By Yuka Hayashi
WASHINGTON -- The U.S.-China trade pact signed a year ago is
being credited for improving business conditions for some American
companies, even if a cornerstone of the deal -- China's commitment
to greatly increase purchases of U.S. goods -- has fallen
short.
Under the deal brokered by the Trump administration, China
agreed to purchase about $159 billion in U.S. goods by the end of
2020. Through November, China's actual purchases were about $82
billion, or about 52% of the target goal, according to an analysis
by Chad Bown, a senior fellow at Peterson Institute for
International Economics.
Economists have attributed the shortfall in part to the impact
of the Covid-19 pandemic, which dented Chinese domestic demand for
foreign goods and lowered the prices of imported energy.
The trade pact signed Jan. 15, 2020, also called on China to
improve access to its markets to U.S. companies -- and on that
front, Beijing has made strides, especially with respect to
American financial companies.
In exchange, the Trump administration agreed to cut tariffs on
some imported Chinese products. Still, import duties remain on
about $370 billion in Chinese goods annually, affecting most
imports.
"I do think that the Chinese have lived up to all their
commitments on the structural side. They have not been able to on
the quantitative side, " said Craig Allen, president of U.S.-China
Business Council, which represents large U.S. companies doing
business in China. "Overall the U.S. has lost a lot of jobs in the
process."
Mr. Allen's group and Oxford Economics jointly released a report
Thursday that estimated that the U.S. tariffs on Chinese imports --
and Beijing's retaliatory duties -- have together caused the loss
of as many as 245,000 American jobs, partly because costs rose for
U.S. companies that depend on imported parts and other products
from China.
Asked about Beijing's implementation of the agreement, Li
Wenkui, a spokesman for China's customs bureau, cited data showing
increases in Chinese imports of U.S. products, particularly for
items such as soybeans and pork.
The deal signed a year ago was effectively a cease-fire
following a tense trade war and was characterized as a "Phase One"
agreement in recognition that it didn't fully accomplish President
Trump's goal of leveling the playing field for U.S. companies.
Along with stepped-up purchases of U.S. goods, the deal sought
to address structural impediments long criticized by U.S.
businesses by protecting intellectual property rights, improving
market access for U.S. financial services firms and refraining from
forcing foreign companies to transfer technology.
Many -- but not all -- U.S. businesses have criticized the
tariffs on Chinese imports left after the trade pact, saying they
add to their own costs and cause job losses and product price
hikes, hurting American workers and consumers.
"The economic burden of the tariffs is profound," said John
Murphy, senior vice president for international policy at the U.S.
Chamber of Commerce. "They have a damaging impact on U.S.
manufacturing and agriculture."
Even though China fell short on purchase targets, U.S. exports
of goods to China rose 13% from a year earlier during the first 11
months of the year, according to the U.S. Census Bureau.
Meanwhile, the decline in economic activity during the pandemic
pushed down imports of Chinese products by 5.8%, lowering the
overall bilateral trade balance by 12% to $283 billion for the
January-November period. But as U.S. imports began to rebound
strongly in recent months, the trade deficit has started to rise
again.
Despite Washington's efforts to curb the imbalances, China's
role in global trade only grew last year. Beijing said Thursday the
country's exports expanded 3.6% from a year earlier to a record
$2.6 trillion in 2020, fueled by robust shipments of medical
supplies and work-from-home computer equipment.
As imports fell slightly, China's trade surplus with the rest of
the world grew to $535.03 billion, the largest since 2015.
China is projected to be the only major economy to report growth
in 2020, drawing contrast to the U.S. and Europe, which are
struggling with the fallouts of the resurgence in Covid-19
cases.
U.S. Trade Representative Robert Lighthizer, a key driver of the
Trump administration's China trade policy, said the phase one deal
has already brought an "enormous amount of change" in China's
structural policies toward U.S. businesses, citing technology
transfer, intellectual-property rights and agriculture.
U.S. officials have cited, as an example, the elimination of
longstanding structural barriers for U.S. imports as having allowed
the exports of American beef to more than double from a year ago as
of August.
"The deal is a success. The direction is set," Mr. Lighthizer
said in an interview with The Wall Street Journal last week, adding
that the Biden administration should keep the agreement intact.
"Just use the tools, and keep the tariffs and the purchase
commitments, and make sure that China abides by it."
President-elect Joe Biden and his aides have said they would
remain tough on China but haven't discussed what to do with the
phase one agreement.
Under the purchase agreement of the phase one deal, China did a
better job of increasing imports of agricultural products than
manufacturing and energy products.
According to Mr. Bown of Peterson Institute, China met 67% of
the target amount for agricultural products through November but
only 52% for manufactured goods and 31% for energy products.
Defenders of the agreement have cited pandemic-induced drops in
energy prices as a reason for the underperformance in the sector.
Others question the validity of the numerical goals.
"People didn't expect those targets to be met even when it was
initially signed," said Simon Lester, associate director for trade
policy studies at Cato Institute. China's failure to meet the goals
is "just the illustration of problems of trying to have the
governments manage the amounts of trade flows," he said.
Bob Davis contributed to this article.
Write to Yuka Hayashi at yuka.hayashi@wsj.com
(END) Dow Jones Newswires
January 15, 2021 05:44 ET (10:44 GMT)
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