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The trade talk headlines continue to roll in. On New Year’s Eve, Donald Trump said that he will sign phase one US trade deal with China on January 15 where the ceremony will take place at the White House, the president tweeted. He went on to say that he would then travel to Beijing to begin talks on the next phase. However, in the latest potential provocation, the South China Morning Post reports that China made it easier to import soybean through the northern border and such changes to customs regulations could smooth the way for shipments from neighbours such as Kazakhstan, Russia and Ukraine.

Key notes

  • Beijing has been looking to diversify sources amid trade frictions with the US
  • China has eased customs regulations on imports of soybean through some northern border checkpoints, the commerce ministry said, a move that could smooth the way for shipments from neighbours such as Kazakhstan, Russia and perhaps Ukraine.
  • The changes come as China looks to diversify soybean imports amid trade tension with the United States, its second largest supplier of the oilseed, and could facilitate trade with the neighbouring countries, traders said.
  • “I think this policy aims to facilitate soybean trade with Russia,” said an industry source based in China’s northeastern region, who sought anonymity as he was not authorised to talk to media.“But the volume [Russian shipments] is too small.”
  • China has taken measures to increase farm goods purchases from Russia, amid warm diplomatic ties, aiming to cut reliance on US imports.
  • On Tuesday, US President Donald Trump said the first phase of a trade deal with China would be signed on January 15 at the White House, which could see the removal of Beijing’s hefty tariffs on US farm products, including soybeans.
  • China has imported 631,320 tonnes of soybeans from Russia in the first 11 months of 2019, when shipments from Kazakhstan amounted to 14,262 tonnes, official data show.

FX implications

This is likely to disturb relations, but not block progress. However, it highlights the risks associated with being too heavily invested in the euphoria of a trade one deal. This means the yen and Aussie will be a focus. AUD/JPY is closely correlated to the trade wars.