China pledged on Friday to uphold its commitments under the phase one trade deal with the U.S., including purchasing of American goods like soybeans and pork, as tensions between the world’s two largest economies flare up once again.
“We will work with the United States to implement the phase one China-U.S. economic and trade agreement,” Premier Li Keqiang told an annual gathering of Chinese lawmakers in Beijing on Friday. “China will continue to boost economic and trade cooperation with other countries to deliver mutual benefits.”
The long-awaited phase one deal was signed back in January, following months of prolonged negotiations which took a toll on market sentiment for much of 2019.
The centerpiece of the agreement was China’s pledge to buy $200 billion of U.S. goods and services, but experts initially questioned whether those targets were realistic—and now they look even less so amid the economic fallout from coronavirus.
Trump’s hardline stance on China, which he has amplified in recent weeks, has many worried about a derailment of the phase one trade deal—something he has repeatedly threatened to do.
The phase one agreement has come under threat as the U.S. and China escalate disputes over a range of issues, including blame for the coronavirus pandemic, financial oversight of Chinese companies and new national security laws for Hong Kong.
Just this week, the Senate unanimously passed a new bill that would delist Chinese companies from the Nasdaq, NYSE and other exchanges for failing to follow U.S. securities laws; President Trump also reiterated his accusations that China is the main culprit behind coronavirus.
A spokesperson for the National People’s Congress, Zhang Yesui, said on Thursday that a “stable and growing relationship between China and the United States is in the best interest of the Chinese and American people.” While China’s top priority is to “work together to fight Covid-19” and ensure global economic stability, it will be forced to react if the U.S. maintains a cold war mentality, Zhang said.
For the first time since it began publishing GDP figures in 1990, China dropped its annual growth target completely, amid “great uncertainty.” The omission of a GDP target is the latest sign that the coronavirus pandemic has wreaked havoc on the world’s second biggest economy.
What to watch for
Trump’s administration has threatened to void the deal if China doesn’t uphold purchasing commitments. “If they don’t buy, we’ll terminate the deal. Very simple,” the president recently said on Fox News.
There is growing frustration with China among U.S. lawmakers. Both President Trump and Secretary of State Mike Pompeo have recently pushed a controversial theory that the coronavirus originated in a lab in Wuhan, China, though there is no evidence supporting this claim. Just last week, Republican Senators introduced the “COVID-19 Accountability Act,” which would authorize Trump to impose sanctions on China if it does not cooperate with an investigation into the origins of the pandemic. Earlier this week, Trump criticized China about its handling of the outbreak on Wednesday, blaming the country’s “incompetence” for “this mass Worldwide killing.” That same day, the Senate also passed the Holding Foreign Companies Accountable Act, which would ban or delist Chinese companies from U.S. stock exchanges if they don’t certify that “they are not owned or controlled by a foreign government.”
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