despite the tariff. As for ramping up domestic production, the Chinese government has already offered generous incentives to farmers to increase soybean yields, but estimates suggest up to a third of all the mainland’s farmland would have to be dedicated to soybean harvests to meet demand.

But this raises the question of why China requires such huge amounts of soybeans (about 100 million tons a year). Is the consumption of tofu and soy milk so great in China that it can be a critical factor in world trade? Hardly.

The vast majority of the soybeans grown around the world will not be eaten directly by humans, but rather, they will be crushed and heated to extract the natural oils. This oil will mostly be used for cooking, with the leftover mush, or soybean meal, used as animal feed, which in China is largely fed to pigs. Soybean meal is a particularly suitable food for farm animals because it is high in protein, which grains such as corn and wheat cannot supply.

Therefore, soybeans play a key role in China’s diet, particularly because trends indicate that the country is rapidly catching up to the West in its carnivorous ways. In the past generation, pork consumption in China has tripled. As for beef, in the same time period, China’s consumption has increased roughly 600 percent. And as China’s economic expansion continues to pull millions out of poverty, the consumption of meat will continue to increase apace.

However, this way of using soybeans ignores the environmental impact of first feeding animals, and then later eating their meat. Unlike when we humans eat soybeans and tofu and benefit directly from their nutrition, the soymeal eaten by pigs, cows, chicken and even farmed fish largely goes towards keeping these animals alive over the months until they grow to an appropriate weight for slaughter. This animal-sourced system of providing nutrition for humans is not only metabolically inefficient, it is also environmentally irresponsible. Brazil, as one of the main providers of soybeans to China, has cut down vast tracks of its rainforest in order to keep up with the demand as Chinese appetite for meat soars.

Returning to the issue of trade and tariffs, China finds itself in a bind. Suggestions have been made that Chinese consumers could boycott American products as a way to fight back against the tariffs. However, visibly American goods and services, such as mobile phones, coffee shops and fast-food restaurants, often weave an intricate web with Chinese parts suppliers and partners to an extent that any boycott could do more harm to China than good. Even avoiding American icons, such as Shanghai’s Disneyland, would mostly hurt their many Chinese employees and joint-venture partners.

How, then, can China effectively fight back? One of the very best ways Chinese consumers can retaliate against the tariffs is at the dinner table. By cutting down on their consumption of meat and farmed fish, there would be a direct and immediate impact on the need for soybeans, which would quickly hit the American heartland.

Such a dietary switch could have a couple of side benefits as well. First, mainlanders would be healthier. The second benefit would be to the environment. A recent study published in the prestigious journal Science found that the single best way to reduce your environmental impact is to become a vegan.

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Associate professor at the Education University of Hong Kong