Coronavirus creates new cracks in US-China relations, as crucial phase one deadline looms

The clock is ticking on the February 14 deadline by which the phase one trade deal must be implemented in full

Some trade watchers say coronavirus outbreak gives Beijing leeway to implement terms, with much of China’s trade infrastructure at a standstill

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The coronavirus outbreak in the central Chinese city of Wuhan has put strain on the US-China relationship. Photo: AFP

Published: 8:00pm, 5 Feb 2020Updated: 12:50pm, 6 Feb 2020

Less than a month after the phase one trade deal was signed, the fragile US-China truce appears to be fraying at the seams.

At the root of the discontent is the rampant spread of the novel coronavirus through China and beyond, the response to which has led to a series of barbs flying from Beijing to Washington and back.

The Ministry of Foreign Affairs in Beijing claimed the United States “inappropriately overreacted” and “spread fear” by restricting travel from China and pulling consular staff from Wuhan, the epicentre of the virus.

Senior Trump administration figures, meanwhile, have intimated that the economic damage inflicted on China could be to America’s benefit.

On Tuesday, White House economic adviser Larry Kudlow said that “you may get a step up in production here in the US, which would be very beneficial”, following a similar statement last week by Commerce Secretary Wilbur Ross, which also drew the ire of China’s foreign ministry.

Kudlow did, however, acknowledge what many have suspected for weeks. “The export boom from that trade deal will take longer because of the Chinese virus, that is true,” he said.

The exchanges have helped add to the sense that the optimism has been sucked out of the relationship, despite US President Donald Trump’s remarks during his State of the Union address on Thursday that he was “coordinating with the Chinese government and working closely together on the coronavirus outbreak in China”.

The outbreak is set to crush consumer demand and industrial output in China, with more than 60 million people officially in lockdown and provinces responsible for 80 per cent of the country’s exports closed down until next Monday at the earliest.