Navigating China's Complex Meat Trade Landscape

Conclusion

China's meat trade landscape is complex. As previously reviewed, China is a major meat producer, but demand is outstripping supply and changing consumer preferences mean that Beef and Poultry meat are increasingly in demand by growing middle and upper income segments.

China maintains an increasingly diverse supplier base, mitigating its dependence on exporters from the EU, Australia, and the US, and expanding and deepening relationships with new suppliers in Africa, Russia, Central Asia, and South America.

China and its suppliers pursue trading opportunities in an environment of political and economic challenges, such as the spill over from tensions regarding electric vehicle tariffs, a soft Chinese economic recovery, and increasingly closer ties between China and Russia across a wide spectrum of issues.

Outside of the economic and political sphere, the global meat industry remains hampered by a cycle of emergence and re-emergence of animal diseases, closing off regional supply bases for shorter or longer periods of time.

All in all, while there is no doubt that China remains of critical importance, meat exporters should take steps to ensure that their operations are not excessively exposed in the event of disruptions to the Chinese market.

Australia: Opportunities Amid Challenges

Australia has historically been a major supplier of beef to China. However, this relationship faced substantial setbacks due to political tensions and technical issues. Since 2020, several Australian beef processing facilities were suspended from exporting to China. These suspensions, initially perceived as retaliatory measures by China over political disputes, significantly impacted Australia's beef industry.

In a significant development, China recently lifted bans on five major Australian beef producers, signalling a thaw in trade relations. This decision is part of a broader trend of improving ties between the two nations, with the Australian government reporting a $20.6 billion reduction in exports due to prior trade impediments. The recent easing of these sanctions has already had a substantial positive impact, adding $11.5 billion in export value across various commodities including barley, cotton, and timber.

Despite these improvements, challenges remain. The imposition of safeguard tariffs, which increased duties on Australian beef exports, adds a layer of complexity. Exporters are adopting strategies such as absorbing additional costs or utilising bonded warehouses to navigate these tariffs effectively.

New Zealand: Navigating Economic Slowdowns

New Zealand's red meat industry, particularly its lamb exports, has also felt the effects of economic fluctuations in China. The economic slowdown and strong competition from Australian meat have led to lower sheep meat prices in China, impacting New Zealand farmers significantly. Despite these challenges, China remains New Zealand's largest market for sheep meat, and the long-term outlook is cautiously optimistic.

Organisations like Beef + Lamb New Zealand (B+LNZ) are working to mitigate these challenges by identifying market opportunities and advocating for improved trade conditions. The recovery of China’s economy, though unpredictable, is expected to boost demand for high-quality meat products in the medium term.

EU: Strategic Engagement and Market Access

The European Union has also been actively engaged in the Chinese meat market. European countries have established significant trade relationships, exporting substantial quantities of pork and beef to China. However, this trade is not without its challenges. In 2024, China initiated an anti-dumping investigation into European pork imports, potentially impacting major exporters like Spain, France, and Denmark.

Additionally, France has secured agreements to ensure the continuity of pork trade even in the event of an African swine fever outbreak. Such agreements demonstrate the EU's strategic approach to maintaining and expanding its market access in China amidst fluctuating regulatory landscapes.

Africa: Emerging Opportunities

African countries are increasingly looking to expand their agricultural exports to China, including beef. In 2024, China lifted a ban on beef imports from South Africa, marking a significant milestone for the African meat industry. Additionally, countries like Kenya and Zambia are actively participating in forums and trade expos aimed at strengthening agricultural trade ties with China.

China has committed to increasing agricultural trade with Africa, targeting a trade value of over $20 billion by 2030. This ambitious goal includes initiatives such as the "Green Lanes" to expedite inspection and quarantine procedures for African agricultural imports, facilitating smoother access to the Chinese market.

Russia and Central Asia: Strengthening Ties

Russia and Central Asian countries have been actively strengthening their meat trade relations with China. Kazakhstan, for example, has signed agreements to export beef and live cattle worth $75 million to China. These agreements are part of broader cooperation initiatives aimed at enhancing agricultural trade and ensuring compliance with sanitary standards.

In addition to bilateral agreements, regional cooperation frameworks like the Belt and Road Initiative (BRI) are facilitating improved trade logistics and infrastructure, further boosting the export potential of Central Asian countries.

The Americas: Expanding Market Share

United States

The United States has been a significant player in China's meat import market, particularly for pork and beef. Following the Phase One trade agreement between the U.S. and China, there were notable improvements in export conditions, including the removal of non-tariff barriers and expanded product eligibility. In recent developments, China has approved new U.S. pork processing establishments for export, marking a positive step after several years of stalled approvals.

Brazil and South America

Brazil, a major beef exporter, has strengthened its position in the Chinese market. In February 2024, China lifted anti-dumping tariffs on Brazilian chicken meat exports, which had been a significant barrier. However, Brazil's poultry exports faced a significant setback with the outbreak of Newcastle disease, leading to a temporary halt in exports to China. This preventive measure aims to avert Chinese sanitary blockades but poses a significant trade setback given that China is a leading destination for Brazilian poultry.