The world is watching to see how the results of the 2020 presidential election will redefine global trade.
The latest projections from Iowa State University have China on pace to import $31 billion dollars of U.S. agricultural goods this year, short of the $36.6 billion dollar commitment.
Speaking to the Hong Kong Chamber of Commerce, Stephen Olson, a research fellow at the Hinrich foundation, says that the U.S. has incentive to maintain the Phase One agreement going into the new year.
According to Olson, “Given the fact that China is behind in its purchase commitments under the Phase One agreement, he’s [Joe Biden] got even less of a substantive reason to ease off on the tariffs. Now having said that, I do not think he would terminate the Phase One agreement that would unnecessarily antagonize Beijing with little immediate payoff.”
China purchased 745.6 thousand metric tons of soybeans last week, but the coming months could see larger shipments, as soybeans are mostly shipped during the fall and winter, and as China continues to recover from the pandemic.
Olson states, “China will very likely be in a position to continue to ramp up their purchases of U.S. goods which of course provides even more reason to stick with the Phase One agreement.”
He says that a Biden administration would have similar trade goals as the Trump administration, including expanding access for agricultural products.
“I think the key thing to keep in mind here is that Biden has largely the same trade agenda... as Trump did,” he states. “Industrial subsidies, state-owned enterprises, technology transfers, national security concerns over technology companies, etc.”
China’s state-run media said that the country would be interested in reviving trade talks between the two countries, for a potential Phase Two agreement.
“Although a lot of these trade issues have been on somewhat of a side-burner since the COVID-19 pandemic really started to take hold, these underlying frictions have not disappeared. They’ll inevitably resurface so at some point Chinese and U.S. negotiators will once again have to sit down across the negotiating table from each other,” he adds.
Olson also notes that a coalition of countries, including the European Union, Japan, and Australia, are acting as a steering committee for global trade in the absence of American leadership at the World Trade Organization.
Here is what economist say that China could buy next year:
$11 billion dollars of soybeans
About $3 billion dollars of pork
- About $2 billion dollars each for cotton and corn
China has not met this year’s Phase One commitment, but ag leaders are encouraged China is still taking steps to buy American goods. China has said that it wants to negotiate a new Phase One, under a new administration.