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Large volume state purchases of U.S. corn and cotton have also
been put on hold, one of the sources said.
China could expand the order to include additional U.S. farm
goods if Washington took further action, the people said.
"China has asked main state firms to suspend large scale
purchases of major U.S. farm products like soybeans and pork, in
response to U.S. reaction to Hong Kong," the source said.
"Now we will watch and see what the U.S. does next."
U.S. President Donald Trump said on Friday he was directing his
administration to begin the process of eliminating special
treatment for Hong Kong, ranging from extradition treatment to
export controls, in response to China's plans to impose new
security legislation in the territory.
China is ready to halt imports of more agriculture products from
the United States if Washington takes more action on Hong Kong,
the sources said.
(GRAPHIC: Value of U.S. agriculture exports to China -
https://fingfx.thomsonreuters.com/
gfx/ce/yzdvxdxdzvx/
USAGExportstoChinaMar2020.png)
Chinese importers have cancelled 10,000 to 20,000 tonnes of
American pork shipments - equivalent to roughly one week's
orders in recent months - following Trump's comments on Friday,
the source said.
State purchases of bulk volumes of U.S. corn and cotton have
also been suspended but the details were not clear.
In a worst case scenario, if Trump continues to target China,
Beijing will have to scrap the Phase 1 trade deal, a second
source familiar with the government plan said.
“There's no way Beijing can buy goods from the U.S. when
receiving constant attacks from Trump," the person said.
China pledged to buy an additional $32 billion worth of U.S.
agriculture products over two years above a baseline based on
2017 figures, under the initial trade deal the two countries
signed in January.
China has bought soybeans, corn, wheat and soyoil from the
United States this year, to fulfil its commitment under the
trade deal. Beijing also stepped up purchases of U.S. pork,
after the deadly African swine fever decimated its pig herd.
The U.S. Department of Agriculture reported that China bought
$1.028 billion worth of soybeans and $691 million of pork in the
first quarter of 2020.
Private importers haven't received a government order to suspend
buying of U.S. farm produce, according to a third source with a
major trading house, but commercial buyers are very cautious at
the moment, the person added.
"A certain scale of trade will be halted," given rising tensions
between China and the U.S. in other areas, but it is not a full
stop, said a fourth source familiar with government plan.
However, China would be able to find other sellers easily (of
the farm products), he added.
The sources all declined to be named due to the sensitivity of
the matter.
(Reporting by Hallie Gu, Jing Xu in Beijing and Keith Zhai in
Singapore; Additional reporting by Dominique Patton, and Gavin
Maguire; Editing by Edmund Blair and Susan Fenton)
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