Coronavirus outbreak clouds China’s trade deal spending vow

The spread of the coronavirus is threatening to undermine the ‘phase one’ trade agreement between China and the US.

A mobile crane moves a container at a logistic station in Shenyang, in China’s Liaoning Province Picture: AP)

The spread of the coronavirus and related economic uncertainty is threatening to undermine the “phase one” trade agreement that the Trump administration signed with its Chinese counterparts less than two months ago.

President Donald Trump, who repeatedly has criticised the US trade deficit with China, made purchase commitments by China a core part of the deal, with Beijing expected to buy $US200bn ($305bn) in additional American exports over two years. An extra $US77bn is required in 2020 and $US123bn in 2021.

Yet, the virus’s spread has hurt Chinese economic demand and trade, and the ensuing drop in global energy prices and weakness in the transportation sector make it extremely unlikely China will be able to make good on the dollar commitments in the deal, economists and trade experts say.

On Monday, the Centre for Strategic and International Studies released a report saying that the purchase targets already were overly ambitious — and that the coronavirus had only worsened the situation.

“Not only are the numbers unrealistic, but they’re unreal,” said Scott Kennedy, China expert at the nonpartisan Washington think tank. “The likelihood of even just reaching last year’s exports is unlikely.”

Trump administration officials previously acknowledged that the coronavirus-related problems may delay expected purchases by China this year, but said Chinese President Xi Jinping had assured Mr Trump the country would meet its obligations.

Trade experts have pointed to a clause in the deal that allows for consultations “in the event that a natural disaster or other unforeseeable event outside the control” of the countries delays implementation.

The office of US Trade Representative Robert Lighthizer, which is responsible for implementing the agreement, said it “has had no conversations like this with our Chinese counterparts”.

“We expect that the Chinese will meet their commitments under the agreement,” a spokesman for Mr Lighthizer said. The Chinese embassy in Washington didn’t immediately respond to a request for comment.

“China realises very clearly there is a lot of scepticism on the US side on whether they will follow through and they are doing all they can to put that to rest,” said Clete Willems, a law partner at Akin Gump and former Trump administration trade ­official.

Mr Trump has been generally complimentary of China’s handling of the crisis, a characterisation that is at odds with some fellow Republicans, who have questioned whether China has been transparent.