This Iowa city forged an unusual friendship with China and its president. Then came the soybean tariffs.https://www.washingtonpost.com/business/economy/this-iowa-city-forged-
MUSCATINE, Iowa — This spring, residents of this Mississippi River city published a book celebrating three decades of friendship with Chinese President Xi Jinping, who first visited as a regional official in 1985 to learn about modern farming practices.
That visit, and one Xi made in 2012, helped forge a relationship that turned China into a major consumer of Iowa’s agricultural exports. It also turned Muscatine into a pilgrimage site for Chinese officials and tourists wanting to meet the people Xi refers to as “old friends.”
So it was with some surprise that, a few months after the book’s publication, Muscatine watched Xi respond to a trade war with the United States by slapping steep tariffs on one of Iowa’s biggest exports: soybeans.
The tariffs caused a 20 percent drop in the price of U.S. soybeans and the first serious strain in a decades-long alliance on which U.S. farmers and Chinese consumers have come to rely. Local farmers say they understand the White House’s desire to challenge China on trade issues, but they worry that they will lose their grip on an export market developed through years of citizen diplomacy.
“I grow a lot of food, and they have a lot of people who need to eat. The tariffs are bad for both of us,” said Tom Watson, who grows corn and soybeans a short drive from Muscatine.Xi Jinping, then vice president of China, and Terry Branstad, then governor of Iowa, in a friendly moment during a formal dinner in 2012 at the Iowa State Capitol in Des Moines. For Xi, China’s future president and Communist Party leader, it was a second trip to Iowa. He toured the state as a regional official in 1985 to study Iowa farming practices. (Charlie Neibergall/AP)
The trade dispute came up when officials from a Chinese sister city of Muscatine visited Watson’s farm last month — the latest of dozens of delegations to travel to the area in recent years. The visit was warm and friendly, with some horsing around on dirt bikes and four-wheelers, Watson said, but the conversation turned serious when the officials asked how the tariffs were affecting him.
Watson explained how the lower pricing would hit his business and stressed that Iowa and China “need each other.” In the next few weeks, Watson will start harvesting his soybean crop, about two-thirds of which he plans to put in storage, instead of selling, because the current price is too low. He presold the other third of his expected crop at a higher price earlier this year, before China announced its tariffs.
At a dinner with community leaders later that evening, Pengyun Sun, the mayor of Zhengding, said he was sorry to hear about the “bad impact” on Watson. The dispute “won’t do either side any good,” he said from the sidelines of the buffet supper at a local golf club, where the cooks prepared fried rice and other dishes. China’s deputy consul general in Chicago, who also attended the dinner, echoed that view.A view of downtown Muscatine in 2018, looking toward the Mississippi River. (Whitten Sabbatini/For The Washington Post) Dave Walton, who has a farm north of Muscatine, expressed concern about recent cases of Chinese nationals being convicted of conspiracy to steal trade secrets. “It’s a fairness issue,” he said. (Whitten Sabbatini/For The Washington Post) Robb Ewoldt, who farms 1,100 acres near Muscatine, said the trade war with China comes at a bad time. But he said, “If it makes the country better,” he’s for the tough U.S. stance on trade. (Whitten Sabbatini/For The Washington Post)
“Cooperation and collaboration are the only way for the two countries to deal with each other,” Jun Liu said in a speech. “We really don’t have time for trade friction, trade wars.”
The trade tensions boiled over this year, when President Trump began slapping tariffs on tens of billions of dollars of Chinese imports, accusing the country of flooding the United States with cheap goods, stealing U.S. intellectual property and unfairly blocking U.S. companies from the Chinese market. Beijing responded with tariffs on some of its biggest imports from the United States, including soybeans, which China uses as animal feed for its rapidly expanding production of cattle, pigs, poultry and fish.
China consumed about 30 percent of U.S. soybean production before the trade spat, a relationship supported by years of trade delegations traveling back and forth to build trust, according to Iowa farmers and the soybean industry’s export council. Beijing’s tariffs have now made U.S. soybeans more expensive for Chinese buyers, causing them to shift some purchases to Brazil and other producers. That shift helped drive down U.S. soybean prices and inflamed fears that the United States could suffer a long-term loss of market share.
