This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.nytimes.com/2020/05/08/business/us-china-trade-coronavirus.html

The article has changed 19 times. There is an RSS feed of changes available.

Version 0 Version 1
China and U.S. Signal Harmony on Trade, Despite Broader Tensions Trump Says He’s ‘Torn’ on China Deal as Advisers Signal Harmony on Trade
(about 7 hours later)
BEIJING — At a time when worsening relations between the United States and China are adding even more uncertainty to the global economic and political outlook, the two countries are trying to reassure the world that the truce in their nearly two-year trade war remains intact. WASHINGTON — President Trump criticized China for failing to hold up its end of the trade deal on Friday and said he was “very torn” about the fate of the agreement signed in January, even as his closest economic advisers released a statement reassuring the world that the truce was intact.
The two countries said on Friday — Thursday night, Washington time — that their top trade and financial officials had held talks via conference call, their first since the coronavirus pandemic ballooned in late January. Although President Trump had suggested this week that the White House would take a skeptical look at whether China was living up to its commitments under the truce, the two countries signaled that their agreement was on track. “Look, I’m having a very hard time with China,” Mr. Trump said in an interview on Fox & Friends, lamenting how recent economic disruptions tied to the coronavirus had overridden “a great trade deal.”
“Both sides agreed that good progress is being made on creating the governmental infrastructures necessary to make the agreement a success,” the Office of the United States Trade Representative said in a statement. “They also agreed that in spite of the current global health emergency, both countries fully expect to meet their obligations under the agreement in a timely manner.” When asked whether the deal might be falling apart, Mr. Trump was noncommittal.
On issues ranging from the disputed origins of the pandemic to Beijing’s policies toward Hong Kong, Taiwan and the South China Sea, relations between China and the United States have deteriorated to their worst point in years. They could fray even more in the coming months. “I have not decided yet, if you want to know the truth,” he said.
Mr. Trump’s campaign team and Republican lawmakers see taking a hard stance on China as a way to bolster their prospects ahead of the November elections. And Chinese negotiators face nationalists at home who favor a more antagonistic relationship. Mr. Trump’s comments came just hours after top trade and financial officials held talks via conference call, their first since the coronavirus pandemic ballooned in late January. In separate statements, the two countries signaled that their agreement was on track.
But the world has changed since Mr. Trump launched the trade war in the spring of 2018, disrupting the world’s largest and most important economic relationship. “Both sides agreed that good progress is being made on creating the governmental infrastructures necessary to make the agreement a success,” the Office of the United States Trade Representative said. “They also agreed that in spite of the current global health emergency, both countries fully expect to meet their obligations under the agreement in a timely manner.”
China is still struggling to recover from its efforts to stamp out the coronavirus, which included shutting vast parts of its industrial machine; its economy shrank for the first time in nearly half a century. The United States is still debating when to end its own lockdowns, which have contributed to the loss of millions of jobs. The future of the trade deal, which brought an end to tariff escalations and set the two countries toward a more cordial relationship, has been called into question in recent days by Mr. Trump, who has expressed anger over China’s response to the coronavirus and has suggested the United States could retaliate for its failure to contain the disease.
It is not clear whether domestic politics will lead to a breakdown of the deal, known as the Phase 1 trade agreement. Other such pacts have quickly fallen apart. But current and former trade officials on both sides of the Pacific have evinced little enthusiasm for a revival of the trade war and predict that the agreement will survive. Mr. Trump suggested that the White House would take a skeptical look at whether China was living up to its commitments under the truce.
“The Phase 1 agreement will set the rules of engagement even after the pandemic has receded,” said Jamieson Greer, who was chief of staff for Robert Lighthizer, the United States trade representative, until a month ago and is now a partner at King and Spalding, a Washington law firm. Those comments had rattled stock markets, and the joint statement released on Friday morning seemed aimed at reassuring businesses and investors that the world’s largest economies were not on the cusp of restarting the trade war.
Yet deep uncertainty surrounding the U.S.-China relationship remains. As the nations spar over the pandemic, misinformation campaigns, Beijing’s policies toward Hong Kong, Taiwan and the South China Sea and over trade, relations have reached a level of hostility not seen even in the depths of the trade war last year.
