China to buy more U.S. energy, manufactured goods in trade deal
The trade deal to be signed this week will include pledges by China to buy $200 billion of U.S. goods over a two-year period in four industries, a Trump administration official and two people briefed on the matter said.
The target for manufactured goods purchases will be the largest, worth around $75 billion. China will also promise to buy $50 billion worth of energy, $40 billion in agriculture and $35 billion to $40 billion in services, the three people said.
Analysts have speculated for weeks about what kinds of purchases China could make in these sectors.
“Energy products are specifically mentioned in the section on ‘Expanding Trade’ in the fact sheet produced by the USTR on Dec. 13, 2019,” said Moody’s Analytics chief Asia-Pacific economist Steve Cochrane. “So it seems like a good possibility to be included in the details of the phase one agreement to be signed on Wednesday.”
U.S. exports of crude oil and related products have fallen considerably since the trade war started, he added. During the four months from July to October 2019, the latest data available from the U.S. Energy Information Agency, exports averaged about 7.2 million barrels per month, or about half the volume during the same period of 2017.
Questions remain about whether China can double its agricultural purchases from about $20 billion in 2016, before the trade war began, to $40 billion, as the Trump administration is touting.
But Rosa Wang, Shanghai-based analyst at agricultural data provider JCI China, said that she was “quite confident” that China could meet the targets. She suggested that the majority of the spend would be on soybeans, followed by smaller purchases of nuts and fruits, pork, poultry, corn, sorghum and ethanol byproducts.
