China promises $80bn trading boost with US in tariff war truce

US Trade Representative Robert Lighthizer described the deal with China as ‘a huge step forward.’ (AFP)
Short Url
Updated 15 January 2020

China promises $80bn trading boost with US in tariff war truce

  • Farm products, aircraft, cars and energy to benefit from major spending surge under two-year agreement

LONDON: China has pledged to buy almost $80 billion of additional manufactured goods from the US over the next two years as part of a trade war truce, according to a source, likely giving a much-needed boost for planemaker Boeing.

Under the terms of the trade deal to be signed on Wednesday in Washington, China would also buy over $50 billion more in energy supplies, and boost purchases of US services by about $35 billion over the same two-year period, the source told Reuters on Monday.

The Phase 1 agreement calls for Chinese purchases of US agricultural goods to increase by some $32 billion over two years, or roughly $16 billion a year, said the source, who was briefed on the deal.

When combined with the
$24 billion US agricultural export baseline in 2017, the total gets close to the $40 billion annual goal touted by US President Donald Trump.

The numbers, expected to be announced on Wednesday at a White House signing ceremony between Trump and Chinese Vice Premier Liu He, represent a staggering increase over recent Chinese imports of US manufactured goods, raising some skepticism over how it would be achieved.

Two other sources familiar with the Phase 1 trade deal agreed with the rough breakdown of the purchases, without providing specific numbers.

A spokesman for the US Trade Representative’s office could not be reached for comment.

US Trade Representative Robert Lighthizer on Monday called the deal a “huge step forward” for US-China trade relations and “a really, really good deal for the US.” He said that Beijing’s compliance would be monitored closely. “We expect them to live up to the letter of the law,” he said.

When the Phase 1 trade deal was struck on Dec. 13, US officials said China had agreed to buy $200 billion in additional US farm products, manufactured goods, energy and services over the next two years, compared to the baseline of 2017.

They said they would publish targets for the four broad areas, but would keep details of specific products classified to avoid market distortions.

The $32 billion agriculture increase over 2017 was confirmed by Myron Brilliant, the US Chamber of Commerce’s head of international affairs, who spoke to reporters on Monday in Beijing.

While seeing room for China to boost purchases of wheat, soybeans, sorghum, dried sistillers grains and some corn, analysts and traders doubted whether it could absorb such a big increase. Relying on the US so heavily could expose China to price and supply risks, they said.

Trump had mainly touted the increased farm exports, which would benefit a major political constituency that has been battered by Chinese retaliatory tariffs during his 18-month trade war with Beijing.

Company executives have been waiting eagerly for details of what other US goods China would be buying more of, aside from farm products, after 18 months of tit-for-tat tariffs that have stalled US business investment.

The $80 billion increase for manufactured goods includes significant purchases of autos, auto parts, aircraft, agricultural machinery, medical devices and semiconductors, said one of the sources, without giving the names of any specific suppliers.

The aircraft would likely be built by Boeing, the No. 1 US exporter, whose sales to China have ground to a halt over the past two years. 


Iran rial slides to new low as coronavirus, sanctions weigh

Updated 04 July 2020

Iran rial slides to new low as coronavirus, sanctions weigh

  • The dollar was offered for as much as 215,500 rials, softening from 208,200 on Friday
  • The rial lost about 70% of its value in the months after May 2018 as Iranians snapped up dollars

DUBAI: The Iranian rial fell to a new low against the US dollar on the unofficial market on Saturday, as the economy comes under pressure from the coronavirus pandemic and US sanctions.
The dollar was offered for as much as 215,500 rials, softening from 208,200 on Friday, according to foreign exchange site Bonbast.com. The economic daily Donya-e-Eqtesad’s website gave the dollar rate as 215,250, compared with 207,500 on Friday.
In May 2018, President Donald Trump withdrew the United States from a multilateral deal aimed at curbing Iran’s nuclear program and reimposed sanctions that have since battered the economy.
A drop in oil prices and a slump in the global economy have deepened the economic crisis in the country, which also has the highest death toll in the Middle East from the pandemic.
The rial’s decline has continued despite assurances from Iranian Central Bank Governor Abdolnaser Hemmati last week that the bank had injected hundreds of millions of dollars to stabilize the currency market.
The rial lost about 70% of its value in the months after May 2018 as Iranians snapped up dollars, fearing Washington’s withdrawal from the nuclear deal and sanctions could shrink vital oil exports and severely impact the economy.
The official exchange rate is 42,000 rials per dollar and is used mostly for imports of state-subsidised food and medicine.