For all non-covered products, which accounted for 29 percent of total Chinese merchandise imports from the U.S. and 27 percent of total U.S. merchandise exports to China in 2017, the Phase One agreement does not include a legal target. In October 2020, China`s imports of all uncovered products from the United States amounted to $28.4 billion, 25 percent less than at the same time in 2017. U.S. exports of all uncovered goods to China stood at $22.0 billion in September, down 13% from the same period in 2017 (October data for uncovered products will be available on December 7, 2020. On February 14, 2020, the Economic and Trade Agreement between the United States of America and the People`s Republic of China: Phase One entered into force. China has agreed to increase the purchase of some U.S. goods and services by a total of $200 billion from 2017 levels from 2020 and 2021 levels.

This PIIE chart tracks China`s monthly purchases of U.S. products covered by the agreement, based on data from China Customs (Chinese imports) and the U.S. Census Bureau (U.S. exports). These purchases are then compared to the annual targets of the legal agreement, which are proportionate on a monthly basis on a seasonally adjusted basis beyond two basic scenarios (see methodology below). As stated in the legal agreement, one baseline scenario for 2017 allows the use of U.S. export statistics and the other allows the use of Chinese import statistics. Under the agreement, China has committed to purchase as much as $63.9 billion of covered goods from the United States by the end of 2020 compared to these 2017 baselines. The definition of the baseline for 2017 using Chinese import statistics implies a purchase target of $173.1 billion for 2020 (red in panel a). Defining the baseline for 2017 using U.S. export statistics implies a target of $159.0 billion for 2020 (in blue in panel a).

Related ReadingWhat Happened in the United States? Deficit with China during the trade conflict between the United States and China? (June 2021) Rethinking the Phase One trade deal with China in the midst of a pandemic (August 2020)Will import tariffs help reduce trade deficits? (As of August 2018) The agreement in the first phase covered a number of substantive issues in Chapters 1 to 5 that deserve more attention than the procurement targets in Chapter 6. These included improving IP protection and technology transfer; the elimination of non-tariff barriers and other unfair trading practices in agriculture and financial services; and more flexibility and transparency in China`s exchange rate system, all with the aim of levelling the playing field between China and its trading partners. The concerns expressed in these chapters are particularly important given the important and arguably growing role of the Chinese government in owning and controlling the country`s economy and financial system (e.g. B, as noted in the recent 14th Five-Year Plan). In this context, the US economy could reap important long-term benefits from the strict implementation of the commitments made under the first five chapters of the agreement. For covered agricultural products, China has committed to purchase additional purchases of $12.5 billion in 2020 over 2017 levels, implying an annual target of $36.6 billion (Chinese imports, group b) and $33.4 billion (U.S. exports, group c). In October 2020, China`s imports of covered agricultural products stood at $15.6 billion, compared to a target of $27.1 billion since the beginning of the year.

Over the same period, U.S. exports of covered agricultural products totalled $17.5 billion, compared to an annual target of $24.6 billion. In the first ten months of 2020, China`s purchases accounted for only 71% (US exports) and 57% (Chinese imports) of their annual targets. Despite the fact that U.S. agricultural exports have generally missed the target of a 60% increase over 2017, some specific products have seen record years. For example, the following products will set new nominal export levels to China in 2020: pork ($2.1 billion), poultry ($761 million), nuts ($705 million), hay ($445 million), beef ($304 million), groundnuts ($239 million) and pulses ($51 million). Meanwhile, exports of some other products, while not setting records, have certainly easily surpassed the 2017 level: corn was 693% above the 2017 level at $1.2 billion and wheat at $570 million was 62% above the 2017 level. Starting with our October 26, 2020 report, we have seasonally adjusted for monthly purchase commitment targets, to reflect the relative weight of these products that month in 2017 commercial data. It should be noted that the proportional increase in the annual targets for 2020 on a monthly basis is provided for information purposes only. Nothing in the text of the agreement suggests that China needs to achieve anything other than the annual targets. The first phase of the trade agreement, signed in January 2020, included specific targets for China`s purchases of agricultural, industrial goods, energy and services exports from the United States (these were set out in Chapter 6 and Annex 6.1 of the agreement).

These commitments were extremely ambitious: the agreement set numerical targets to increase U.S. exports of goods and services to China, compared to a baseline of $77 billion in 2020 and $123 billion in 2021. The target for 2021 was 82% above the baseline in 2017 and about twice as high as in 2019 shortly before the agreement was signed. The first phase set out a plan for China to buy $12.5 billion worth of agricultural products higher than what was purchased in 2017, which was chosen as the basis because it was the last “normal” year of trade between China and the United States before the two countries began negotiating retaliatory tariffs. In 2017, the United States exported $20.8 billion worth of products covered by the agreement to China. This would mean that China would have to import $33.4 billion worth of U.S. agricultural products in 2020 to fully comply with the terms of the agreement. This represents a 60% increase over 2017 exports. The agreement also stated that over the years 2020 and 2021, total U.S. agricultural exports to China would increase by $73 billion, equivalent to $80 billion in Chinese imports once shipping and freight were added. Hunter L. Clark, “An Update on the U.S.

– China Phase One Trade Deal,” Federal Reserve Bank of New York Liberty Street Economics, October 6, 2021, libertystreeteconomics.newyorkfed.org/2021/10/an-update-on-the-us-china-phase-one-trade-deal.html. A senior Trump administration official said the monetary deal is based on provisions of the U.S.-Mexico-Canada trade deal, which requires the three countries to disclose monthly data on international reserve balances and foreign exchange market interventions, as well as quarterly balance of payments data and other public reports to the International Monetary Fund. .