The Strategist

China ponders termination of trade deal with US

05/12/2020 - 03:01

Trade advisers recommend that senior Chinese officials terminate the “first phase” of the US deal because of an ongoing anti-Chinese campaign demanding that China be held accountable for the Covid-19 pandemic. via flickr via flickr
Beijing regards the agreement, concluded on January 15, as a concession made in order to achieve a ceasefire in the 22-month tariff war. However, the US administration and several other Western countries accusing the PRC of the pandemic provoked "tsunami of anger" among Chinese officials, who are now calling for retaliatory measures, Global Times sources say.

In particular, it is proposed to invalidate the deal and agree on a new one - on Chinese terms. This can be done with reference to force majeure, a former official of the PRC explains.

“Actually, it would be in China’s interests to abandon the current phase of the deal. The USA cannot afford to start a trade war with China again and return to the point from which it started,” one of the PRC government advisers on trade issues noted.

Under an agreement signed by Donald Trump and Deputy Prime Minister Liu He, China agreed to buy US agricultural product worth $ 12.5 billion in this year and $ 19.5 billion – the next year. Oil products, meat, cotton and cereals should be included in the shopping list.

Purchases of energy products, including oil, LNG, petroleum products and coal, will total $ 18.5 billion this year and $ 33.9 billion next year. In addition, China agreed to acquire US equipment for nuclear power plants.

In total, over two years, China has committed to invest $ 200 billion more in the purchase of American goods than in 2017.

In response, the United States did not cancel duties already imposed against China, which affect nearly $360 billion of Chinese exports, and only refused to further increase tariffs. The reduction in duties was expected to take place as part of the “second phase” of the transaction, which will include intellectual property and technology transfer issues.

On May 2, Trump announced that the United States was considering introducing additional duties on Chinese goods in response to China's attempts to hide the scale of the coronavirus epidemic.

According to The Washington Post, the US government discussed depriving China of “sovereign immunity” in US courts, opening up the opportunity for Covid-19 victims to file a class action lawsuit, as well as writing off $ 1.2 trillion of US debt to China.