China to lift 13-year ban on U.S. beef

China has lifted its 13-year ban on U.S. beef one month after Chinese President Xi Jinping and his U.S. counterpart, Donald Trump, met for the first time at the latter's Mar-a-Lago estate. Some analysts have said that the cheaper American beef may put pressure on the domestic market, but others believe the impact will be minimal.

Along with the lifting of the beef ban came consensus in nine other areas including agricultural trade, financial services, investment and energy, according to China's State Council Information Office at a press conference on May 12. China's importation of U.S. beef will start no later than July 16, according to Chinese Vice Finance Minister Zhu Guangyao.

President Trump expressed his excitement about the development on Twitter, saying: "This is REAL news." The National Cattlemen's Beef Association in the U.S. noted that it is "impossible to overstate how beneficial this will be for America's cattle producers." China has barred most U.S. beef since 2003 over worries about mad cow disease. However, two-thirds of China's beef imports came from the U.S. before the ban. Though China conditionally lifted the ban in 2016, orders still remained low.

The decade-plus absence of U.S. beef ensured that China's beef imports grew rapidly. Now the fastest-growing market for beef consumption, China is also the world's second largest beef importer. Statistics show that China imported 825,000 tons of beef in 2016, at a cost of $2.6 billion. That figure is up from just $15 million in 2003, the last year U.S. beef was present in China in large quantities.

Based on the latest data released by China's National Bureau of Statistics, the average price of domestic beef per kilogram was 66.96 RMB ($9.72) in early May. The cost of imported beef, in comparison, stood at a comparatively inexpensive 20 RMB per kilogram. However, foreign beef has other disadvantages. Unlike domestic beef, most imported beef has to be frozen before being transported to China.

While some dealers worry that American beef will drag down the price of Chinese beef, the chairman of Inner Mongolia Kerchin Cattle, China's largest beef producer, believes imports from the U.S. will not have a huge impact on the Chinese market. Li He pointed out that the domestic market has withstood several tests in recent years, including the presence of imports from Australia and Brazil. Therefore, the reintroduction of U.S. beef will not make big trouble for domestic producers.

Industry insiders also speculate that China's beef import market, which is currently dominated by Brazil and Australia, could be forced to adjust once the U.S. returns, as American beef is cheaper than beef from Australia and New Zealand. Australia has begun to worry about a dropping market share caused by U.S. imports, the insiders confirmed.