Trade deal whets China’s appetite for US beef

Donald Trump this month hailed a deal to resume US beef exports to China as an early win from trade talks with Beijing.

“China just agreed that the US will be allowed to sell beef, and other major products, into China once again,” the US president tweeted. “This is REAL news!”

But prime American steak is already on the menu at many mainland restaurants despite a ban in place since a 2003 case of mad cow disease: there is a flourishing grey market in secondary imports from Hong Kong, where the curbs did not apply.

“That’s a secret,” said a waiter at New York Style Steak & Burger in Shanghai when asked how it sourced its meat.

Cuts destined for China could make up half of US beef exports to Hong Kong, according to Chenjun Pan, an analyst at Rabobank — a figure that would represent more than $340m of meat a year.

The official revival of US beef exports to China stands to benefit big producers such as Tyson, which have missed out on a boom in Chinese beef demand. Chinese imports of the meat have soared in recent years, reaching $2.5bn last year — up 700 per cent on 2012 — as rising incomes boost meat consumption while relatively inefficient domestic producers struggle to keep up with demand. 

Several Chinese importers told the Financial Times they were keen to start buying premium grain-fed US beef as soon as possible. 

Although most of China’s imports are of lower-priced grass-fed beef from Brazil, Uruguay and Australia, US beef has long been perceived as higher quality, and it is this that has fuelled the grey market trade via Hong Kong.

Zhou Wenjie, a buyer at an import business based in Jiangsu province, said the prevalence of smuggling would set a ceiling on future prices. US beef is expected to sell for higher prices than those charged for Australian meat, which retails online from about Rmb80 ($11) per kilogramme, but lower than those for Canadian beef, which starts at roughly Rmb120, he estimated.

The existence of the grey channel…

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