According to Hong Kong’s South China Morning Post on October 29, China will start importing soybeans from Tanzania, and Tanzania has become the latest African country to sign an agricultural import and export agreement with the Chinese government.
At the same time, some analysts believe that China’s move is an attempt to reduce its dependence on soybean imports from the United States and Brazil. However, due to the low level of soybean production in Africa, it is currently unable to have a real impact.
According to the South China Morning Post quoting Wu Peng, Director of the African Department of the Ministry of Foreign Affairs of China, China has reached an agreement with Tanzania on Monday (26th) to start importing soybean products from the country.
‘’Both China and Africa will benefit from strengthened trade relations.” Wu Peng said that the conclusion of this agreement is in line with the commitment made by the Chinese government during the 2018 Beijing Summit of the Forum on China-Africa Cooperation, which is to expand imports, especially natural Imports other than resources to support African countries.
At present, China’s imports from Africa are mainly natural resources such as crude oil, copper, cobalt, iron ore and diamonds, while most of Africa imports machinery, electronics and consumer goods from China.
According to reports, Tanzania is the latest to sign an agreement with the Chinese government to allow it to export agricultural products to China in order to reduce its trade deficit with China. Other African countries that have reached similar agreements include Kenya (avocado, tea, coffee and roses), Ethiopia (coffee and soybeans), Namibia (beef), Botswana (beef and by-products), South Africa (fruit) and Rwanda (coffee).
There has always been a huge trade deficit between Tanzania and China. According to the data of the China-Africa Institute of Advanced International Studies at Johns Hopkins University, China purchased nearly US$400 million (US$393 million) from Tanzania in 2018, mainly sesame, sisal (a perennial tropical hard-leaf fiber crop, used for rope making, carpet weaving, etc , tobacco and cashew nuts. At the same time, China exported goods worth about 3.59 billion U.S. dollars to Tanzania.
According to the South China Morning Post quoting Tanzania’s ambassador to China, Mbelwa Kairuki, when interviewed earlier this month, China ranked fifth on the Tanzania’s export list, accounting for 3.9 of the country’s total exports. China is also the largest buyer of Tanzanian sesame, accounting for 80% of exports. In 2019 alone, it earned nearly US$165 million from this export to China.
“Tanzania has been added to the import list of China, a country with huge soybean demand. This has found a reliable product market for our farmers and opened up new opportunities.” The Tanzanian Embassy in China stated that China’s annual import demand of soybeans is estimated to be about 103 million tons, of which about 1,500 tons are self-produced and the rest are imported.
Soybeans are the main source of protein for animal feed and edible oil in China. Most of them are imported from American countries such as Brazil, the United States and Argentina. In Africa, Ethiopia was previously the only country that exported soybeans to China, but only a small part of China’s imports. Other soybean producing countries in Africa include South Africa, Nigeria and Zambia.
According to data from the General Administration of Customs, China imported 9.79 million tons of soybeans in September, a year-on-year increase of 19%. According to data from S&P Global Platts, nearly three-quarters of these imports come from Brazil, the world’s largest soybean producer and exporter, while the United States supplies 12%.
The report also specifically mentioned that as part of the first phase of the Sino-US economic and trade agreement, China is expected to increase imports of US soybeans in the next two years.
Mark Bohlund, a senior analyst at the emerging market analysis company “REDD Intelligence”, said that there are signs that China’s agricultural imports from African countries such as Kenya and Tanzania are increasing, but the scale is still small.
“I think part of the reason for this is that China wants to reduce its dependence on soybean imports from the United States and Brazil, but the current output levels in African countries are still very low and cannot have any substantial impact.” Bolender said.
And Charles Robertson, global chief economist at Renaissance Capital, believes that if African countries’ production can be raised to Brazil’s level, Africa’s agriculture can at least double (maybe four times), and China will be a huge market of these products.