They could fray even more in the coming months. Mr. Trump and many of his advisers continue to see the trade agreement signed with China last year as a signature achievement. But they have been worried and angered by recent data showing that China is falling behind on its promises to buy $200 billion of additional American exports by 2021.
Chinese negotiators face nationalists at home who favor a more antagonistic relationship. And Mr. Trump’s campaign team and Republican lawmakers see taking a hard stance on China as a way to bolster their prospects ahead of the November elections.
Two-thirds of Americans now view China unfavorably, according to a poll from the Pew Research Center, a proportion that has climbed sharply in the last few years. Mr. Trump and former Vice President Joe Biden have painted each other as weak on China in recent campaign ads.
As he has throughout his presidency, Mr. Trump has continued to alternate between praise and criticism of China. But his optimism about his trade deal appears to have slowly evaporated in recent weeks.
In early April, Mr. Trump said he believed the Chinese leader, Xi Jinping, would “honor the deal” he made with the United States “because I know President Xi, who I like and respect,” Mr. Trump said.
The Phase 1 agreement keeps 25 percent tariffs in place on a wide range of imports from China that the Trump administration considers to have strategic or economic value, like cars or nuclear reactor components. It requires China to strengthen intellectual property protection and open its markets to foreign financial services companies.The Phase 1 agreement keeps 25 percent tariffs in place on a wide range of imports from China that the Trump administration considers to have strategic or economic value, like cars or nuclear reactor components. It requires China to strengthen intellectual property protection and open its markets to foreign financial services companies.
The agreement also calls for China to increase its imports from the United States by $200 billion this year and next year, compared to levels in 2017, before the trade war began. The agreement also calls for China to increase its imports from the United States by $200 billion this year and next year, compared with levels in 2017, before the trade war began.
The chapter on extra purchases, one of seven chapters in the agreement, mandates specific increases in four categories of China’s imports from the United States: food, manufactured goods, energy and services.The chapter on extra purchases, one of seven chapters in the agreement, mandates specific increases in four categories of China’s imports from the United States: food, manufactured goods, energy and services.
China has increased its imports of American food since the pact was signed. But its overall imports of other American goods have fallen short of the administration’s initial hopes, as the coronavirus pandemic has hurt Chinese consumer spending and investment. China’s total imports from the United States fell 5.6 percent in the first four months of this year compared to the same period last year, according to China’s trade data. China has increased its imports of American food since the pact was signed. But its overall imports of other American goods have fallen short of the administration’s initial hopes.
On Wednesday, Mr. Trump said during a White House briefing that he would review by the end of next week whether China was complying with the Phase 1 trade pact. The comments came amid charged rhetoric between the two countries over the coronavirus, with the Trump administration having increasingly blamed Beijing for downplaying the severity of the initial outbreak in the city of Wuhan. China’s total imports from the United States fell 5.6 percent in the first four months of this year compared with the same period last year, according to China’s trade data. According to an analysis by Panjiva, China’s imports in March of the goods it promised to buy in the trade deal were just 44 percent of their target level, and Chinese trade data suggested April might be worse.
But even during that briefing, Mr. Trump talked about trade with China only when asked specifically about it. He said twice that he did not want to talk about any new tariffs. Given the economic catastrophe caused by coronavirus, that is no surprise, analysts said.
Experts in China, meanwhile, said Beijing would live up to its commitments, despite a pandemic that negotiators could not have anticipated when the truce was reached in mid-January. China is still struggling to recover from its efforts to stamp out the coronavirus, which included shutting vast parts of its industrial machine; its economy shrank for the first time in nearly half a century. The United States is still debating when to end its own lockdowns, which have contributed to the loss of millions of jobs.
“There’s no chance whatsoever that the purchasing targets will be met,” said Scott Kennedy, a China expert at the Center for Strategic and International Studies.
Economists said plummeting consumer demand in China would likely translate to fewer purchases of American cars and Boeing aircraft, making it hard for China to meet the target for buying manufactured goods.
