EnU.S trade policy regarding China is largely set by the administration of President Joe Biden, though there is evidence that the Senate is looking to force his hand with a new set of legislation. Senators Rob Wyden (D-Ore.) and Chuck Schumer (D-NY) have proposed the Combating Oppressive and Manipulative Policies that Endanger Trade and Economic Security (COMPETES) Act that “strikes right at the heart of China’s anti-competitive and morally abhorrent labor, environmental and digital practices“.
The legislation, if passed by the Senate as part of the wider Endless Frontiers Act, may force the Biden administration to take action on relations with China linked to the phase 1 trade deal. Thus far the administration has left the deal in place as it builds a coalition with other nations, including with Europe which is taking a more hawkish stance as discussed in Panjiva’s research of May 24.
A review of the phase 1 trade deal between the U.S. and China was due on its one-year anniversary in February but has yet to take place, though a preliminary meeting between U.S. Trade Representative Katherine Tai and China’s Vice Premier Liu He has at least now occurred.
In the meantime China remains well behind its commitments on purchasing. Panjiva’s analysis of official data shows U.S. exports to China of products covered by the phase 1 trade deal reached $7.98 billion in April, a full $6.81 billion below the run rate implied for 2021 by the deal.
The main shortfall was in energy products with shipments worth just $793 million versus a target of $3.46 billion while shipments of industrial and agricultural products reached 82.7% and 87.5% of target respectively.
Source: Panjiva
The phase 1 deal allows for adaptations subject to “market conditions” though the recovery in the oil price over the past 12 months makes that a less justifiable claim for energy exports. Additionally, China may choose to redirect its energy purchases further towards Iran in the event that a renewed nuclear weapons deal is signed.
Panjiva’s data shows that U.S. exports of crude oil to China reached just $215 million in April after averaging $543 million per month in the prior three months. Exports of liquefied natural gas and refined products meanwhile increased by 47.9% and 14.4% sequentially in April versus Q1 on average but couldn’t offset the shortfall in oil exports.
Source: Panjiva
