US and China Renew Commitment to Honor Phase One Trade Deal

Following the phone discussion between senior officials from the US and China on the phase one trade deal, the risk sentiment in global financial markets received a boost into Tuesday. The USTR confirmed that both sides remained committed to adhering with the terms of the partial trade agreement, helping dissipate some of the tensions that had been building up over the two world leaders in recent months.

The Chinese Commerce Ministry also stated that the officials had held a “constructive dialogue” and were going to progress with implementing the trade deal. Due to the coronavirus pandemic, China has so far been unable to increase its purchases of US-made goods this year by $77 billion, as per the deal.

However, just ahead of the originally scheduled six-month review of the phase one deal, China has confirmed that it would increase its imports of US farm goods as well as US crude. Until H1 2020, China has only managed to purchase around 5% of the target of $25.3 billion worth of energy products from the US, but state-owned oil companies are planning to buy at least 20 million barrels of crude from the US in August and September.

On Tuesday, White House chief economic adviser Larry Kudlow also confirmed that US officials are satisfied with China’s progress on meeting the terms of the trade deal after the review meeting. Kudlow also added that China’s commitment to purchase more farm products from the US will boost jobs in the country