US-China trade truce at risk as virus hits global economy

Monitoring Desk

Beijing: A hard-won trade war truce between the US and China is at risk as the coronavirus pandemic rocks the global economy, making it tough for Beijing to fulfill its commitments.

The United States also faces huge disruptions from the deadly virus while a diplomatic spat between Beijing and Washington threatens to derail the phase-one deal that came after more than a year of escalating tensions between the world’s two biggest economies.

In the pact signed in January, China agreed to buy $200 billion more in US goods over two years than it did in 2017 — before the trade war erupted and triggered tariffs on billions of dollars of two-way trade.

But concerns are mounting that the conditions of the deal cannot be met as the world economy is threatened by governments taking drastic measures to contain the outbreak, including quarantines, travel bans and closures of public spaces.

“(The coronavirus) is likely to be a huge distraction for both governments,” said Steve Tsang, head of the China Institute at the School of Oriental and African Studies in London.

Global markets have plummeted, oil prices have slid, and the International Monetary Fund warned this week that 2020 growth will drop below last year’s 2.9 percent under “any scenario”.

“I would be surprised if they can now fulfill the terms of the phase one deal,” said Tsang.

Huge waves of business closures have not only disrupted China’s consumer spending and manufacturing but also the world’s supply chains.

Companies told AFP the past year has brought disarray first from the trade war, then the virus outbreak.

Qingzhou Ruiyuan Trading Company restarted importing soybeans from the United States this month, but sales were down at least 20 percent from last year, said the general manager surnamed Li. (AFP)