New Export Opportunities and Investment Strengthen Louisiana-China Ties

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by Sarah Wang
Long grain rice. Image: Flickr, Keith Weller, U.S. Department of Agriculture

On July 20, 2017, U.S. Department of Agriculture Secretary Sonny Perdue announced that for the first time ever, the United States will be able to export rice to China. China, which every 13 days consumes an amount of rice equivalent to the total annual US rice crop, is expected to import 5.3 million tons of rice from the United States in 2017-18.

One of the six rice-producing US states is Louisiana. The third-largest rice producer, it exports roughly 60% of its rice annually. In 2016, Louisiana’s exports of rough rice and milled rice totaled $444 million and $252 million, respectively. The opening of the Chinese market to US rice exports represents a boon for Louisiana, which boasts the largest trade surplus with China of any US state. This surplus is largely due to agricultural exports, which has also led to China becoming Louisiana’s largest export market; exports were valued at $8 billion in 2016.

There is also the possibility that Louisiana will benefit from the Trump administration’s “100 day plan” discussions with Chinese leadership that would allow for US exports of liquefied natural gas (LNG) to China. China is the 3rd-largest market for LNG exports, and although competition from other suppliers remains a factor, the United States is poised to be a major player in the field. Louisiana is uniquely suited to capitalize on this growing relationship as it is home to the first and only big LNG export facility in the lower 48 states, located at Sabine Pass. Another export facility is also expected to come online in Lousiana 2022.

In addition to the strong trade relationship, Chinese investment in Louisiana is growing. In 2014, China’s Yuhuang Chemical became the first major foreign direct investment (FDI) by China in the Bayou State. The manufacture of methanol in the complex in St. James Parish will provide 2,365 indirect jobs, 2,100 construction jobs, and exports both to China and North American customers.  In April 2017, Louisiana gained its second-largest Chinese FDI project from Wanhua Chemical Group, which will create 170 direct jobs and 945 indirect jobs as the chemical manufacturing plant is built.

Sarah Wang is a Project Assistant at the East-West Center in Washington.