Based on the trade deal that kicked in during February 2020, China had an obligation for 2020 and 2021. According to the agreement, they have a shopping list that includes soybeans, oil and gas, airplanes, and financial services. At the end of November they had only reached 60% of the deal’s targeted amount.
Our most up-to-date numbers extend through November. Please just compare the dashes (targets) to the solid lines. Calculating the numbers through Chinese import numbers and also U.S. export data, China was substantially behind:
The question is what we do now.
A US-China Trade Deal Tracker
Please think four buckets. The 96 page phase one trade agreement included 1) agriculture, 2) manufactured goods, and 3) energy. The last bucket is financial services for which we don’t have the current data.
Using U.S. export numbers, we sent $57.4.2 billion while the November target was $69.3 billion. That takes us to 83 percent of what it should be:
Considerably larger than agriculture and energy, using U.S. export numbers, we sent manufactured goods valued at $117.8 billion while the target was $198.9 billion. That takes us to 59 percent of what it should be:
Again comparing actual and prorated, we have a gap of $38.7 billion energy-related items not yet bought by China. In other words, we are looking at a 62 percent gap:
Our Bottom Line: The Phase One Trade Agreement
Signed on January 15, 2020, the Phase One Economic and Trade Agreement went into effect on February 14, 2020. Essentially, it specified an extra $200 billion (above 2017 levels) that China would import from the U.S. The agricultural imports ranged from soybeans to cotton and seafood. For manufacturing, machinery and chemicals were a part of the deal. With energy, it was liquefied natural gas and crude oil. And, the services sections included finance, insurance, the cloud, and travel.
We could say that phase one was about the “low hanging fruit.” It covered where China would diminish non-tariff barriers like regulatory restrictions and cancelled certain U.S. tariffs. At the same time, the tough stuff was postponed for phases 2 and 3 when they were supposed to make the intellectual property transfer and patent protection decisions.
Where are we? China appears to have partially adhered to its side of the deal and we can ask if there will ever be a phase 2 and 3.
My sources and more: Periodically, I take a peek at the Peterson Institute’s US-China trade updates and also what the NY Fed’s Liberty Street blog says. Both are excellent for trade updates. Then, the best summary of the phase one deal was from EY.
Please note that today, as an update from a year ago, includes sections of our previous post.