Editor’s note: As of Friday June, 5 post-WLJ press time, reports are now saying China has moved forward with soybean and pork purchases. The paused measures may have circulated around Chinese media before reaching the U.S.
Although the Phase One deal with China was finalized months ago, things are starting to look uncertain in terms of whether the agreement will hold.
Chinese government officials have told major state-run agricultural companies to pause purchases of some American ag products, as reported by Bloomberg. Soybeans, pork, corn and cotton have been placed on hold, with the threat of more to come.
The measures to halt American imports came following the U.S.’s criticism of China’s plan to impose stricter national security legislation on Hong Kong. President Donald Trump threatened May 29 to retaliate against China if Hong Kong’s autonomy was taken away.
Trump has threatened to call off the deal several times since its signage, but his economic advisers have suggested it will continue. Larry Kudlow, director of the National Economic Council, told news outlet CNBC the deal “does continue to go on for the moment and we may be making progress there.”
The Phase One deal has been called into question over the last few weeks for a handful of reasons—mostly related to foreign diplomacy over issues such as coronavirus, Hong Kong, and China’s possible inability to follow through on the deal’s purchase requirements.
China agreed to buy about $36.5 billion worth of U.S. ag products in 2020, but has only managed to import $3.35 billion worth of products in the first three months of the year. The country slowly began to increase its imports once the economy was opened after the coronavirus outbreak, but increasing tensions with the U.S. have led to disruptions in trade.
An anonymous source familiar with China’s plan told Reuters that China will have to cancel the deal if the country continues to be targeted by the U.S. “There’s no way Beijing can buy goods from the U.S. when receiving constant attacks from Trump,” the individual said.
Private companies were not told to halt their purchases, but commercial buyers are being cautious anyway, the source said. — WLJ
