WASHINGTON (NYTIMES) – China has fallen far short of its promise to buy hundreds of billions of dollars in American products as part of an initial trade deal it reached with the United States in January last year, according to data released on Thursday (Jan 21), creating another Trump-era challenge for the Biden administration to confront.
A key part of the deal, which resulted in a tariff ceasefire between both countries, included a commitment from China that it would buy an additional US$200 billion (S$265 billion) worth of American goods and services in 2020 and 2021.
But an analysis of Chinese import data conducted by the Peterson Institute for International Economics found that, nearly a year after the agreement went into effect, China had bought just 58 per cent of the goods that it had committed to purchase.
The shortfall poses a challenge for President Joe Biden as he seeks to reorient the US’ relationship with China. The new administration faces a big question of whether to keep the tariffs that former president Donald Trump imposed on US$360 billion worth of Chinese goods in an attempt to force Beijing to commit to certain economic changes.
Mr Biden must decide whether to maintain those tariffs – which have raised prices for American companies – or find new ways to curb China’s practices of subsidising its exports and stealing intellectual property.
At her confirmation hearing this week, Dr Janet Yellen, Mr Biden’s nominee to be the treasury secretary, sounded a tough tone towards China and said the administration would look to address any economic misbehaviour by China.
Dr Yellen suggested that the US would engage its allies to help in that effort, which would be a marked departure from the Trump administration’s aggressive and unilateral approach.
In written responses to the Senate Finance Committee, which were reviewed by The New York Times on Thursday, Dr Yellen said Mr Biden would not make any immediate moves with regard to the tariffs but suggested that the US needed to take a different approach from the one that the Trump administration had pursued.
“President Biden has said that he is not going to make any immediate moves on the current China tariffs,” she wrote. “As part of his review, he is going to consult with allies to galvanise collective pressure.”
Mr Trump sold the trade deal as a boon for American farmers and manufacturers, saying the Chinese government would buy agricultural and energy products, along with other goods and services.
But China bought only 64 per cent of the agricultural products that it had committed to purchase, 60 per cent of the manufactured products and 39 per cent of energy products, according to the Peterson Institute’s analysis.
Trump administration officials have blamed the pandemic and the slowing global economy for China’s failure to buy as many goods as expected. Before they left office, Mr Trump and his top economic officials said they expected Beijing to eventually make good on its promises.
The administration never used the enforcement provisions that were part of the deal, despite extensive negotiations about how such a mechanism would work. It is now up to the Biden administration to decide whether to initiate those penalties.
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