Robb Ewoldt, who farms 1,100 acres of gently rolling land near Muscatine, said the dispute comes at a bad time for U.S. farmers, who have been struggling with rising costs for land, fertilizer and seed. “We were already under that stress. To have this come on top of it wasn’t good,” he said.Robb Ewoldt, shown in a soybean field, said he is hopeful that the Trump administration’s planned $12 billion in emergency aid to farmers hurt by Chinese tariffs will help offset the drop in soybean prices. (Whitten Sabbatini/For The Washington Post)
Ewoldt said he is hopeful that the Trump administration’s planned $12 billion in emergency aid to farmers hurt by Chinese tariffs will help offset the drop in soybean prices. And Ewoldt said he is sympathetic to the administration’s efforts to take a tough stance on trade if it thinks China is acting unfairly. “If it makes the country better, I’m for it,” he said.
Other farmers in the area agree that the United States needs to stand up to China on some issues. Taking a break from repairing a giant tractor at his farm just north of Muscatine, Dave Walton expressed concern about recent cases of Chinese nationals being convicted of conspiracy to steal trade secrets after attempting to pilfer patent-protected seeds from Midwestern fields and biotech facilities. One stole corn seeds from the ground in Iowa, with the aim of sending them to a Chinese company, according to the FBI.
“It’s a fairness issue,” Walton said. “Part of the cost of the seed we buy is the [research and development] of that seed. So if someone comes in and steals it, they’re getting that R&D without paying for it.”
He and other members of the Iowa Soybean Association delivered that message to China’s consul general in Chicago at a meeting this summer. “We said we want to remain trade-friendly, but there are some issues we need to work out between our countries,” Watson said. They voiced concern about theft of intellectual property, the U.S. trade deficit with China and what they see as unfair tactics China uses to protect its market, Watson said.Chinese officials dined with community leaders in Muscatine during a visit in August. Tom Watson, a farmer and one of the hosts, declared that tariffs on Iowa food products “are bad for both of us.” (Whitten Sabbatini/For The Washington Post) During the dinner in Muscatine, the Chinese visitors mixed easily with their hosts. “We really don’t have time for trade friction, trade wars,” said Jun Liu, a diplomat stationed in Chicago. (Whitten Sabbatini/For The Washington Post)
Despite the friction, Muscatine residents remain largely positive about China and committed to the citizen exchanges that have helped build strong trade and cultural ties. In a speech at the dinner honoring the Zhengding delegation, Muscatine’s Sarah Lande stressed the need to strengthen relations “not just between our national governments but between our cities, towns, farmers, educators and bankers.” The tariff dispute, she said in an interview afterward, makes such nongovernmental bonds all the more important.
Lande, 80, is the chief author of the new book about Xi, “Old Friends: The Xi Jinping-Iowa Story.” It includes photos of Lande and others hosting Xi on his first, brief visit in 1985 and again during his return in 2012.
“You cannot imagine what a deep impression I took away from my visit 27 years ago,” the book quotes Xi as saying in 2012. “You were the first Americans I had contact with . . . to me, you are America.”Glad Cheng at the Sino-U.S. Friendship House in Muscatine. Cheng, a Chinese businessman who moved to Iowa a few years ago, bought the house where Xi Jinping, China’s future president, stayed in 1985. He turned it into a museum. (Whitten Sabbatini/For The Washington Post)
A few years ago, a Chinese businessman named Glad Cheng moved to Iowa and bought the Muscatine house where Xi stayed for those few days in 1985. Cheng turned it into a museum, which he estimates attracted about 5,000 Chinese visitors last year. On a recent afternoon, the guests included Hao Huang, a Chinese doctoral student who traveled with a friend from his university in New Hampshire.
“At the government level, we have maybe serious disputes but forget about that,” Huang said as he perused the 1960s-era home on a cul-de-sac. “We are here to visit this town and to understand what impressed our president and to learn maybe how we can develop.”
Cheng also helped finance construction of a chic hotel in Muscatine and renovated an old storefront that he turned into the Sino-U.S. Friendship Center. He hopes to draw more Americans to that location, with attractions including calligraphy lessons and ping-pong tables.
“If China and the U.S. can sit down, we can talk about anything,” Cheng said. “I think maybe we don’t understand enough between our two countries.”Xi Jinping with area residents at the home of Roger and Sarah Lande in Muscatine in 2012. Xi’s visits to Iowa in 2012 and 1985 helped make China a major consumer of Iowa’s agricultural exports and turned the little city of Muscatine into a pilgrimage site for Chinese tourists and officials who come to meet the people Xi refers to as “old friends.” (Kevin E. Schmidt/Quad City Times/Pool/AP)