Agriculture, shipping and energy firms set to gain most from the US-China trade truce
The truce in the US-China trade war is set to benefit the agriculture and energy sectors because of China’s commitment to significantly increase related imports from the US, say analysts. Shipping companies and port operators are also likely to profit from stronger freight demand and trade flows.
Following two days of intense talks in Washington, the two biggest economies in the world have agreed on “meaningful increases” in US agriculture and energy exports to China, with details to be worked out later, according to a joint statement by Beijing and Washington over the weekend.
“We estimate China could increase goods imports from the US by US$60 billion to US$90 billion, with a rise in agricultural imports in the near term, followed by energy, and then non high-tech manufactured goods,” said Morgan Stanley analysts in a research note.
In agriculture, US beef could be a key beneficiary as Chinese consumers will probably opt for foreign, protein-rich meat as part of a broader “consumption upgrade” in which an increasingly wealthy middle class are tending to buy better quality products from abroad. China’s share of US beef exports was a mere 0.3 per cent last year.
There might also be room for bigger Chinese imports of cereals like corn and wheat, sorghum, fruit and nuts, and dairy products from the US.
On the energy front, China may primarily increase imports of American liquefied natural gas (LNG) products by US$9 billion, while the amount could be even larger if the US can resolve its logistics bottleneck, the analysts estimated.
In manufacturing, China is likely to increase imports of chemicals, aerospace and non-electrical machinery from the US, as they are the key product areas in which the US enjoys a comparative advantage, while their export share to China is still relatively small.
