China appears to be quietly moving ahead with implementing the phase one trade deal with the United States despite the continuing deterioration in relations between the two countries. In a subtle move behind the scenes, Beijing has shifted the day-to-day authority over China’s purchases of US farm products, such as soybeans, to the Ministry of Agriculture and Rural Affairs from the Ministry of Commerce, according to sources and government documents. An official at the Ministry of Commerce, who declined to be identified, confirmed agricultural product purchases were now in the hands of the Ministry of Agriculture. The Ministry of Agriculture did not respond to a request for comment. The Commerce Ministry, which was the key ministry supporting the trade negotiations with the US headed by Vice-Premier Liu He, is not directly involved in the arrangements for purchase volume or shipments of US farm products, the official said. The adjustment suggests that authority to make the purchases of an additional US$32 billion in agricultural goods required by the trade deal is now seen as more of a bureaucratic task of combining domestic demand with market conditions rather than a political task. Beijing still sees the deal as an important way to display goodwill even as tensions between Beijing and Washington continue to escalate on other issues, including the national security law in Hong Kong and the origin of the coronavirus, analysts said. The change in authority over China’s purchase of US farm goods means that China’s state-owned grain importers could be subject to more intensive and technical directives from the Agriculture Ministry, which, given its remit, is more sensitive in responding to domestic demand and supply conditions, as well as prices from different suppliers, analysts added. A 2020 work plan published in March by the international cooperation department of the Ministry of Agriculture stated that the department will “implement the phase one trade deal with the US … by increasing imports and filling domestic supply gaps”. In particular, the ministry’s division on US and Canadian affairs will take the lead in the task and the trade division will provide assistance. Implementing the phase one trade deal is crucial to maintaining US-China relations – both sides should safeguard it Cui Fan “Implementing the phase one trade deal is crucial to maintaining US-China relations – both sides should safeguard it,” said Cui Fan, a professor at the University of International Business and Economics in Beijing. A media report on Monday suggested Beijing had ordered a suspension of state purchases of US soybeans, raising concerns that China would walk away from the phase one trade deal in response to US threats of retaliation linked to the Hong Kong national security law. Despite that report, Chinese buyers bought another 200,984 tonnes of American soybeans in the week that ended May 28 for delivery before September, and ordered 264,000 tonnes for the next marketing year starting in September, both higher than the figures for the previous week, according to data released by the US Department of Agriculture on Thursday. Fang Yan, a member of the Chinese Agricultural Outlook Committee, a market monitoring agency under the Ministry of Agriculture, said observers should not be too concerned about short-term issues with the US-China trade deal as China’s demand for US farm products remains strong. “After all, China imports roughly 30 million tonnes of US soybeans every year … you can’t easily make an adjustment to other sources,” said Fang. China imported a total of over 7.81 million tonnes of US soybeans in the first quarter of 2020, three times the amount during the same trade war-depressed period last year, according to data from China’s Commerce Ministry. But the figure was still just half of the 15.4 million tonnes bought in the first three months of 2017, indicating that China is lagging far behind the commitment in the phase one deal, which requires China to more than double its purchase of US farm goods over two years compared to 2017 levels. On Thursday, US Trade Representative Robert Lighthizer said “on the structural changes, China has done a pretty good job” as part of the phase one trade deal and that “we’ve seen significant purchases over the course of the last many weeks”. Two weeks ago, the Office of the US Trade Representative and US Department of Agriculture jointly announced that China was on the track to fulfil its agricultural purchase commitments. Even if China didn’t complete [the required purchases] in the first half of the year, if China finishes [such purchases] in the second half, that is still something good Huo Jianguo Huo Jianguo, the former head of a think tank under the Chinese Ministry of Commerce, said that China is now vigorously implementing the phase one trade deal, playing down the prospect that the US will abandon the deal, as US President Donald Trump has threatened recently. “We should focus on the general trend rather than staring at a certain point in time … even if China didn’t complete [the required purchases] in the first half of the year, if China finishes [such purchases] in the second half, that is still something good,” Huo said. The most important issue for the two countries now is to avoid a further escalation of diplomatic conflicts, which would hurt both economies as well as the global fight against the coronavirus, he said. “If the US hopes to implement the phase one trade deal, you shouldn't pressure China constantly in various fields, because the entire China-US relations are so complicated … if we want to move forward, we need to cooperate more with each other,” Huo added. What is the US-China trade war? How did it start and what is inside the phase one deal? Cui, from the University of International Business and Economics in Beijing, also expressed confidence in the implementation of the deal over the longer term, arguing recent actions showed that both Beijing and Washington were taking it seriously despite heated rhetoric on other issues. According to Cui, there will be no problem in implementing the first five chapters of the accord, including provisions covering intellectual property, technology transfer, agricultural product quarantines, financial services and monetary policies, while the section concerning increasing US imports has its own flexible mechanism and a time frame of two years, he said. He predicted China would significantly increase its purchases in the second half of the year when the current US soybean crop is harvested. “Indeed there are difficulties at present, we can’t ignore them, including the pandemic-related transport disruptions,” Cui added. “But the more difficult the situation is, the more both sides need mutual understanding and cooperation to push ahead with the implementation of the trade deal.” Additional reporting by Bloomberg