Back in January, President Trump reached an agreement with China regarding a trade deal, which comes nearly two years after a trade war broke out between the two largest economies in the world. The deal entailed the reduction of US tariffs on $120 billion in Chinese products from 15% to 7.5%. In return, China promised to buy approximately $200 billion in American goods over two years. On February 6th, China lowered their tariffs on US goods, such as cars, crude oil, and soybeans, in response to the US cuts on tariffs in January. While this is an important step in mending the economic relations between the two, Beijing has yet to uphold the crucial part of the deal of buying $200 billion of US goods. This can prove to be a hard task for them as many parts of the nation have faced lockdowns due to the outbreak of the coronavirus all throughout the country, causing flights to China to be cancelled and forcing factories to temporarily close. However, China may be more incentivized to buy more US agricultural products in light of the food shortages and rising grocery costs that can be caused by the outbreak.
Questions:
- What do you think will be the effects of the coronavirus’ outbreak on China’s ability to hold up their end of the trade deal?
- Although this move was widely predicted, do you believe that China’s tariff cuts can indicate meaningful movement in advancing US-China economic relations?
- Some have cited China’s history of finding excuses to reject American farm goods, stating that this trade deal will not change much. How much of an impact do you foresee this deal having?
I feel that if anything, the virus will promote expenditures on China's side of the trade deal. As you said, the contamination of agricultural products would in turn lead to spending on US agricult products. Although it is big news that China somewhat concedes their grudge match with the US on trade, I believe this wont make that much of an impact on strengthening that US- China relation substantially, that doesn't mean it wont open doors to more intervention. I don't understand why China would make excuses to reject buying US farm goods when a part of the deal is buying 200 bill in goods, especially since they may need these goods. Like I said previously, I believe this trade deal would work solely to create more opportunity to create relationships and compromises, but in the end, both country's own agendas don't necessarily concurr just from this one deal. But idk really
ReplyDeleteAs I'm sure most everyone else who comments on this blog post will do so from an American economic standpoint (global effects of 2019-nCoV, China not buying our goods, China lowering tariffs on our goods), I want to try writing from a more Chinese political standpoint. First of all, a large reason why China might be more incentivized to buy U.S. agricultural goods than in the past is the apparent struggle for their One Belt One Road initiative to succeed. Their foreign investments in other developing nations are starting to rack up significant debt, and with all the internal issues that have started to come up in recent months, with protests and the swine flu and now the coronavirus, they may be forced to reinvest in America to keep the nation alive, especially in agricultural products. From a Chinese political standpoint, reliance on America is very looked down upon, but as it stands I'm sure even President Xi would concede that China is nowhere near ready to take up America's role as global leader, especially considering, besides all the other setbacks already, that the chances that China's Yuan will be able to usurp the USD in economic dominance are growing increasingly improbable. Right now, though, it's still uncertain whether China will try to mend economic relations with the US in the long-term, or is just using the US as a temporary crutch as they recover from the blows they've taken in recent years.
ReplyDeleteSimilar to what Philip writes, I believe that due to the dire situation within China, they are likely to rely more on American farmed goods in order to keep their population safe from the shortages being face internally now. The past does not always indicate what may occur in the future, and the dire situation produced by the coronavirus will likely push China to reach out to the resources that the US can provide during the lockdown. Optimistically, I see the trade deal helping both nations in the future.
ReplyDeleteI think coronavirus is and will continue to have a massive impact on the Chinese economy for quite a while. The outbreak has made quite a big dent on restaurants (like Chinese hot pot chains Heidilao and Xiabuxiabu), transportation (like cruise ship companies), and trade. I can only hope that this will lead to a lowering in economic tensions that lasts, but given the history, I'm skeptical that the current cuts are anything but a temporary stopgap solution.
ReplyDeleteI think it will prove to be more difficult for China in general to maintain a stable economy with the outbreak of the coronavirus. Because of this fact, the Chinese might rely on imported U.S. goods more as their domestic resources become less readily available. Although the trade relations between the U.S. and China have not always been very good in the past, I think this could help strengthen their relationship. Hopefully this will lead to stronger trade between the two nations in the future.
ReplyDeleteI believe that the coronavirus will have a large impact on all parts of the Chinese economy. However, that does not necessarily mean that it will negatively affect the trade agreement with the US. I definitely agree with the previous comments that China will want to buy products from the US in order to prevent their own shortages since most of their factories have shut down. Hopefully, this mutual agreement between these two economic powerhouses will end the tension that has been prominent within the last few years.
ReplyDeleteI do not believe that the cuts of tariffs will make a meaningful impact on our economic relations. I certainly think it will help the American economy, but this does not mean that suddenly our relationship in trade will no longer be adversarial. With Trump in office, we will always be trying to "compete" with China economically, and this is still part of that process. This is a de-escalation of the trade war, but the tension still remains.
ReplyDeleteThe recent Coronavirus outbreak will definitely make Trump and others skeptical of China during trade, but hopefully shouldn't become a problem for trade.
ReplyDeleteThe recent outbreak of the coronavirus would not necessarily make it harder for China to hold up their end of the deal, as they can still provide goods. The problem comes in how other countries view the coronavirus. Some countries may take drastic action and refuse to trade with China until the coronavirus is contained, while others may settle for a rigorous screening of all goods that come from China. Though it is not China's fault that this virus exists, it will still hurt their economy as many countries will not want to trade with them. The tariff cuts is a step to more friendly relations with China, but there is still a long way to go before there is any significant movement to better relations.
ReplyDeleteChina will not have its end of the deal affected by much, but other countries may start to be extremely fearful in dealing with China I believe. Their economy will still be hurt but the relationship is not in any way improved by them having obtained the coronavirus.
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