Home Indiana Agriculture News Chinese Economy is ‘Vulnerable’ in Trade War

Chinese Economy is ‘Vulnerable’ in Trade War


Chinese Economy is ‘Vulnerable’ in Trade War

Trade war concerns continue to plague the ag markets with the war officially beginning last Friday. Chief Commodities Economist Arlan Suderman with INTL FCStone says that the American farmer has paid a price already with declining soybean prices, despite our export campaign being one of the strongest on record for this time of year. He says the Chinese are waging this trade war in the political realm because they can’t win it in the economic realm.

“Friday was not a good day for (Chinese) President Xi to see soybeans rally as hard as they did and the US stock market rally as much as it did, and continues to rally, as the trade war starts. The US economy is strong. If we were going to pick a fight with China, from the US economic standpoint, now is the time to do it when our economy is strong and there’s is vulnerable.”

Suderman says the Chinese leadership does not want to be seen as caving to American demands. He believes the U.S. will have to give them an “out” to end this trade war. He pointed back to the beginning of the negotiations as a possible strategy that could work.

“President Trump suddenly started talking very positively about President Xi, about how he’ll do the right thing, and speaking very honorable of him. And we were getting concessions. Very quietly they were conceding that we’re going to buy more commodities, we’re going to buy more agricultural commodities, more energy commodities, but the real issue at stake was the intellectual property rights.”

Larry Kudlow, Chief Economic Advisor, has stated that China has had private discussions about the concessions they would need to make regarding intellectual property rights, but it’s been all talk and no action. Suderman says if there is action taken on that front, “I think you’ll quickly also see a big agreement to buy more commodities as well.”

You can hear more from Suderman by listening to the HAT Morning Edition below.