The Impact of Climate Change on China and Brazil's Soybean Trade

In the recent past, China has expanded its grain production to achieve high food security and increased its partial dependence on imported agricultural commodities, of which soybean supply is highly import-dependent. This study systematically reviews the past trends in China's soybean demand, Brazil's soybean production and export, factors contributing to the soybean trade between China and Brazil, and future uncertainty in China's demand and Brazil's supply under climate change. We find that recently China imported similar to 64% of soybean from Brazil, while similar to 73% of Brazil's soybean exports were destined for China, making them key stakeholders in their international soybean trade. China's accession to the World Trade Organization, China-Brazil trade cooperation, and diversion from trade with the USA have played a pivotal role in China's increasing soybean imports from Brazil. China's soybean import has brought increasing virtual land to China (from 3.57 million hectares (Mha) in 2005 to 19.63 mha in 2020). This growing virtual land import could be one of the reasons behind Brazil's soybean harvested area, which increased from 22.95 Mha in 2005 to 37.19 Mha in 2020. In the future, climate change impacts on soybean production in Brazil can seriously affect China's soybean imports from Brazil and its domestic food security. We analyze these effects using a climate-crop-economic modeling approach, where yield changes from the crop model are incorporated into the economic model as lower land productivity. Our results show that Brazil's future soybean production and gross exports can drop up to 13.1% and 15.2% under the highest emissions scenario (RCP8.5). Consequently, China would face a decrease in its soybean imports from Brazil (-9.94 Mt). Due to these import reductions, China's domestic soybean supply will be reduced (-9.94 Mt). There would also be some reduction in China's meat supply and a drop in China's consumer welfare. Our results can contribute to devising policies to ensure China's food security and promote global sustainable development goals.