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The US-China Business Council says that the business slowdown in China due to the coronavirus will not stop Beijing fulfilling its purchasing agreements under the phase one deal. Photo: Xinhua
EconomyGlobal Economy

Trade war: coronavirus unlikely to halt purchase agreements in phase one deal, US business lobby says

  • US-China Business Council confident that Beijing will meet terms of phase one deal, despite an economic slowdown caused by the coronavirus outbreak
  • Survey showed that 78 per cent of members viewed the trade deal as positive or somewhat positive, but only 22 per cent would use dispute mechanism
US-China trade war
Reuters
Reuters
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The head of an American business lobbying group said on Thursday he was confident that China will still meet its phase one trade deal commitments to massively increase purchases of US goods and services despite the coronavirus crisis.

Craig Allen, president of the US-China Business Council (USCBC), said that the business slowdown in China could affect the timing of purchases, but both governments were committed to meeting the targets. The group represents US companies doing business in and with China.

While China’s commitment to increase purchases of US manufactured goods, farm products, energy and services by $200 billion by the end of 2021 was “aggressive,” he said US industry was ready to meet the challenge.

“The coronavirus doesn’t change any of that, though it might affect the timeline,” Allen told a news conference in Washington.

The Chinese province at the Centre of the virus outbreak reported a much larger number of infections and deaths under a broader definition on Thursday, knocking back global stocks and raising new questions about the extent of the outbreak.

Under the trade deal, which officially takes effect on Saturday, China has pledged to increase US goods purchases by $77 billion in 2020 and by $123 billion by 2021, compared to a baseline of US imports from 2017, the year before the US-China tariff war began.

A Chinese government researcher on Tuesday forecast that the coronavirus outbreak could cut China’s 2020 economic growth by a full percentage point, pressuring the cash flow of companies that would be buying US goods.

The USCBC announced on Thursday that around 60 of its member companies were donating medical supplies, including two million face masks, and other goods to hospitals in Wuhan. The effort, included companies such as insurer Chubb, retailer Walmart Inc and FedEx Corp, which donated delivery services.

In a survey of member companies released on Thursday, the USCBC said that 78 per cent of respondents viewed the phase one trade deal as positive or somewhat positive, while 12 per cent viewed the deal as negative. Those viewing the trade deal positively overwhelmingly said so because it stopped further tariff escalation and puts the US-China relationship on a more sustainable trajectory.

But 51 per cent of the companies said it was too early to tell whether the benefits of US President Donald Trump’s trade actions against China would outweigh their costs. And only 22 per cent said they expected to utilise the trade deal’s dispute mechanism.

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