Heard on the Street: China needs to placate its own stressed consumers more than punish U.S. farmers
By Nathaniel Taplin July 22, 2019 8:14 am ET China’s food fight with the U.S. is getting costly at home. That doesn’t mean a resolution to overall trade tensions is near, but it could help keep further escalation in check.
The Xinhua report didn’t specify when any exemptions, if granted, would come into effect. But the dovish signal on trade fits with a longstanding pattern by Beijing of framing concessions in terms of domestic priorities rather than pressure from foreigners. Xinhua’s report said that the Chinese companies in question were interested in continuing to import U.S. agricultural goods to “satisfy the needs of Chinese consumers.
High food price inflation, which has spread to other important foodstuffs like apples, lamb and vegetables, makes China’s fiscal policy less effective, since consumers end up spending more of the extra income from their recent tax cut on food. It also constrains the administration’s room for further monetary stimulus to prop up prices of industrial goods and the finances of China’s heavily indebted factory sector.
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