China set to default on US trade commitments by year-end


Sino-U.S. Trade tensions could erupt again as it appears China will default on its obligations under a near-expired deal that emerged from a dispute under the administration of former US President Donald Trump, said analysts.

The Economic and Trade Agreement signed by the two superpowers in January 2020 is due to end on December 31. Trade observers say China broke a clause that requires it to purchase imports of manufactured goods, agricultural products, energy products and certain services from the United States totaling $ 200 billion. dollars more than 2017 total. China bought $ 186 billion worth of goods and services in 2017 before the trade war, according to US government figures.

China has struggled to comply due to delays in Chinese aircraft orders from the United States and setbacks related to the pandemic, said Matthew Goodman, senior vice president of economics at the Center for Strategic & International Studies, a Washington-based research group.

“I think the Biden administration is going to follow through on this deal and hold China to account,” Goodman told VOA. “I see no reason why they are going to change course.”

FILE – A cargo truck rolls amidst stacked shipping containers in the port of Yangshan in Shanghai, China, March 29, 2018.

China had only reached 62% of its import purchase target in October, according to an analysis by Chad Bown, Principal Investigator at the Peterson Institute for International Economics, another research organization in Washington.

U.S. manufacturers may also lack the capacity to meet demand for goods destined for China, said Bashar Malkawi, a University of Arizona law professor specializing in commerce. The closure of China’s borders during the pandemic era further hurt U.S. exports, he said.

Trump’s nearly four-year trade dispute over the China-U.S. Trade imbalance has imposed tariffs on $ 550 billion in goods, including $ 350 billion from China. The dispute also led to a cooling of the broader two-way relations that would run throughout Trump’s tenure.

“The environment between these two countries is toxic,” said Malkawi. “The trade war and mistrust have raged since 2018 and will not abate for the foreseeable future.”

And after

The U.S. trade representative’s office did not respond to a question for this report asking whether China has honored the agreement. Its website does not indicate what could happen in 2022.

FILE - In this file photo from September 29, 2021, U.S. Trade Representative Katherine Tai speaks at the start of the "Workforce management in.  Technical jobs" panel discussion at the inaugural US-EU Trade and Technology Council meeting in Pittsburgh.

FILE – In this file photo from September 29, 2021, U.S. Trade Representative Katherine Tai speaks at the start of the “Workforce Management in Tech Jobs” panel discussion at the inaugural meeting of the US-EU Business and Technology Council in Pittsburgh.

United States Trade Representative Katherine Tai said in a speech at the Center for Strategic & International Studies in October that the US government will discuss with China its “performance” and that under the agreement, China had “made” commitments that benefit certain US industries, including agriculture , which we must enforce “.

The US side “will work to uphold the terms of the first phase,” she added, referring to the terms of the agreement.

Tai said the United States has yet to review the deal.

China hopes the US government “will create favorable conditions for the two nations to expand trade cooperation,” Commerce Ministry spokesman Gao Feng said on Thursday. China daily news site.

Gao Feng, spokesperson for China's Ministry of Commerce, speaks at a late-night press conference on a China-Europe investment deal at the Ministry of Commerce in Beijing, December 30, 2020.

Gao Feng, spokesperson for China’s Ministry of Commerce, speaks at a late-night press conference on a China-Europe investment deal at the Ministry of Commerce in Beijing, December 30, 2020.

Gao said China had “made strenuous efforts to offset the negative impact of factors such as the COVID-19 pandemic, global economic recession and supply chain constraint” to bring the deal to fruition. , according to the website.

China is the United States’ largest merchandise trading partner, with $ 559.2 billion going both ways in 2020, according to the sales representative office.

The United States’ trade in goods and services with China totaled about $ 615.2 billion in 2020, with imports of $ 450.4 billion.

The expiration of the trade deal potentially gives China an opening to negotiate the purchase of the American goods it needs, said Song Seng Wun, an economist in the private banking unit of Malaysian bank CIMB. China traditionally buys American food products, civilian airplanes and aircraft parts. Its tech companies also depended on US supplies before the trade war.

“I guess it always comes down to what China wants to buy and what the United States wants to sell,” Song said. “China can be more selective in its purchases. Politics matters more at this point.”

Chinese officials could consider asking to buy the US goods China needs most, possibly swapping those in today’s deal, said Stuart Orr, director of the Melbourne Institute of Technology’s School of Business. in Australia.

“I think China is probably going to have to try to renegotiate, and the reason that will probably motivate it will be the volume of supplies of some of the things it really needs,” he said.

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