Amazon fires: collateral damage of the Sino-US trade war

By Wong Kin-ming

The Amazon wildfires have become front-page news across the globe in recent weeks.

While Brazilian President Jair Bolsonaro has been blamed for encouraging local farmers to clear rainforests for crop fields, which have led to the raging fires, less known is the fact that the ongoing Sino-US trade war has actually played a part in triggering the widespread blazes.

Since the outbreak of the trade dispute, US soybean exports to China have dropped significantly due to the punitive tariffs. As a result, Beijing has to look to other global suppliers for soybeans, including Brazil and Argentina.

And the surge in Chinese soybean purchases has prompted Brazilian farmers to clear more land for growing soybeans by burning down trees and other vegetation in the Amazon rainforest.

On many occasions, the fires started by farmers often spun out of control and quickly spread across the rainforest.

Over the past 20 years, China’s demand for soybeans has been up four times, yet domestic production has continued to decline. Before the trade war commenced, one of China’s major sources of imported soybeans was the United States.

One major reason why China has such a huge appetite for soybeans is the continuing improvement in the standard of living of the people, as a result of which meat consumption is also growing. This has led to the rapid expansion of the animal farming industry and a soaring demand for soybeans, a common feed ingredient for livestock and poultry.

According to the estimation¹ of some scientists, if, in the worst-case scenario, China stops all soybean purchases from the US, it may need to ramp up soybean imports from Brazil, the world’s second-largest supplier, by an extra 20 to 30 million tons a year.

And in order to meet that extra soybean demand from China, Brazil will need 40 percent more farmland (i.e., around 10 million hectares), which is going to pose a huge potential threat to the Amazon rainforest.

As we can see, the global ramifications of the Sino-US trade war have gone far beyond our imagination, and are likely to get increasingly profound and far-reaching in the days ahead.

The author is Lecturer at the Department of Economics of the Hong Kong Baptist University

Note 1: Fuchs, R., Alexander, P., Brown, C., Cossar, F., Henry, R. C., & Rounsevell, M. (2019). Why the US-China trade war spells disaster for the Amazon.

This article appeared in the Hong Kong Economic Journal on Sept 21

Translation by Alan Lee

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