China has failed to meet its commitments under a two-year phase-one trade deal that expired at the end of 2021, and discussions are continuing with Beijing on the matter, deputy US Trade Representative (USTR) Sarah Bianchi said on Tuesday. “You know, it is really clear that the Chinese haven’t met their commitment in phase one. That’s something we’re trying to address,” Bianchi told a virtual forum hosted by the Washington International Trade Association. In the deal signed by former president Donald Trump in January 2020, China pledged to increase purchases of US farm and manufactured goods, energy and services by US$200 billion above 2017 levels during 2020 and 2021. Through November, China had met only about 60 per cent of that goal, according to trade data compiled by Peterson Institute for International Economics senior fellow Chad Bown. US-China phase-one trade deal gets a reality check after nearly two years The deal prevented the escalation of a nearly three-year trade war between the world’s two largest economies, but left in place tariffs on hundreds of billions of dollars of imports on both sides of the Pacific. Agriculture Secretary Tom Vilsack in late January told lawmakers that China’s purchases of US farm goods fell short of the phase one goal by around US$13 billion. The US Census bureau is expected to release final 2021 trade data for goods and services next week, which will provide specifics on the shortfall. Chinese customs data showed the country’s 2021 trade surplus with the United States surged by 25 per cent to US$396.6 billion after declining for two straight years, with exports to the US up by 27 per cent and imports of American goods rising by 33 per cent. It’s not our goal to escalate here. But certainly we’re looking at all the tools we have in our toolbox to make sure they’re held accountable Sarah Bianchi China’s embassy in Washington said Beijing has worked to implement the phase one agreement “despite the impact of Covid-19, global recession and supply chain disruptions”. “We hope the US can create a sound atmosphere and conditions for expanded trade with China. The two trade teams are in normal communication,” the embassy said in an emailed statement. Bianchi, whose portfolio includes China and Asian trade matters, did not identify steps the Biden administration is taking to hold China to its phase one commitments, which also include some increased Chinese market access for US agriculture, biotechnology and financial services. “It’s not our goal to escalate here. But certainly we’re looking at all the tools we have in our toolbox to make sure they’re held accountable,” Bianchi said, without providing details. NEW: With only 2 months of purchase commitments left to go under President Trump's Phase One agreement, China remains on pace to come up nearly 40% short of US goods it promised to buy over 2020-21. (US export & Chinese import data for Oct 2021 released) https://t.co/L2Be1ozw68 — Chad P. Bown (@ChadBown) November 24, 2021 Bianchi, who served as an economic adviser in the Obama administration and took office in October, said the US was trying to foster a “stable relationship” with China, but the two countries are at a “difficult stage in the relationship”. “To be super-candid, the conversations are not easy. They’re very difficult. But you know, from my perspective, what’s important is that we’re having conversations and they will be unflinchingly honest,” Bianchi said. She said the USTR was emphasising that China’s state aid to companies and non-market economic policies and practices are a “serious threat to American economic interests.” Bianchi said USTR was consulting closely with the US Congress on the Biden administration’s planned Indo-Pacific Economic Framework to re-engage economically with the rest of Asia, and more details would be released in coming weeks. The framework will not include improved market access for countries that sign up, Bianchi said, but said the US will be seeking high-standard “binding commitments” from trading partners in negotiations on digital trade policies, labour rules, environmental standards and supply chain resilience.