China has bought less than three-fifths of US products planned in the “Phase one” trade agreement which suspended a tariff dispute between the two countries a year ago, posing another challenge for the Joe Biden administration in its dealings with Beijing.
Under the deal, China agreed to buy $ 200 billion more in US goods and services than in 2017, before the trade dispute began, over a two-year period until the end of 2021. .
Business analysts have measured Beijing’s progress towards this goal, and the latest Chinese import data suggests they are far behind.
According to an analysis by the Peterson Institute for International Economics, based on data from the end of last month, Beijing had only bought 58% of US exports expected according to its projections.
Chinese imports of U.S. products covered by the trade deal’s purchase commitments amounted to $ 100 billion at the end of December, against a prorated target of $ 173.1 billion, the institute said.
Trade Secrets is the essential daily briefing of the FT on the evolution of international trade and globalization.
register here to understand which countries, companies and technologies are shaping the new global economy.
The shortfall poses a challenge for the Biden administration as it decides how much of the Trump administration’s China policy to maintain, including whether to preserve US tariffs on billions dollars of Chinese imports.
Chad Bown, a member of the Peterson Institute, said the deal was “still a political deal,” and that Biden’s team should “de-emphasize purchase commitments.”
“You want to reward behavior, and not necessarily encourage the Chinese state to make all of these purchases at the same time as you’re trying to say – ‘no, become more market-oriented,’” Bown said.
Speaking to the Financial Times last week, Robert lighthizer, outgoing United States trade representative, said that when it comes to analyzing China’s compliance with its purchasing commitments, it was “quite unfair of people to act as if Covid doesn’t ‘was not produced’.
Mr Lighthizer, who as Donald Trump’s chief trade official oversaw US trade talks with Chinese officials, said the phase one deal included more than purchase commitments. He argued that there had been “a tremendous amount of change” that China had made to intellectual property protections; new and clear rules that Beijing cannot force the transfer of technology from American companies to Chinese companies; and some openness of the country’s financial services.
The deal set targets for broad sectors, which could be met through purchases of products ranging from airplanes to medical equipment and from soybeans to seafood and services such as tourism or cloud computing.
With regard to purchasing commitments in 2020, some sectoral exports performed better than others. China has been the closest to completing its agricultural purchases and has made its energy purchase commitments the worst.
China bought $ 23.5 billion worth of agricultural products covered by the deal, compared to an expected figure of $ 36.6 billion in the first year.
Chinese imports of US energy products covered by the deal were only $ 9.8 billion, however, against an implicit target of $ 25.3 billion for the year. The collapse in oil and other energy prices during the pandemic made the deal’s dollar target virtually unattainable.
The low oil price, however, has led to a surge in crude imports in recent months, as China has held back supply as prices depressed.
Its crude imports from the United States averaged around 1 million barrels per day from May to September, about three times the same period last year, according to US government data – but analysts are ask if China will maintain this buying pace with the price recovery.
The first phase of the trade deal failed to address some of the biggest sources of tension between the two countries, including commercial cyber-theft in China and Beijing’s use of industrial subsidies.
However, phase two talks never took place under the Trump administration, as U.S.-China relations deteriorated further.
Mr Biden has said he will aim to work with Europe to put more pressure on Beijing on trade issues, ending the Trump administration’s negotiating strategy alone, and its new officials have so far indicated that they saw it as a key priority.
In her inaugural address earlier this month, Katherine Tai, the new United States trade representative, said that “strengthening competition from a growing and ambitious China” would be one of the main issues on her case. commercial. Janet Yellen, the new treasury secretary, also told Congress this week that the administration will seek to deal quickly with any economic misconduct from China.