Shutdowns in American slaughterhouses could limit the amount of pork, beef and other American agricultural products available for purchase. And the price of oil and gas has collapsed, meaning China would have to buy many more barrels to meet a $50 billion target by the end of the next year.
Brad Setser, an economist at the Council on Foreign Relations, said the energy target from the trade deal “assumes a different world.”
Experts in China said Beijing would live up to its commitments, despite a pandemic that negotiators could not have anticipated when the truce was reached in mid-January.
“China sticks to the Phase 1 agreement,” said He Weiwen, a prominent Chinese trade expert and former Commerce Ministry official.“China sticks to the Phase 1 agreement,” said He Weiwen, a prominent Chinese trade expert and former Commerce Ministry official.
But Mr. He acknowledged that a nose-dive in world oil prices, together with falling Chinese energy usage as the country’s economy slows, would make it hard for China to meet the targets in the Phase 1 accord for energy imports from the United States.
“There is a phenomenal decrease in the demand,” Mr. He said.
On Wednesday, Mr. Trump said during a White House briefing that by the end of next week he would review whether China was complying with the Phase 1 trade pact. But when asked about putting tariffs on China, he responded, “I don’t want to talk about this.”
Current and former trade officials on both sides of the Pacific have evinced little enthusiasm for a revival of the trade war and predicted that the agreement would survive.
“The Phase 1 agreement will set the rules of engagement even after the pandemic has receded,” said Jamieson Greer, who was chief of staff for Robert Lighthizer, the United States trade representative, until a month ago and is now a partner at King and Spalding, a Washington law firm.
The pact signed in January contains a clause saying the two countries may resume talks if “a natural disaster or other unforeseeable event” prevents them from keeping the terms of the deal. But China has insisted it isn’t exercising that provision.
Against that backdrop, the statements released by both governments after the call — which included Mr. Lighthizer, Vice Premier Liu He and Treasury Secretary Steven T. Mnuchin — were noticeably upbeat.Against that backdrop, the statements released by both governments after the call — which included Mr. Lighthizer, Vice Premier Liu He and Treasury Secretary Steven T. Mnuchin — were noticeably upbeat.
“The two sides stated that they should strengthen macroeconomic and public health cooperation, strive to create a favorable atmosphere and conditions for the implementation of the first phase of the Sino-U.S. economic and trade agreement, and promote positive results,” China’s Ministry of Commerce said.“The two sides stated that they should strengthen macroeconomic and public health cooperation, strive to create a favorable atmosphere and conditions for the implementation of the first phase of the Sino-U.S. economic and trade agreement, and promote positive results,” China’s Ministry of Commerce said.
Doubts about the U.S.-China relationship have weighed on stock markets in recent days. Mr. Trump has long perceived the stock market as a barometer of his political success, and trade flaps with China have tended to depress share prices. Asian markets on Friday, already buoyed by a strong showing on Wall Street the day before, rose further after news of the talks emerged.
None of that guarantees the Phase 1 deal will last. The two sides reached truces at Group of 20 summits in Japan last summer and in Buenos Aires 17 months ago. Both fell apart, leading to further rounds of tariffs.
But neither of those truces was a comprehensive pact or met more than a few of the Trump administration’s goals, as the Phase 1 agreement appears to do.
A resumption of the trade war would be bitterly opposed by many businesses in the United States. They dislike paying tariffs and have lobbied hard for their removal. Business lobbyists contend that, like other taxes on businesses, the cost of the tariffs is eventually passed along to consumers.
Still, with the Chinese economy in the doldrums, China will be hard-pressed to increase its purchases of American goods, which could put pressure on Mr. Trump to act.
Mr. He, the former Commerce Ministry official, said that a nose-dive in world oil prices, together with falling Chinese energy usage as the country’s economy slows, would make it hard for China to meet the targets in the Phase 1 accord for energy imports from the United States. The accord specified that China would pay market prices for its imports, meaning it would now have to buy a lot more to meet targets at a time when it does not have much need for more fuel.
“There is a phenomenal decrease in the demand,” Mr. He said.