With decades of continuous economic growth, China has become one of the leading exporters of manufactured products, earning its reputation as the world’s factory. At the same time, rapidly rising incomes have shifted Chinese dietary preferences towards diets increasingly dominated by animal products. This has led to a growing demand for feed grains that has largely outpaced domestic production.

Thus, while China has primarily exported labour-intensive industrial goods to global markets, it has also become a major importer of land-intensive agricultural products to address its domestic demand-supply imbalance. This contradiction has become particularly pronounced in the context of China’s economic relationship with its largest trading partner – the US – especially since the onset of the Sino-US trade war. The stark contrasts between the two countries in terms of land availability and trade dynamics highlight the complexity of their economic interdependence, adding further layers to China’s position in the escalating Sino-US trade tensions.

In recent years, the agricultural import equivalent of land use in China has risen to approximately two-thirds of the country’s total available farmland. China’s current agricultural imports primarily originate from Brazil and the United States. The structure of agricultural and related products imported from Brazil is relatively straightforward, focusing mainly on soybeans and food-related items such as sugar. The US, by contrast, supplies substantial quantities of soybeans, maize and sorghum, along with the majority of China’s imports of distiller’s dried grains with solubles (DDGS), a by-product of ethanol production used as a protein and energy supplement in animal feed. As soybeans are also processed into meal for use as protein feed, the US remains one of China’s leading suppliers of feed commodities. At the onset of Sino-US trade war, the US accounted for more than half of China’s total maize imports.  

Over the years, trade tensions between China and the US have sparked widespread discussions about the future of their economic relationship. In 2018–2019, the US imposed several rounds of tariffs on Chinese imports, prompting China to respond with comparable duties on American exports.

With the return of the Trump administration, tensions in the economic relationship between the US and China have heightened significantly. In February 2025, US Executive Order 14195 was issued, imposing a 10 per cent tariff on all Chinese imports from 4th February 2025. On 10th February, China retaliated with tariffs of 15 per cent on US coal and liquefied natural gas, and 10 per cent on oil and agricultural machinery. Later in April, the US announced a 34 per cent increase in tariffs on Chinese imports, and quickly increased this to 145 per cent within a week. Most of the sanctions were temporarily put on hold after the two sides held talks in Geneva in early May. but there is now significant uncertainty regarding future trading terms and how they will impact the domestic markets of both countries.

Setting aside political and ideological differences, the economic effects of these trade tensions largely depend on each country’s capacity for import substitution and their reliance on imported products. This capacity for import substitution will be a decisive factor in shaping the future Sino-US economic relationship, ultimately reflecting the deeper structural differences between the two economies.

The pattern of trade between the two countries is rooted in the structure of resource endowments. China’s comparative advantage has traditionally been in labour-intensive industrial products, stemming from its large and relatively low-cost industrial labour force and the resultant massive economies of scale in export-oriented industries, particularly in textiles, electronics, and other manufactured consumer goods. By contrast, US exports to China are mostly capital- and land-intensive products, reflecting America’s advantages in industrial productivity and its extensive farmland, the result of its abundant per capita land endowment, which supports the export of land-intensive crops such soybeans.

Such economic complementarity should, in theory, foster deep economic interdependence through trade. However, it can also undermine a country’s export advantage when trade tensions escalate.

Specifically, unlike manufactured goods, where supply diversification is often possible, the narrow supplier base for feed crops – especially soybeans – creates vulnerabilities for China in times of trade disputes. Any alignment between the US and other countries (e.g., Ukraine and Canada) on soybean export policies could further constrain China’s options in the midst of escalating trade tensions. This is also one of the reasons why China has maintained good relations with Brazil, the world’s largest exporter of soybeans.

In short, the growing demand for feed grains, coupled with the limited land resources allocated to staple crop farming, has increased China’s dependence on international trade and its vulnerability to external economic and political factors. This, in turn, has placed pressure on China to diversify its agricultural imports, seeking alternatives when available, while also pushing China to reduce its reliance on US technologies in developing its domestic manufacturing sector. Furthermore, this has already influenced China’s terms of trade with trading partners, altering its comparative advantages in labour-intensive industrial goods exports and affecting its bargaining power within the global supply chain.

These dynamics have brought a new challenge into sharp focus: the delicate balance between maintaining self-sufficiency in staple food grains and achieving trade independence in feed grain commodity imports – a balance which neither creates over-reliance on a limited number of exporting countries, which could weaken China’s bargaining power in non-agricultural international markets, nor prevents feed grain consumption from encroaching on domestic sown acreage, thus preserving China’s long-standing commitment to staple food self-sufficiency. The increasing trade war tensions have significantly disrupted the flow of technology. This affects not only the supply chains for high-tech components but also access to major international consumer markets under deteriorating export conditions, both of which are critical to China’s export-oriented manufacturing economy. For China, this situation presents both opportunities and risks. The ultimate outcome will depend on its ability to adapt industrial strategy and rebuild technological systems at a time of increasingly restricted global integration. Successfully addressing this challenge will influence not only China’s agricultural performance but also its broader growth trajectory in the years ahead.