Trade war: China’s trading partners wary of phase one deal, while analysts puzzle over US$200 billion import figure

Giant increase in China’s imports from the US would come at the expense of other trading partners, which are concerned at the prospect of phase one trade deal

Analysts say US$200 billion purchase agreement is mathematically possible, but wonder about long-term impact on trade and supply chains

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China has agreed to increase imports of US agricultural products over two years. Photo: EPA-EFE

Published: 5:30am, 20 Dec 2019Updated: 2:00pm, 17 Apr 2020

Economists continue to puzzle over the details of the US-China phase one deal announced last Friday, particularly Washington’s demand that Beijing imports an extra US$200 billion of American goods and services over two years.

The deal would effectively double China’s imports from the United States, which were around US$188 billion in 2017, the last year before tariffs decimated shipments, according to a fact-sheet released by the Office of the United States Trade Representative.

China’s total imports of goods in 2017 were US$1.84 trillion, meaning that it is mathematically possible to meet Washington's demands, especially as this does not include services. If Beijing reverts to 2017’s levels and adds US$200 billion, it would buy US$576 billion over two years.

However, this would result in trade diversion, substituting the imports of other nations and thereby upsetting other trading partners and potentially inviting challenges at the World Trade Organisation.

Any number is possible if you try really hard, the problem is how many other countries do you want to make unhappy?

Alicia Garcia Herrero

“Any number is possible if you try really hard, the problem is how many other countries do you want to make unhappy?” said Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis.

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