U.S. and China negotiators will talk Saturday about the “phase one” industrial agreement signed earlier this year, before the coronavirus hits the global economy and relations between the two economic powers deteriorate.
The January agreement between Washington and Beijing represented a partial truce in its months-long industrial war and required Beijing to import another $200 billion of U.S. products over two years, from automobiles and machinery to oil and agricultural products.
But purchases of these products have been delayed, while U.S. President Donald Trump has stepped up his opposing rhetoric to China earlier than expected to be a difficult fight for a moment in the November election, which has also raised doubts about the fate of the deal. as an option of a momentary phase of the truce.
“The final results of the industry discussion will imply whether either party is willing to continue with the agreement, which will sign if the dates get even worse,” said Iris Pang, a leading economist for Greater China of monetary facilities giant ING.
Neither the United States nor the Chinese government has shown the talks to AFP, however, the agreement contemplates meetings every six months after its entry into force, which would be Saturday.
Even with maximum tensions and any of the countries teetering over COVID-19, which has caused a historic contraction in global expansion and industry, analysts expect negotiations to produce primary adjustments to the agreement. And if anything happened, Washington would be the catalyst.
“So far, China has been passive and the United States has been proactive,” said Raymond Yeung, a leading economist for Greater China at ANZ Bank. “In my opinion, there shouldn’t be many replacements coming from China in terms of trade, cooperation or market opening, the key is still on the US side.”
The signing committee of the agreement in Washington has been overshadowed in months, as Washington and Beijing exchanged beards about who is to blame for the coronavirus, which first appeared in China.
China’s crackdown on Hong Kong, to which Washington responded with sanctions, and the Trump administration’s order to ban Chinese Internet giants TikTok and WeChat from operating in the United States are getting worse.
U.S. trade representative Robert Lighthizer said in June that China would fulfill its commitments while Washington reached an agreement, but the same month, an adviser to China’s State Council said the COVID-19 pandemic had had an “impact” on the agreement and relations between countries were “very unsatisfactory.”
The U.S.-based Peterson Institute for International Economics said Chinese agricultural purchases at the end of June were nowhere near what was at this level of the year.
They had achieved 39% of their 20-year target, according to US figures, or 48%, according to Chinese figures.
Beijing “is falling behind, but it turns out that China still needs to participate, despite escalating tensions between the US and China,” said Tommy Xie, China’s head of studies at OCBC Bank.
Bert Hofman, director of the East Asia Institute in Singapore, said Chinese agricultural purchases may be later in the year, but they will struggle to meet energy product targets given low global prices.
However, he said the drafting of the agreement would allow either party to replace the targets in reaction to a crisis such as a coronavirus pandemic, which would be “a smart outcome” but could be ignored for political reasons.
“It will be politically difficult to replace the agreement in the run-up to an election in which President Trump has made moderation of China a key component of his re-election campaign,” Hofman said. “Instead of modifying the agreement, I would probably prefer to cancel it some time before the US election.”
[AFP]
Vanguard News Nigeria.
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