Exports of U.S. products to China are surging.

Surging exports of U.S. products to China are a realized “dream come true” for U.S. agriculture and food processors, but the dream comes with a word of caution along the lines of
“too much of a good thing” may not last.

China is the top market for U.S. agricultural exports, claiming 18% of the total and surpassing shipments to Canada, Mexico, Japan and the European Union in the top five. From a supplier standpoint, the United States also leads the world in shipments to China, with Brazil second, followed distantly by Australia, Canada, New Zealand and Argentina.

As the top supplier of agricultural products to China, the United States accounted for 24% of China’s agricultural imports in 2012-13 and ranked No. 1 in soybeans and other oilseeds (36% of China’s imports for the category), cotton (30%), meat (25%), cereal grains (42%), cattle hides (53%), distillers’ dried grains (99%) and hay and forage products (95%), according to the U.S.D.A. And while the United States may not be first in some other categories, such as fruits and nuts (4th) and dairy (2nd), its high volume of imports has had a significant impact on U.S. prices in some cases.

In a presentation at the recent U.S. Department of Agriculture’s annual Agricultural Outlook Forum 2015, Fred Gale, senior economist at the U.S.D.A.’s Economic Research Service, outlined the “China Dream” and its potential risks.

“Pursue the China dream, but keep your eyes open,” Mr. Gale said. “Dreams are not always what they appear to be.”

He noted that China’s imports of bulk commodities increasingly have been offset by domestic commodities being taken off the market by Chinese price support programs. In 2014 the volumes were nearly equal with major commodity imports near 136 million tonnes while 124 million tonnes of domestic commodities were removed under “policy purchases” by China.

“Land used to grow surplus corn and rice in China could have been used to grow more of its own soybeans,” Mr. Gale said. China imported about 71 million tonnes of soybeans in 2014 while stockpiling 70 million tonnes of its domestic corn crop.

Mr. Gale noted growing conflicts in the agricultural-trade relationship as Chinese authorities look for ways to protect their own producers from foreign influence by multinational companies and large imports. At the same time, he noted there was a vacuum in investment in agriculture within China.

The amount of food needed by China is staggering because of its near 1.4 billion people. Plus, as the Chinese economy grows and incomes rise, demand for higher protein foods and higher value food is growing even faster. China also is the world’s largest net importer of petroleum products, and on any given day when there appears to be a slowdown or upturn in its economy, the crude oil market quickly reacts, not unlike soybean futures when China makes a major purchase, cancels previous purchases or shifts buying from the United States to Brazil.

In an E.R.S. bulletin released in conjunction with the U.S.D.A.’s Outlook Forum in late February, Mr. Gale and co-authors James Hansen and Michael Jewison examined China’s emergence as a major agricultural importer over the past few decades and its implications for global markets.

China’s commodity imports reflect its “relative scarcity of land resources” and focus on “products that have high land requirements per unit of output,” the study said. Its major imports are oilseeds (specifically soybeans), vegetable oils and cotton. But needs have been shifting over the years, prompting changes in the import mix and to some degree in policy.

“While bulk commodities remain predominant in China’s agricultural imports, evolving consumer tastes and increased purchasing power are stimulating demand for higher value products,” the study said. “Imports of wine, beer, cheese, breads, cookies, extracts of coffee and tea, and ice cream are growing rapidly. China’s import demand has evolved in unexpected ways and remains difficult to predict.”

Those changes have come about since the 1970s, as the government sought to upgrade diets by boosting consumption of animal proteins and as China emerged from isolation in the 1980s and 1990s, highlighted by its acceptance into the World Trade Organization in 2001. Still “growth has been somewhat hindered by long-standing, deep-rooted preferences among Chinese officials for self-sufficiency,” the report said.

The authors noted that in 2014 China’s Communist Party’s “Number One Document” on rural policy said China must take the initiative to ensure that domestic supplies will be China’s primary food source. Their food security strategy included boosting domestic production capacity and utilizing international markets in a way that ensures a dominant role for Chinese companies in the supply chain of imported commodities.

“Interventions in markets can create uncertainty that distorts prices and disrupts trade,” the report’s authors said.

“A strong agricultural trading partnership has developed between China and the United States that is likely to persist into the future,” the authors said. But that partnership isn’t without risk.