China to become world's largest market for imported beef in 2021

A strong economic recovery from the initial wave of the  COVID-19 pandemic and a significant meat shortage due to African swine fever (ASF) have boosted China 's beef imports over the past year, and the momentum has continued in recent months.

While pork prices in China have declined significantly since the Lunar New Year as pork supplies have rebounded, the sheer extent of sow eradication and sporadic relapses of ASF suggest this may be a short-lived phenomenon. However, the decline in pork prices has not yet translated into lower beef prices, and beef imports continue to rise.

Over the past decade, China has continued to open up its beef market to an ever-growing list of suppliers - most of the major beef producers have been happy to expand their trade in the market. From the beginning of the year to May, China's beef imports increased 18% year-over-year, with all 10 top suppliers (except Australia) posting double-digit export growth.

However, the two main suppliers, Australia and Argentina, have recently faced restricted access. Meanwhile, the United States, a relative newcomer to the Chinese market , has seen the Phase One Trade Strengthening Agreement with the PRC grow into a booming beef trade. 

Australia: A number of technical issues have resulted in the suspension of seven meat plants in 2020 that are not yet listed as suppliers. While supplies of cattle and beef have been limited due to the ongoing recovery in Australia, beef exports to China are down 42% year-over-year. The reduction in trade was greatly affected by the suspension of catering establishments.

Argentina: In an attempt to contain the rise in domestic beef prices, in mid-May, Argentina's Peronist government announced a 30-day ban on beef exports to all markets except those governed by tariff quotas (TRQs), such as the US and the EU. Subsequently, the Argentine government announced measures to limit beef exports to 50% of 2020 volumes and ban the export of certain cuts until the end of August. Such measures could significantly limit Argentinean beef exports to China, its largest export market. Moreover, a return to the government's interventionist policies will continue to cloud the long-term prospects for Argentine beef exports to the Chinese market.

United States: A phase one agreement struck between the US and China in early 2020 provided unrivaled technical access for US beef exports to China. The agreement not only eliminated tariffs set during the trade war between the countries, but the US was also allowed to export to China HGP-treated beef (albeit within maximum residue limits and with banned beta-agonists) and beef from bovine animals over 30 months old. In addition, the US has been able to apply a systematic approach to the approval of exporting enterprises in China (as opposed to the rest of the world, which requests approval on a case-by-case basis). While initial trade was slow, US beef shipments to China have surged in recent months.

So what could these changes mean for the Chinese beef import market?

First, in the case of Argentina and Australia, it is not clear how long and in what form restricted access can be maintained. Second, while the Phase One Agreement was a political deal, and political relations between China and the US did not improve under the Biden administration, there is little sign that either side is going to back out of the treaty. The favorable access of US beef to China looks fairly secure, at least until the end of 2021.

And this fact will be taken into account when preparing the monthly analytical report Meatinfo.ru

To date, China's demand for imported beef shows no signs of slowing down. But with Argentina and Australia limited in access to the Chinese market, and other exporters already heavily market-driven, beef imports into the Chinese market may soon face supply constraints.