China remains to be falling in need of an settlement to chop its US commerce surplus
An American and a Chinese flag wave in front of a commercial building in Beijing, July 9, 2007.
Teh Eng Koon | AFP | Getty Images
BEIJING – China’s purchases of US goods are still lagging behind the level of trade deals, although Chinese imports from the US have overall increased
This emerges from an analysis by the US Peterson Institute for International Economics on Monday.
In January 2020, before the coronavirus pandemic and under former US President Donald Trump, China agreed to buy at least $ 200 billion more in US goods and services over the next two years compared to 2017 levels. The sales contract, known as the Phase 1 Trade Agreement, covered specific agricultural, energy and industrial products.
However, in June, both Chinese and US government data showed that China had bought less than 70% of its previous annual target, according to estimates by Chad P. Bown, Senior Fellow of the Peterson Institute.
According to Bown, the agricultural purchases were the closest they got to the agreements at 90% of the target.
The shortage arises because the trade between the two countries has increased according to Chinese customs data.
China’s imports from the United States rose to $ 87.94 billion in the first half of the year, 55.5% more than the same period in 2020 and nearly 49.3% more than the first half of 2019.
Meanwhile, China exported $ 252.86 billion worth of goods to the U.S. in the first half of 2021 – up 42.6% over the same period in 2020 and up 26.8% over the first half of 2019.
As a result, despite trade tensions escalating under the Trump administration, the US remains China’s largest single country trading partner.
Trade talks between the US and China stand still
In recent years, under the Trump administration, the U.S. has levied billions of dollars in tariffs on Chinese goods to resolve long-standing complaints about issues such as inadequate market access and intellectual property protection. Beijing responded with its own tariffs on US goods.
Since taking office in January, President Joe Biden has maintained Trump-era tariffs and sanctions against large Chinese tech companies like Huawei, while also announcing additional sanctions against Chinese companies.
But Biden has “not yet formulated a trade strategy or any other approach that would be really effective to counter China’s economic power,” said Michael Hirson, head of practice for China and Northeast Asia at Eurasia Group, on Monday in Squawk Box Asia CNBC.
During a high-level meeting between the two countries’ officials on Monday, Chinese Foreign Minister Wang Yi said the US should lift tariffs as part of three broader demands from China, the ministry said.
Senior US government officials did not mention the tariffs in a call to reporters about the Chinese officials’ meeting with US Secretary of State Wendy Sherman. Rather, US officials said Sherman had concerns about unfair trade and economic practices.
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The first phase trade deal called for a review of the deal, but that meeting has yet to take place in part due to the coronavirus pandemic and a change in the leadership of the White House.
In the first year of the phase one trade deal, in 2020, based on data from both countries, Chinese purchases were less than 60% of the target, the Peterson Institute said.
China’s trade surplus with the US, which Trump was trying to reduce, remained near historic highs in June at $ 32.58 billion, customs data showed.
At a press conference in mid-July, Commerce Department spokesman Gao Feng declined to confirm whether the Phase 1 deal will be implemented.
Instead, he said China has always encouraged both sides to “work together to create the atmosphere and conditions for the implementation of the deal,” according to a CNBC translation of his comments in Mandarin.
– CNBC’s Yen Nee Lee contributed to this report.