Exclusive | Trade war: China to make huge purchases of US goods as details of phase one deal revealed
- Sources confirm that China has committed to making large scale purchases of US$200 billion of American goods as part of the phase one trade deal
- Purchase target for manufactured goods of around US$75 billion, with China also committing to buy huge amounts of energy, agriculture and services
This story is part of an ongoing series on US-China relations, jointly produced by the South China Morning Post and POLITICO, with reporting from Asia and the United States.
“In this context, Treasury has determined that China should no longer be designated as a currency manipulator at this time,” the US Treasury Department said.
Analysts have speculated for weeks about the purchases China could make in these sectors.
“Energy products are specifically mentioned in the section on ‘Expanding Trade’ in the fact sheet produced by the [Office of the United States Trade Representative] on December 13, 2019,” said Moody’s Analytics chief Asia-Pacific economist Steve Cochrane. “So it seems like a good possibility to be included in the details of the phase one agreement to be signed on Wednesday.”
US exports of crude oil and related products have fallen considerably since the trade war started, he added. During the four months of July-October 2019, the latest data available from the US Energy Information Agency, exports averaged about 7.2 million barrels per month, or about half the volume during the same period of 2017.
But Rosa Wang, Shanghai-based analyst at agricultural data provider JCI China, said that she was “quite confident” that China could meet the targets. She suggested that most of the expenditure would be on soybeans, followed by smaller purchases of nuts and fruits, pork, poultry, corn, sorghum and ethanol by-products.
The deal will bolster intellectual property protection, and also has chapters on forced technology transfer, currency, and market access to key sectors in the Chinese economy, including financial services and agriculture.
It will contain an enforcement provision, through which the US will be unilaterally be able to reimpose tariffs should China not hold to its commitments, including the purchase agreements.
White House trade adviser Peter Navarro said in an interview with US broadcaster NPR on Monday that the enforcement mechanism permits US trade representative Robert Lighthizer to reimpose tariffs within a 90-day period.
“And if he thinks that hasn't been addressed properly, we have [the right to impose a] proportionate response and the Chinese have promised not to retaliate,” said Navarro.
Finbarr Bermingham reports for the South China Morning Post from Hong Kong and Ben White and Doug Palmer report for Politico from New York and Washington, respectively.