Iowa signs historical cooperation agreement with China

Iowa’s economic ties with China deepened Thursday as the state signed a cooperation agreement with the Ministry of Commerce of the world’s second-largest economy.

In addition, the Chinese agreed to buy $100 million worth of U.S. soybeans. China is the soy industry’s biggest customer.

The deals were signed in a ceremony at the state Capitol on Thursday. The memorandum of understanding between the state of Iowa and the Chinese ministry, plus four provinces in northeast China, creates a joint working group to enhance trade and investment.

Iowa is one of only three areas — the others are California and Chicago — to sign such a memorandum with the Chinese Ministry of Commerce, said Debi Durham, Iowa’s economic development director. She said the agreement is a consequence of the February 2012 Iowa visit of President Xi Jinping, who was vice president at the time.

Durham told the Chinese delegation that she would convene a meeting later Thursday of industry and government leaders to begin moving forward on the agreement.

The memorandum calls for cooperation on areas that are Iowa’s strengths, including agriculture, wind energy, biofuels and finance. It also includes environmental protection, which is considered an opportunity for U.S. companies as China vows to clean up its massive pollution problems.

Durham envisioned that the agreement could lead to increased trade, as well as more communication on issues such as the regulation of biotech crops. That has been a controversial issue between the Americans and Chinese, who have blocked shipments of corn that they say contain unapproved genetic modifications.

The memorandum “marks a fresh chapter of our relationship,” Zhang Xiangchen, the assistant minister of the China Ministry of Commerce, said in English during the signing ceremony. “Today is a great day for Iowa and China.”

The provinces are Jilin, Heilongjiang, Liaoning and Hebei, Iowa’s sister state. The areas are “breadbaskets, also like Iowa,” Zhang said.

Together, the four provinces contain 182 million people, equivalent to almost the entire population of Brazil.

Other agreements signed Thursday included a cooperation agreement between the Iowa Department of Agriculture and the China Chamber of Commerce of Foodstuffs and Native Produce, which represents grain buyers in China.

The $100 million contract between grade traders in the United States and China covers soybeans planted this spring, for delivery after the harvest. The deal represents 200,000 tons of soybeans.

Iowa and Illinois are typically the largest growers of soybeans in the U.S.

Such deals are usually signed in the fall and are larger. This one pales in comparison with a $4.31 billion purchase of soybeans that Chinese officials signed in 2012 during Xi’s visit.

“Any signing this time of the year is still important since it is well in advance of harvest, and it demonstrates the demand in China remains strong as they try to secure supplies early,” said Grant Kimberley of the Iowa Soybean Association.

Laura Foell, a soybean producer from Schaller in Sac County and secretary of the U.S. Soybean Export Council, told the Chinese she is grateful for their business. One out of four rows of U.S. soybeans is exported to China, she noted.