China Approves Tariff-Free U.S. Soybean Purchases as Goodwill

(Bloomberg) --

The Chinese government has given the go-ahead for five companies to buy up to 3 million tons of U.S. soybeans free of retaliatory import tariffs as trade negotiations between the two nations continue, according to people familiar with the situation.

The retaliatory tariff-free quota for 2 million to 3 million tons will be part of a goodwill gesture toward the U.S., and there could be a second round of exemptions depending on how the trade talks progress, two of the people said, declining to be identified as the information is private.

Among the companies is state-owned Jiusan Group as well as privately-run Shandong Bohi Industry Co. and China Sea (Zhonghai) Grain and Oil Industry Co., the people said. Yihai Kerry Group, a Chinese subsidiary of Singapore-based Wilmar International Ltd., and Hopefull Grain & Oil Group are also among the firms, said the people.

China’s commerce ministry didn’t respond to a fax seeking comment outside normal business hours.

Senior U.S. officials are set to travel to China on Monday for the first high-level, face-to-face negotiations since talks broke down in May. President Donald Trump had complained that China hasn’t increased its purchases of American farm products, a promise he said was secured at a meeting with Xi Jinping at the Group of 20 summit in Osaka last month.

The decision on the soybean purchases follows a meeting between the Chinese government and soybean buyers last Friday in Beijing to discuss the plan. After China adopted 25% tariffs on U.S. soybeans in July 2018, imports by the world’s biggest consumer had plummeted to almost zero toward the end of last year.

To contact Bloomberg News staff for this story: Niu Shuping in Beijing at nshuping@bloomberg.net;Isis Almeida in Chicago at ialmeida3@bloomberg.net;Steven Yang in Beijing at kyang74@bloomberg.net

To contact the editors responsible for this story: Anna Kitanaka at akitanaka@bloomberg.net, Alexander Kwiatkowski

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With assistance from Bloomberg