BEIJING • Chinese government officials have told major state-run agricultural companies to pause purchases of some American farm goods – including soya beans – as Beijing evaluates the ongoing escalation of tensions with the US over Hong Kong, according to sources familiar with the situation.
State-owned traders Cofco and Sinograin were ordered to suspend purchases, said one of the sources, who asked not to be identified.
Chinese buyers have also cancelled an unspecified number of US pork orders, according to a source.
Private companies have not been told to halt imports, a source said.
The halt is the latest sign that the hard-won phase one trade deal between the world’s two biggest economies is in jeopardy.
While Chinese Premier Li Keqiang last month reiterated a pledge to implement the agreement that was inked in January, tensions have continued to escalate since then, amid a stand-off over Beijing’s move to tighten its grip on Hong Kong.
The measures to halt soya bean imports come after US President Donald Trump last Friday lobbed a barrage of criticism at Beijing following its move to impose controversial new national security legislation on Hong Kong.
Critics say the law will crack down on dissent and undermine the “one country, two systems” principle that has kept Hong Kong autonomous from the mainland since the 1997 handover from the British.
Cofco and Sinograin are China’s key importers of farm goods. They had been making pricing inquiries for 20 to 30 cargoes of US soya beans last Friday but held off on going through with purchases after Mr Trump indicated he would punish Chinese officials, according to one of the sources.
Beijing is waiting to see what steps Mr Trump takes before deciding its next move, a source said.
It is unclear how soon the US would move on a range of options, from sanctioning Chinese officials to imposing tariffs on Hong Kong and attacking the territory’s financial stability.
While Mr Trump has periodically threatened to call off the phase one trade deal, his economic advisers have suggested it would continue.
China had agreed to buy US farm goods worth about US$36.5 billion (S$51.5 billion) for this year as part of the phase one trade deal signed in January.
However, the Covid-19 pandemic roiled those plans, with China managing to import only US$3.35 billion in American agricultural products in the first three months of the year, the lowest for that period since 2007, according to data from the US Department of Agriculture.
Still, as China started to gradually reopen its economy from the virus-led lockdown, it had increased its pace of imports – including a more-than one million tonne cargo of US soya beans in just two weeks last month and rare purchases of US soya bean oil and ethanol.
But then tensions between the US and China began escalating, with Mr Trump blaming China for misleading the world about the scale and risk of the virus outbreak.
The fallout filtered through to the commodities markets, with China opting to buy Brazilian soya beans instead of US output.