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Monday, October 25, 2021

China US Trade Update

Trade negotiators from the United States and China will hold a phone call as early as next week, citing people familiar with the matter.

The call will include Chinese Vice Premier Liu He and U.S. Trade Representative Robert Lighthizer.

The talks will be about progress in implementing a phase-one deal after U.S. President Donald Trump threatened its termination if China was not adhering to the terms, the report added.

China’s April trade with U.S. and Key Economies

China’s exports unexpectedly rose in April for the first time this year as factories raced to make up for lost sales due to the coronavirus shock, but a double-digit fall in imports signals more trouble ahead as the global economy sinks into recession.

Overseas shipments in April rose 3.5% from a year earlier, customs data showed on Thursday. That compared with a 15.7% drop forecast in a Reuters poll and a 6.6% plunge in March. Imports sank 14.2% from a year earlier, the biggest contraction since January 2016.

Following is a breakdown of China’s exports and imports with its biggest trade partners in April.

AprilExports ($bln)Imports ($bln)Balance ($bln)Exports +/- % y/yImports +/- % y/yExports +/- % m/mImports +/- % m/m
South Korea10.113.5-3.48.4%-14.5%5.3%-6.8%
European Union*32.218.713.528.7%-9.1%

*China’s customs agency no longer includes United Kingdom as part of the European Union in publishing the country’s trade data, rendering year-on-year calculations inaccurate.

U.S. President Donald Trump said he would be able to report in about a week or two whether China is fulfilling its obligations under a Phase 1 trade deal the two countries signed in January before the coronavirus spread globally.

Trump, whose administration is weighing punitive actions against Beijing over its early handling of the virus outbreak as economic damage mounts, said he was “watching closely” whether China would meet its commitments to increase U.S. goods purchases under the trade deal.

He said China was buying a lot of American farm products, but questioned whether the purchases were at the levels needed to meet the deal’s commitments on U.S. agricultural and manufactured goods, energy and services.

“I’ll be able to report in about a week or two as to – not only with the farmers, but with many other industries also,” Trump said.

“They understand they have a deal and hopefully they’re going to get with the deal and we’ll see. They may. They may not. We’re going to find out,” Trump added.

Under the trade deal, China agreed to increase its purchases of U.S. goods from a 2017 baseline by $200 billion over two years, with about $77 billion in increased purchases in the first year and $123 billion in the second year. But the health crisis dealt a sharp blow to Chinese demand and its economy is only starting to recover.

Trump’s promise to check on Chinese purchases of U.S. goods comes as both sides lock horns over the origins of the new coronavirus, which has infected over a million people in the United States. Secretary of State Mike Pompeo says the pathogen emerged from a laboratory in China.

“The rapport that seemed to have developed between the two countries during their trade talks is now just a distant memory,” the state-controlled China Daily wrote in an editorial on Thursday.

“Despite the positive outcome of those discussions and the constructive interaction that the negotiations incubated, it is Washington’s dirty politics of always blame China that has discouraged the world’s two largest economies from standing shoulder to shoulder to fight the contagion, even though it is a common enemy.”

Washington has pledged to launch negotiations with Beijing on a Phase 2 trade deal tackling government subsidies and thornier technology transfer issues, but there has been no effort to start these talks since the coronavirus has locked down large parts of the U.S. economy.

U.S. officials have said they are weighing actions against China, including possible tariffs and moves to shift supply chains away from China.

Asked about these at a White House briefing, Trump said, “We’re in the midst of some very big things, so I just don’t want to talk about that now.”

But comments by White House press secretary Kayleigh McEnany on Wednesday highlighted a deepening rift between Washington and Beijing.

Paul Ebeling
Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he is the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.   

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