Former Ambassador To China Reflects On Historic Time

Feb 19, 2021  | 6 min  | Ep4627

Terry Branstad is the longest serving governor of any state. During his time in Iowa, Branstad saw the rise of renewable fuels as a source of energy and the use of Hawkeye State farm products destined for foreign ports. He also had an early interaction with an international delegation that included Xi Jing Ping -- who eventually became the President of China.

Following the election of Donald Trump, Branstad was tapped to be the U.S. Ambassador to China. Paul Yeager had a chance to get the former Ambassador’s thoughts on what worked with Phase One and some advice for the new administration on how to deal with the world power.

Amb. Terry Branstad, Former U.S. Ambassador to China: “Well, first of all, we are the largest economy in the world. And we have done more to help China to join the World Trade Organization in invested in China. So we've done a lot to help China. And this administration said, and the Chinese love to have these dialogues, where you have these discussions, that doesn't lead to anything. And they say, Oh, yeah, we're going to reform and open up and then it gets delayed and delayed and delayed it and, and Ambassador Lighthizer. And initially, I wasn't so sure about him. But I became very impressed with him. He's very focused, very meticulous, not only did he get, and it took us two years, it was a long, hard battle. And we had to use tariffs to get their attention, but it worked, we did get their attention. And we got them to address long standing issues like protecting intellectual property rights, preventing the stealing of technology, like they have with corn seed here, and things like that. But also dramatically increasing a purchase of agriculture, energy and manufactured goods from the United States. The Chinese have now purchased record amounts of corn, soybeans, pork, even beef and chicken. And the result has been the price of ever since I think, September, soybeans have gone up from about $9 a bushel to $14, corn's gone up from $3 to five and a half. It's made a real difference for the price we're getting and the prices are even higher in China.”

Paul Yeager: “But it is short of what the projections are at least what the deal was. And there's.”

Amb. Terry Branstad, Former U.S. Ambassador to China: “It's a two year deal.”

Paul Yeager: “It's a two year deal. That's going to be a heck of amount of purchases that are going to have to be made in the second year. Are they going to be able to do it?”

Amb. Terry Branstad, Former U.S. Ambassador to China: “Well, I think they're able to do it. The question is, do they have the, the will to do it. And the administration, the Biden administration needs to insist that they abide by what they committed to. Now there's, I think there's valid reasons why it got off to a slow start, because of that what was happening with the virus. But now we they've caught up to a great degree in the fall, but and they've done more on agriculture than they've done on energy, or like aircraft from Boeing and things like that. So there's still a lot they need to do. But we need to not only do that, the other part that didn't get done, the phase one didn't include eliminating the subsidies of the state owned enterprises, which really distorts the market. And that's what the new administration needs to focus on. That's what the Trump administration was wanting to do it in a second term.”

Paul Yeager: “Well, and the the Chinese own companies have long been a source of look to them for signs, because that's usually an indication of what the government wants to do when it comes to buying soybeans or corn.”

Amb. Terry Branstad, Former U.S. Ambassador to China: “That's right. In fact, one of the last groups that I met with before I left China was COFCO. They are the biggest Chinese purchaser of agricultural products. So I, and I made the point that they had made progress on a lot of things, but they hadn't purchased ethanol. And now they've made a commitment. They're going to make a record purchase of ethanol in 2021. We need to see that they do that they need to do that, to help reduce pollution. They're still using MTBE, which is poisoning the groundwater. So we've made some progress and the embassy actually started monitoring air quality years ago. And that has helped convince the Chinese they need to get serious about air pollution. But they have a huge problem with both our groundwater and soil pollution. And we can help them and certainly ethanol and biodiesel. And and for that matter, DDGs are great livestock feed. So I'm very hopeful we're going to see that and that's one of the last things I did with both COFCO and with their chief negotiator Liu He. Before leaving China.”

Paul Yeager: “As we sit here tonight is a phrase that we've said many times on Market to Market, as we sit here today and have this discussion. Ambassador has Phase One been a success?”

Amb. Terry Branstad, Former U.S. Ambassador to China: “Oh, it's been a great success. Just ask the farmer who's seen their price of corn go up from $3 to right, five and a half. There's no question about that. It's not perfect, but it's a good first step. And we need to continue to move forward on that. China is a huge country with a huge population. And with a growing middle class, there's more and more demand for protein and pork is there. And and of course, they've been hit by the Asian, by the African Swine Fever, which their dream, they're really rebuilding their pork herd. And that's one of the reasons why they need the corn and soybeans.”

Paul Yeager: “Which is a concern if you're looking at the market from the outside perspective. Not your inside perspective of what was going on over there to say, China needs to feed their people, right. That's why they're buying. It just so happens that can fall under the umbrella of Phase One.”

Amb. Terry Branstad, Former U.S. Ambassador to China: “Well, that's true.”

Paul Yeager: “Is that an accurate statement?”

Amb. Terry Branstad, Former U.S. Ambassador to China: “Well, yeah, I think that's true. But the Chinese people love the quality and the reliability of American food. Hormel, Kentucky Fried Chicken, you know, Quaker Oats, all of those things are very popular with the Chinese consumer. And so I think we need to continue to press them to fulfill the commitments they've made. And it's in their interest as well. Because, frankly, what they're importing from us, costs a lot less than their local prices in China.”

Paul Yeager: “Ambassador Terry Branstad, thank you so much for your time. I appreciate it.”

Amb. Terry Branstad, Former U.S. Ambassador to China: “Great to be with you. Thank you.”

This is only part of the conversation. The full interview will be released Tuesday as part of the MtoM podcast which can be found via our YouTube channel of Market to Market or wherever you get your podcasts.

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