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Thursday, February 10, 2022
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Business|China fell far short of promises it made to purchase American goods.

https://www.nytimes.com/2022/02/08/business/china-us-trade.html
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Daily Business Briefing


CHINA FELL FAR SHORT OF PROMISES IT MADE TO PURCHASE AMERICAN GOODS.

New data show that China effectively bought none of the additional $200 billion
in goods it promised to as part of a 2020 trade deal.

By Ana Swanson

 * Feb. 8, 2022

阅读简体中文版閱讀繁體中文版

China fell far short of the commitments it made in a 2020 trade deal with the
United States, failing to purchase the promised volume of American airplanes,
soybeans, energy, services and other products before the end of last year, data
released Tuesday morning showed.

In a trade agreement signed with former President Donald J. Trump in January
2020, Chinese leaders committed to buying an additional $200 billion worth of
American goods and services over 2017 levels by the end of 2021, in addition to
other trade commitments. Those targets were viewed as ambitious at the time and
would have amounted to a record level of purchases by China.

In order to reach those targets, China would have needed to purchase at least
$227.9 billion of U.S. exports in 2020 and $274.5 billion in 2021, for a total
of $502.4 billion over the two years, said Chad Bown, a senior fellow at the
Peterson Institute for International Economics.

But China did not come close, Mr. Bown said in an analysis of the trade data
published Tuesday, buying only $288.8 billion, or 57 percent, of the American
exports it promised.



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That volume was actually below the 2017 levels that had served as a baseline for
the agreement, Mr. Bown said. In other words, China bought none of the
additional $200 billion of exports that it pledged to purchase, he said.

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“The data released today confirms that China has fallen well short of the
purchase commitments they made under the Phase One agreement,” Adam Hodge,
assistant United States Trade Representative for media and public affairs, said
in a statement. “We have engaged the PRC on its shortfalls for months, but have
not seen real signs towards making good on the purchase commitments and our
patience is wearing thin.”

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The Biden administration has been carrying out negotiations with Chinese
officials about the trade deal and said that it intends to hold China to its
commitments. But it has not yet clarified what action it will take in response.

The trade agreement did include an enforcement mechanism, in case one side
failed to follow through on meeting its commitments. In that scenario, the trade
deal calls for both governments to carry out talks; if those talks are
unsuccessful, tariffs can be imposed.

But many American companies have complained that tariffs on Chinese products are
already high. And in conversations with the Biden administration, Chinese
leaders have cited a clause in the trade deal that calls for consultations
between the governments “in the event that a natural disaster or other
unforeseeable event outside the control of the Parties delays a Party from
timely complying with its obligations.”



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Mr. Trump, who imposed stiff tariffs on Chinese goods in an attempt to force a
trade deal, had said the purchases would lower the U.S. trade deficit with
China. Mr. Trump viewed the gap between what America imports and what it exports
as evidence of economic weakness, and he promised that his trade deal would
generate an export boom, particularly in farm country, heading into the 2020
election.

But trade data released Tuesday morning show that those results never
materialized.

U.S. goods exports to China did grow substantially in 2021 from the previous
year, rising 21.4 percent to $151.1 billion in 2021, including a record volume
of agricultural goods. But American demand for imports from China also surged,
and the U.S. deficit with China widened 14.5 percent from the previous year to
reach $355.3 billion.

While purchases of products like soybeans, medical supplies and semiconductors
were strong, sales of autos and airplanes were weak, and service exports, like
tourism and education, were badly hurt by the pandemic, Mr. Bown’s tracking
shows.

China made more progress on other commitments in the trade deal, like removing
technical barriers to American agriculture, strengthening protections for
intellectual property and opening its financial sector.

And officials in both governments have pointed to the unusual circumstances of
the pandemic as a reason for the shortfall, including factory stoppages,
shipping disruptions and swings in consumer demand.

But “signing something that was problematic, if not unrealistic, from the start,
shows some degree of bad faith on both sides,” Mr. Bown said.

Scott Paul, the president of the Alliance for American Manufacturing, which
represents manufacturers and workers, said that commodity purchases were never
the solution to fixing a lopsided U.S.-China trade relationship, and that until
more fundamental issues in that relationship were addressed — like Chinese
subsidies, intellectual property theft and lax labor and environmental laws —
the massive trade gap would remain.



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“The results of the much-hyped Phase 1 trade deal with China are officially in —
and, my, are they disappointing,” he said.

Unlike Mr. Trump, Mr. Biden has made no concrete promises to lower the trade
deficit. But he has pledged to spur a revival in American manufacturing and
reduce the country’s dependence on China.

To accomplish this, the Biden administration has thrown its weight behind a
massive legislative package that would pour nearly $300 billion into research
and development and manufacturing, including major investments in the chips
sector, in addition to an infrastructure bill that has already been signed into
law.

Mr. Hodge added that the trade deal Mr. Trump signed in 2020 “did not address
the core problems” with China’s state-led economy, and that the United States
would continue its “efforts to shape the environment around China.”

That included “building resilience and competitiveness at home, diversifying
markets, limiting the impact of Beijing’s harmful practices, working with allies
and partners, and using the full range of tools we have to defend American
economic interests,” he said.






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