China imports, exports down in September as growth cools

Clay Curtis
October 15, 2019

United States president Donald Trump tweeted the "phase one" deal could be finalised and signed soon, with China already buying agricultural products and the USA not increasing tariffs from 25% to 30% tomorrow.

President Donald Trump shakes hands with Chinese Vice Premier Liu He on October 11 after announcing a "phase one" trade agreement with China. Trust between the two sides suffered a big blow in May 2018, when Trump put a stop to a deal for China to buy more energy and agricultural goods to narrow the trade deficit.

Though President Trump had agreed not to proceed with a hike in tariffs set for Tuesday, U.S. Trade Representative Robert Lighthizer said Trump had not made a decision about tariffs that were subject to go into effect in December.

This is just phase one of the proposed deal that Trump says does include some provisions on intellectual property theft and forced technology transfer, though more provisions on those will likely come during phase two negotiations that will begin immediately following the formal signing of phase one.

Chinese officials would like to hold further talks with the USA before the preliminary agreement the Trump administration touted on Friday is finalized, according to Bloomberg.

"The U.S. must concede on its December tariff threat if they want sign a deal during APEC summit, otherwise it would be a humiliating treaty for China", said Huo Jianguo, a former Chinese commerce ministry official who is now vice chairman of the China Society For World Trade Organization Studies.

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But even with a breakthrough on bigger issues, scaling up farm imports to that level is a "big, big ask", said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney. "We have a fundamental agreement". Bloomberg said the deal is far smaller in scope than what President Trump had expected.

Li attributed the resilient trade growth to China's stable economic expansion, effective policy support and market diversification. USA crude lost 2.23% to $53.48 a barrel.

But Arthur Kroeber of Gavekal Economics points out that Chinese imports of USA crops peaked at $29 billion a year in 2013 and have since declined to $10 billion annually.

"The president is acting as if a lot of Chinese concessions have been nailed down, and they just haven't", said Derek Scissors, a China specialist at the conservative American Enterprise Institute. Exports to Vietnam jumped, "which I believe could be goods rerouting to Vietnam for some simple processing then to USA to avoid tariffs".

A few days later, China confirmed it had made no such phone calls to Trump.

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