With China’s coronavirus threatening to put the brakes on China’s recovering economy, Chinese officials are hoping the U.S. will agree to some flexibility on its pledges in the recently signed phase-1 trade deal, said sources familiar with the situation at hand.
The U.S.-China Phase-1 trade deal, which was signed on January 15, is scheduled to take effect in mid-February. The agreement has a clause that states Washington and Beijing will consult “in the event that a natural disaster or other unforeseeable event” delays either from complying with the agreement.
While it is unclear whether China has formally requested such a consultation,, sources familiar with the matter say, China is likely to do so at some point.
A spokesman for U.S. Trade Representative Robert Lighthizer said, the United States has not received a request from China to discuss Beijing’s purchase commitments.
China’s Commerce Ministry did not respond to requests for comments.
China has committed to buying an extra $76.7 billion of American goods beyond what it did in 2017 in the Phase-1 trade agreement; it has also committed to buying $123.3 billion of American goods in the second year.
Futures prices for soybeans, one of the key commodities China has agreed to purchase, are already starting to show weakening demand from China. Soybeans traded in Chicago were little changed after nine straight days of declines, the longest losing streak since July 2014.
The coronavirus is also having an impact on China’s GDP with Chinese officials evaluating whether they should taper down their target for economic growth this year.
Last week, White House economic adviser Larry Kudlow stated, so far the coronavirus has not had any major impact on the U.S. economy.
“This is principally a public health problem and the pandemic of course is in China, not the U.S.,” said Kudlow in an interview on Fox Business Network. “Insofar as the economy, we see no material impact.”
When asked whether the coronavirus will provide the U.S. with more leverage in the second phase of the U.S.-China trade negotiations, Kudlow said the outbreak is “completely separate from trade, jobs and all the rest.”
He went on add, “This is an issue of helping them if we can, offering our assistance, engaging with them, this is a humanitarian effort on our part — nothing to do with economic rivalries”.