The monetary agreement contains Commitments from China to abandon competitive currency devaluations and not to steer its exchange rate towards a trade advantage – a language that China has accepted for years as part of its commitments to the Group of 20 major economies. Under the agreement, China has committed to purchase as much as $63.9 billion of U.S. covered goods by the end of 2020 compared to those basic plans for 2017. The definition of the baseline for 2017 based on Chinese import statistics implies a purchase target of $173.1 billion for 2020 (in red in panel a). The definition of the baseline for 2017 based on U.S. export statistics implies a target of $159.0 billion by 2020 (blue in panel a). Nevertheless, the Phase 1 agreement did not resolve Washington`s fundamental differences with Beijing, which depends on massive state intervention in the economy to turn China into a technological powerhouse. Given that the Phase One agreement brought a ceasefire to the growing tensions between the United States and China, what would lead to its downfall? Although the narrow trade agreement reached earlier this year is only a small part of a much broader relationship between the world`s two largest economies, hopes for its implementation have contributed to some of what has become an open strategic confrontation. This PIIE map, originally released on May 18, 2020, tracks China`s monthly purchases of U.S. goods under the U.S.-China Phase 1 Agreement. The United States and China have reached a historic and binding agreement on a first-phase trade agreement, which requires structural reforms and other changes to China`s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, currency and currencies. The Phase One agreement also provides for China to make significant additional purchases of goods and services in the United States in the coming years.
It is important that the agreement creates a robust dispute resolution system that ensures timely and effective implementation and implementation. The United States has agreed to substantially amend its customs measures in accordance with Section 301. “We need to make sure that this is properly implemented,” Lighthizer said. “This is the first agreement of its kind, and we need to make sure it works.” Although the agreement also sets targets for purchases of certain services negotiated by China from the United States, these data are not reported monthly and are not processed here. The agreement also contains targets for 2021, which are not presented here. The United States and China must resume negotiations on important policies that are not affected by the first phase agreement. Trump`s trade war has failed to address what really concerns U.S.-China trade relations. It is time for a new approach. “Politically, he will continue to whip China. But at the same time, it has a fragile economic recovery and fears a negative market reaction to a resumption of trade war, so it probably feels limited,” said Simon Lester, a business expert at the Cato Institute.