China Will Struggle to Honor Trade Commitments
Here's a headline I don't believe: a senior U.S. official says Outbreak will not Change China's Commitments to Buy U.S. Goods.
The U.S. government expects China to honor its commitments to buy more U.S. goods under a trade deal signed by the world’s two largest economies in January despite the fast-spreading coronavirus outbreak, a senior U.S. official said on Thursday.
China’s commerce ministry on Friday said January and February exports and imports would be hit by the coronavirus outbreak, but foreign companies in most places would resume production by the end of February.
Under the deal, which took effect this month, China pledged to increase U.S. goods purchases by $77 billion in 2020 and by $123 billion by 2021, compared with a baseline of U.S. imports from 2017, the year before the U.S.-China tariff war began.
Experts had expressed skepticism that China would be able to meet such aggressive purchase commitments even before the coronavirus emerged, while reports of new cases in China and elsewhere have further intensified fears over its impact on the global economy.
But the Global Times newspaper, which often speaks for the Chinese government, reported on Thursday that China was likely to buy 10 million tons of U.S. liquefied natural gas despite a gas glut.
I am standing in line with the skeptics.
And color me skeptical on that production resumption as well.
What percentage of normal production will China have back up?
Mike "Mish" Shedlock