March 6, 2019 - Author: David Ortega
Although 80% of Chinese consumers believe more trade to be better for their economy, only 62% find trade with the United States to be favorable. This discrepancy, found in research conducted by Michigan State University’s David Ortega, Titus Awokuse, and Wen Lin, can be attributed to heightened trade tensions and the current trade environment between the US and China. Approximately 68% of Chinese consumers find America’s current trade policy toward China to be unfair. These statistics highlight the complexity associated with reaching a trade deal and signal the need for a paradigm shift in trade negotiations.
Information on Chinese views toward the US are important in understanding attitudes of consumers in both countries. While data on US consumer views toward China are available from various sources, information on Chinese consumers is more difficult to come by. The data collected by Ortega and his collaborators provides an important glimpse into public opinion in China and the challenges with reaching a trade deal. Having access to this type of information is becoming increasingly important as we start to see the effects of the trade war affect everyday consumers. It is no surprise that in a recent Wall Street Journal survey, half of economists view a trade war between the U.S China as the most significant threat to the US economy.
Trade relations between the United States and China escalated in 2018 to a trade war as both countries continue to quarrel over tariffs placed on goods traded between them. Since April 2018, China began imposing tariffs on goods it imports from the US in response to tariffs being levied against them by the Trump administration. To date, the United States has imposed tariffs on $50 billion worth of Chinese products and China has either levied or suggested tariffs on most of the products it imports from the US, which is valued at $110 billion. These actions have started to have significant consequences on the food economy. MSU researchers found that while only 16% of Chinese consumers reported a decrease in food availability, almost a quarter noted changes in domestic food prices, and 44% have seen imported food prices increase since the trade dispute started.
Caught in the middle of the disputes are US agricultural exports to China, affecting US farmers and Chinese consumers who are increasingly seeking high quality imported products. Products that have been hit the hardest include US exports of pork, fruits, nuts and soybeans which are used to feed China’s large hog industry. The tariffs have also affected the US beef industry which recently regained access to the Chinese market after a 14-year ban following the first US case of BSE in December 2003. While not as widely consumed as pork (the staple meat in the Chinese diet) urban Chinese consumers are rapidly increasing their consumption of beef. In the 10 months after regaining access, the US sent 5200 metric tons valued at $52 million to China, with much of it finding its way to the foodservice sector and high-end supermarkets. The tariffs and threat of additional trade escalation have dampened the future of US beef in China. The MSU researchers found that 50% of Chinese beef consumers report purchasing less US beef and 21 percent report increasing their purchase of Australian beef as a result.
Chinese consumers aren’t alone in their views of their trade adversary. On the other side of this conundrum is the American public, who shares a similar view toward their trade partner. Results from a Gallup poll conducted in June 2018 finds that 62% of Americans believe China’s trade policy with the US to be unfair. By contrast, these same consumers have more favorable views regarding trade practices of Canada, the E.U. and Mexico—countries that have also been involved in recent trade disputes with the US. A dichotomy in views toward China’s trade practices exists along political ideology, with more Republicans (71%) deeming those practices to be unfair than Democrats (57%). A subsequent poll in July finds that the majority of Americans (78%) were largely unaffected by the trade dispute, but 38% believe that the tariffs have hurt the US economy.
US attitudes toward China have fluctuated in recent years. Data from the Pew Research Center Global Attitudes Survey shows that views toward China started to become more unfavorable during the 2012 election cycle, improved in 2017 before starting to declining in 2018. The main source of concern with China seems to be its economic strength. 62% of Americans find the large amount of debt held by China to be a very serious problem and 42% believe the trade deficit to be of similar concern. Partisan gaps are also found in these opinions, with Republicans generally having stronger views toward economic issues with China. While the political and policy implications have yet to be fully realized, this glimpse into the attitudes of consumers in both sides of the debate forebodes a challenging path ahead, even if a short term deal is reached.