WASHINGTON – China came nowhere close to meeting its purchasing targets set out in the 2020 trade deal with the United States, data released on Tuesday (Feb 8) showed.
The data gives the first complete snapshot of what China’s purchases of goods and services were over the full duration of the “phase one” trade agreement, which had a Dec 31, 2021, deadline for China to meet its goals.
The verdict underscores how problematic the agreement was from the start, and raises the question of what the Biden administration will do to hold China accountable for not meeting its obligations, which officials previously vowed to do.
Analysts also note that the deal was further undermined by the pandemic and the screeching halt that the US-China trade war’s tariffs had brought to some exports.
“Two years ago, President Donald Trump signed what he called a ‘historical trade deal’ with China… Today, the only undisputed ‘historical’ aspect of that agreement is its failure,” said US trade economist Chad Bown of the Peterson Institute for International Economics in an analysis on Tuesday of the trade data.
Under the agreement, inked in January 2020 after months of tit-for-tat tariffs, China committed to buying an additional US$200 billion (S$269 billion) worth of US goods and services, based on its 2017 levels of trade, by the end of 2021. In total, it should have purchased US$502.4 billion worth of American exports over 2020 and 2021.
But in the end, China bought only 57 per cent – about US$288.8 billion worth – of US exports it had committed to purchase. This did not even reach its import levels from before the trade war, noted Dr Bown, who tracks US-China trade data.
“Put differently, China bought none of the additional US$200 billion of exports Trump’s deal had promised,” he said.
He attributed this to two years of the trade war having “dug a really big hole for US exporters in 2019”, which they found difficult to climb out of.
American autos and aircraft took an especially big hit. Carmakers like BMW and Tesla, for instance, responded to China’s retaliatory tariffs by moving production meant for the Chinese market out of the US, and exports did not recover even after the Chinese tariffs were lifted.
On the other hand, exports of American semiconductors and Covid-19 medical supplies fared much better and exceeded their targets.
Services exports, which made up a third of US exports to China, were devastated by the pandemic, as tourism, business travel and education-related travel experienced sharp downturns.
Meanwhile, agriculture exports – which formed about a tenth of US exports to China – largely recovered from the trade war, aided by government subsidies. But they, too, did not reach the targets set out in the deal.