Food: One way China still really, really needs the US

Rising incomes in China have meant more meat consumption. Photo / Getty

In the typical trade story with China, the low cost of production and strategic currency management helps propel its trade surplus with the United States, as it did to a record high last year.

But all that changes when it comes to food: China is importing more and more of its agricultural commodities from the United States. The US Department of Agriculture has a new report that puts this in perspective.

In the years after the normalisation of trade relations in 2000, US manufacturing firms rapidly shifted production to China, resulting in the loss of hundreds of thousands of American jobs. Agricultural trade, however, is a mirror image: During that period, the United States sold far more farm goods to China than it bought.

Not only that, but the United States trounced most other countries in gaining access to the Chinese market.

So why do trade flows in agriculture look so much different from those in manufacturing?

Partly, it has to do with evolving consumer tastes. Rising incomes in China have meant more meat consumption. The Chinese government has tried to prevent meat imports from growing too fast, but producing livestock domestically requires a tremendous amount of feedstock - especially soybeans - which the United States is well-equipped to supply.

At the same time, China hasn't been able to increase its food exports as dramatically, because of the rising costs of labour and land, as well as concerns about food safety that don't apply in the same way to things like textiles and electronics.

All of this is concerning to China, which is looking for ways to maintain as much control over its food supply as possible, even if it can't produce it at home. That's given rise to a breed of international relations known as "farm diplomacy," the USDA study's authors write, as the country negotiates agreements with other nations over commodity imports.

Chinese companies have also been buying US agricultural companies outright - most notably in the 2013 acquisition of Smithfield Foods, the world's largest pork producer. The United States' export success, however, probably won't have as big of an effect on domestic employment as its manufacturing losses.

The number of people needed to produce food in America has declined steadily throughout the century, as mechanisation made most tasks obsolete, and it's projected to decline even further through 2022. That means big profits for agribusiness but not much in the way of new jobs.

DePillis is a reporter focusing on labour, business, and housing. She previously worked at The New Republic and the Washington City Paper.