Where’s the beef? China causes boom in global beef trade

Global beef trade is on the rise with an increased demand for beef imports in China. In the first three quarters of 2022, China imported 1.69 million tons of beef from all over the world, an increase of 200,000 tons from the same period in 2021. As of right now, the price of beef in the Chinese market stands at 65.80 Chinese Yuan per kilogram (equivalent to around 9.50 USD per kilogram), which adds up to only a one percent rise within the last year.

Meanwhile, across the equator in New Zealand, the export of protein has boomed. For example, in the single month of August 2022, New Zealand ports shipped 885 million USD worth of red meat, mostly to their three key markets of China, the United States, and Japan; a 34% increase since 2021. According to the Meat Industry Association, the import of beef to China from New Zealand has increased 49%. This means that monthly, China imports nearly 24,000 tons of beef from New Zealand, a record high that has not been seen since June 2019.

Though New Zealand’s market share still occupies a relatively small portion of the dramatic increase of beef imported to the Chinese market, this expanding trend is noticeable especially when considering larger trade trends between the two nations. Notably, China has become New Zealand’s largest trading partner in goods. According to the New Zealand Ministry of Foreign Affairs and Trade, two-way trade has increased from 10 billion to 30 billion New Zealand dollars since 2007. The following article will have a deep dive into the factors leading to the current situation.

How macro-environmental factors are affecting global beef trade

The global macro-environment has facilitated this trend in two key ways:

Firstly, in April 2022, the two countries have upgraded the protocol of the China-New Zealand Free Trade Agreement (FTA), which was originally signed in 2008 and opened the door to the trading relationship. The recent upgrade is a major move to improve bilateral economic and trade cooperation while also bringing positive momentum into regional and global trade cooperation.

Secondly, the Regional Comprehensive Economic Partnership Agreement (RCEP) has officially entered into force on January 1st, 2022 for 16 participating countries, including China and New Zealand, with the aim to eliminate tariffs in the future for foreign trade. For countries like New Zealand, which is rich in agricultural and protein resources, participating in the RCEP Agreement allows for a great benefit, with tariff reductions on such exports. Taking beef as an example, Chinese importers can enjoy an annual tariff reduction of 1.2%-1.3% for New Zealand beef, ultimately achieve zero tariffs after 20 years.

New Zealand Trade Minister, Damien O'Connor, recently said that with RCEP, coupled with the effect of the upgraded FTA protocol, most of New Zealand's dairy and protein products will enter the Chinese market with zero tariffs. Additionally, based on current export volumes, New Zealand exporters can anticipate around 180 million New Zealand dollars (equivalent to 120 million USD) in tariff benefits.

Increased demand due to lifestyle changes in China

The general lifestyle improvements in China are another factor for this boom in imported beef. With these changes come increased demand for beef, and China has transformed into the biggest battlefield for countries reliant on beef exports on the global trade market. While historically, China has been the largest pork consumer in the world, beef is now taking its fair share. Statistics show that while pork occupied 95.92% of all meat consumption in China in 2014, as of 2020 it dropped 22.53% to a 73.39% market share. At the same time, beef has climbed to occupy 9.27% of the market share and is still growing quickly. Significantly, in 2019, China surpassed the United States to become the biggest beef importer in the world.