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US Says China Fails to Meet ‘Phase 1’ Trade Commitments

China pledged to increase purchases of US farm and manufactured goods, energy and services but had met only about 60% of that goal


The flags of the United States and China fly from a lamppost in Boston
China's embassy in Washington said Beijing has worked to implement the Phase 1 agreement "despite the impact of Covid-19, global recession and supply chain disruptions". Photo: Reuters

 

China has failed to meet its commitments under a two-year “Phase 1” trade deal that expired at the end of 2021, and discussions are continuing with Beijing on the matter, deputy US trade representative Sarah Bianchi said on Tuesday.

“You know, it is really clear that the Chinese haven’t met their commitment in Phase 1. 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 $200 billion above 2017 levels during 2020 and 2021.

Through November, China had met only about 60% of that goal, according to trade data compiled by Peterson Institute for International Economics senior fellow Chad Bown. The shortfall had been expected.

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.

 

Farm Goods Shortfall

Agriculture secretary Tom Vilsack in late January told lawmakers that China’s purchases of US farm goods fell short of the Phase 1 goal by about $13 billion.

The US census bureau is expected to release final 2021 trade data for goods and services on February 8, which will provide specifics on the shortfall.

Chinese customs data showed the country’s 2021 trade surplus with the US surged 25% to $396.6 billion after declining for two straight years, with exports to the US up 27% and imports of goods rising 33%.

Beijing has worked to implement the Phase 1 agreement “despite the impact of Covid-19, global recession and supply chain disruptions”, according to a spokesperson for China’s embassy.

“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 spokesperson said.

 

  • Reuters, with additional editing by George Russell

 

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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.