The United States and China signed the Phase I Trade Agreement on January 15, 2020. Washington agreed to reduce some added tariffs in exchange for Beijing, in the years of 2021 and 2022, agreeing to buy an additional total of $200 billion in goods and services from the U.S., over and above China’s purchases from the U.S. in 2017.
A year after the agreement, China didn’t reach its purchase target and the U.S. trade deficient from China increased again.
China agreed to buy around $159 billion in American goods. However, according to a report from the Peterson Institute for International Economics, by November 2020, China’s actual purchases were around $82 billion, or 52 percent of the target.
China fulfilled 67 percent of its purchase goal on agricultural products, 52 percent on manufacturing goods, and 31 percent on energy products.
On the other hand, China kept increasing its exports to the world. Beijing stated on January 7 that leading with the strong export of medical supplies, China’s trade surplus with the world has increased to $535 billion, the new high from 2015.
The U.S. also tried to remove structural blocks that American companies faced in China in the Phase I Trade Agreement, in the areas of protecting intellectual property, avoiding forced technology transfer, and easing restrictions on market entry to China.
Last June, China announced it would open its $45 trillion financial market to the world. It also granted American Express a license for clearing house transactions. In September, China issued a draft regulation on protecting business secrets. However, these actions have not materially changed the real situation in China.
Some analysts think that the positive side of the trade agreement is that the Trump administration changed people’s view of China in the economic field and made companies rethink their dependence on the supply chain from China.
Doug Barry, the spokesperson of the US-China Business Council told VOA, “I hope the new administration can support the successful completion of the Phase I agreement and reach an accord with China to start the work of Phase II, which will focus on resolving China’s subsidies to state-owned enterprises, opening more economic fields to foreign competitors, and other trade issues.”
Source: VOA, January 16, 2021