US and China say trade talks on track despite coronavirus tensions

US and China say trade talks on track despite coronavirus tensions


Top US officials said their trade pact with China remained on track despite rising tensions, easing fears that the coronavirus pandemic had upended the two countries’ fragile economic truce.

Washington’s reassuring remarks come after Donald Trump has continually lashed out at Beijing’s handling of the virus. The US president has also threatened to “terminate” the trade deal because of scepticism over China’s willingness to honour its pledge to buy billions of dollars of American goods.

Robert Lighthizer, the US trade representative, and Steven Mnuchin, the Treasury secretary, held a conference call with Liu He, China’s vice-premier, on Thursday night to discuss the implementation of the “phase one” agreement.

“Both sides agreed that good progress is being made on creating the governmental infrastructures necessary to make the agreement a success. They also agreed that in spite of the current global health emergency, both countries fully expect to meet their obligations under the agreement in a timely manner,” USTR and the Treasury said in a joint statement.

Mr Trump has accused China of failing to prevent a pandemic that has left the US and global economies reeling and caused more than 75,000 deaths in America. He has also strengthened his rhetoric on trade with China in recent weeks.

“Now they [China] have to buy,” Mr Trump said on Fox News last weekend. “And if they don’t buy, we’ll terminate the deal, very simple.”

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Apart from threatening to abandon the trade pact, which marked a truce after nearly two years of tariff escalations between Washington and Beijing, US officials and lawmakers have also considered other economic measures. These have ranged from export controls to investment curbs and crackdowns on integrated supply chains.

But the drive to punish Beijing was tempered by concern over the negative impact of a new breakdown in the trade relationship at a time when the global economy was struggling with the pandemic.

China’s ministry of commerce said the two sides on Thursday agreed to strengthen co-operation over macroeconomic and public health matters, and to “strive to create a favourable atmosphere and conditions for the implementation of the first phase of the China-US economic and trade agreement”.

Some analysts doubted China would be able meet its commitments to buy US goods given a sharp drop in consumer demand spurred by the pandemic.

“China doesn’t have the ability to carry out the deal and the US knows it . . . if the US wants to be strict with the deal, then it will cause the deal to fall apart the hard way,” said Shi Yinhong, professor of international relations at Renmin University in Beijing. But President Trump “would be crazy to add more sanctions” on China with the US economy in freefall, Mr Shi said.

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Others argued China would stand by the trade deal in spite of the Covid-19 blame game.

“Liu He and Lighthizer’s attitudes have always been pragmatic, and will not be affected by issues between other departments,” said Huang Ping, director of the Institute of American Studies at the Chinese Academy for Social Sciences, a government-led think-tank.

But Mr Huang added that globalisation and trade with China could come under further attack in the US if the pandemic worsened. “Will sanctioning Huawei bring you more votes? Or will stopping people from dying bring you more votes?” he said.

Additional reporting by Nian Liu in Beijing



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