Top Chinese New Year fruits mirror US-China trade tensions

Published Feb 5, 2021

With just a few days left before the Chinese New Year (CNY), the article looks into the import history of the three most consumed fruits during CNY, cherries, apples, and oranges, and analyze how US-China trade tensions have affected the import value of these fruits in China during 2015-2019.

Chinese New Year (CNY), also known as the Chinese Spring Festival, is the biggest celebration in China that signifies a new and bountiful beginning of the year. Aside from its cultural significance, the generous demand from 1.4 billion Chinese consumers during the festival creates a substantial impact on the economy of its trading partners. In 2020, China’s fruit imports from January to February amounted to USD 2.35 billion, 215% higher than the monthly average of 2020. This article looks into the import history of the three most consumed fruits during CNY, namely cherries, apples, and oranges, and analyzes how the trade trend has changed during 2015-2019 by the heightened US-China trade tensions.

Source: Tridge

Cherries

Cherries are considered to be a premium fruit in the Chinese market. The global import value of cherries has increased by 103.56% during 2014-2019, reaching a total import value of USD 4.44 billion in 2019. Despite its high price, China’s imports amounted to 48.7% in 2019. According to Tridge’s market intelligence, most cherry exports from Chile, New Zealand, and Australia are headed toward China wherein they have already built a strong relationship with domestic distributors. For this reason, the substantial increase in imports from Tajikistan and Kyrgyzstan is a surprise considering existing New Zealand and Australian exporters’ tight relationship with Chinese suppliers and the country’s renowned strict import standards and regulations. Contrary to the overall upward trend in cherry imports, the US recorded negative growth of 2% during 2015-2019.

Source: Tridge, ITC Trade map

Apples

Apples are an irreplaceable part of the CNY with their vibrant red color that is believed to bring luck. Holding up to its symbolic reputation, the global apple market has a total import value of USD 7.72B in 2019. Although small in percentage, considering the wide distribution of apples around the world, 3.89% of China’s share is still substantial. Similar to cherry imports, while shares of Poland, South Africa, and Argentina have shown a huge upward trend, the US apple export to China has declined by 21%.

Source: Tridge, ITC Trade map

Oranges

The global market for oranges has a total global import value of USD 5.49B in 2019 with 9.8% of it imported by China, being the largest individual importer of oranges. Its import has grown by 261.34% in 5 years (2015-2019). Similarly to other fruits, the US growth rate decreased by 6% despite the increasing trend in Chinese orange imports with growth in Israel and Argentina standing out.

China-US trade tensions

The growth in import value of cherries, apples, and oranges in China during 2015-2019 persistently showed a downward trend for US imports despite an overall increase in the import value of these fruits. This is an aftereffect of the prolonged diplomatic tensions between the US and China, which is often translated to trade sanctions, apparent from the harsh tariffs measures on imports from China to the US and from the US to China. Despite the signing of the initial bilateral trade agreement between the US and China in 2020, tensions do not seem to be easing, with China only meeting 50% of the agreed USD 200 billion worth of American goods and services imported as of early 2021. With less than a year left to fulfill the agreement, the success of this bilateral trade agreement is being questioned with possible retaliatory action from the US once China fails to meet the deadline.

Market Outlook for 2021

Source: Tridge, ITC Trade map

The map above highlights countries that experienced the highest import value growth (China) in cherries, apples, and oranges, as listed in the previous tables. Aside from imposing trade sanctions on each other, Washington and Beijing have explicitly expressed their intent in expanding their influence over certain regions such as Central Asia and the Middle East, including some of the countries highlighted above.

What is the Chinese suppliers’ reaction to the situation?

According to Tommy Lee, a Tridge Engagement Manager directly immersed in trades with China, Chinese suppliers have been noticing the decline in US imports to China in recent years (2015-2019) and are hoping that President Biden, the newly elected US president, will ease the trade tension and support the initial US-China bilateral trade agreement that allows free flow of goods without heavy tariffs. Thus the reason behind Chinese suppliers’ support for the trade agreement is not due to their preference towards American goods but more on the wider choices of goods that free trade brings, allowing them to acquire more price-competitive supplies.

Overall, China’s influence over international trade is expected to escalate further, especially with China’s Belt and Road initiative, a mass infrastructure project that connects East Asia to Europe. As of January 2021, China made significant progress in the project by almost completing the formation of the Digital Silk Road with Pakistan which substantially reduces the time taken to transfer internet data. In relation to this, most of the countries highlighted on the map above play a vital role in bringing BRI to success, in terms of geographical location and global economic stance, thus, creating a positive trade history with these countries may work favorably for China.