Explained: Impact on NZ farmers as China doubles agricultural trade with US

Trump and Chinese leader Xi Jinping.
Trump and Chinese leader Xi Jinping. Photo credit: File

The partial trade deal between the United States and China is being viewed as a positive move for New Zealand's agricultural sector, despite China's pledge to more than double trade with American farmers.

The newly signed agreement comes amid a trade war between the two countries, and follows almost two years of negotiations.

Under the deal, China has promised to buy an additional $18.8 billion in US agricultural products in year one, and $30 billion in year two. 

In a statement, US Farm Bureau President Zippy Duvall said the agreement was an "important step".

"China was once the largest market for US agricultural products but has dropped to fifth largest since retaliatory tariffs were introduced. 

"This agreement will help turn around two years of declining agricultural exports," Duvall said.

China is the main destination for New Zealand's dairy exports, followed by Australia and United States.

University of Waikato international law expert, Professor Alexander Gillespie said the new deal was good overall for New Zealand as it would stablise the global market. 

Professor Alexander Gillespie said the new deal was good overall for New Zealand as it would help calm the global market.
Professor Alexander Gillespie said the new deal was good overall for New Zealand as it would help calm the global market. Photo credit: Newshub

"We are not out of the woods by a long shot with the China-America trade dispute, there is still a lot of work to be done but this is going in the right direction.

"If that calms the market, that will have good flow-on effects for New Zealand," said Gillespie.

He said the new deal isn't expected to dent New Zealand dairy exports to China.

"The American agriculture market for China is not an area that we compete with. 

"Over 50 percent of their market is soybeans, it's a lot of things that aren't dairy," he said.

The Chinese market was also large enough to soak up demand, should more dairy competition be introduced.

"Even if we went head-to-head, and they were just exporting dairy, there are over a billion Chinese, and they are becoming middle class and developing a taste for these products."

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