US expects China to honor trade commitments despite virus crisis

February 21, 2020 09:32
Washington expects Beijing to stick to its pledges to buy more US goods under a trade deal despite the virus crisis. Photo: Reuters

The United States expects China to honor its commitments to buy more US goods under a trade deal signed by the two sides in January, despite the coronavirus outbreak, Reuters reports, citing a senior unidentified US official.

The official said it is too soon to make accurate forecasts for the impact of the virus on the global economy, but the base case scenario sees China’s growth dropping in the first quarter and then rebounding sharply.

The impact could be more significant if the outbreak worsens, said the official.

The International Monetary Fund said this week the epidemic has disrupted economic growth in China and could derail a “highly fragile” projected recovery in the global economy in 2020 if it spreads to other countries.

Asked if the outbreak would require changes to the Phase 1 trade deal with China, the US official was quoted as saying: “At this stage, we’re not expecting changes to implementation of Phase 1. ... We still expect them to meet their commitment, but it’s over a period of time.”

Under the deal, which took effect this month, China pledged to increase US goods purchases by US$77 billion in 2020 and by US$123 billion by 2021, compared with a baseline of US imports from 2017, the year before the US-China tariff war began.

US Treasury Secretary Steven Mnuchin will discuss the economic impact of the epidemic with senior finance officials and central bankers from the world’s 20 largest economies (G20) in the Saudi capital, Riyadh, on Saturday and Sunday.

China said on Wednesday that it is not sending senior central bank and finance ministry officials to the meeting because of the virus outbreak.

Lower-level officials would represent Beijing.

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