Exclusive: Review of US-China trade postponed as China warms up farm, energy purchases

WASHINGTON (Reuters) – The United States and China have delayed an assessment of their Phase 1 trade sales, which originally began on Saturday, sources familiar with the plans told Reuters, citing schedule conflicts and the need to allow time for more Chinese purchases of U.S. exports.

PHILO PHOTO: U.S. Trade Representative Robert Lighthizer points to markers on the floor as he leads Chinese Deputy Prime Minister Liu He and Treasury Secretary Steven Mnuchin to their position for a family photo at the Xijiao Conference Center in Shanghai, China, July 31, 2019. Ng Han Guan / Pool via REUTERS / File Photo

No new date for the initial six-month review of compliance between U.S. Trade Representative Robert Lighthizer, U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He has agreed, sources said.

Officials were expected to hold a video conference on Saturday, marking the 16th anniversary of the February 15th trade deal, as the coronavirus pandemic began to spread worldwide.

One source familiar with the talks said the delay was related to a conference of senior Communist Party leaders in the coastal city of Beidaihe on the northeast coast of China. The exhibit did not reflect a substantial problem with the trade deal, the source said, adding: “The new date has not yet been finalized.”

US President Donald Trump on Friday reiterated his view that the trade deal was “going very well”, but did not comment on the delayed meeting. The White House referred questions about the talks to the Lighthizer office, which did not respond to a Reuters question about plans for the review.

Another source familiar with the plans said U.S. officials wanted more time to increase China’s purchases of U.S. goods agreed in the deal, improving the political optics of the review.

China’s imports of U.S. farms and manufactured goods, energy and services are well behind the pace needed to meet a first-year target increase of $ 77 billion over 2017 purchases.

But as China’s economy recovered from a coronavirus lockon earlier this year, purchases have increased. On Friday, the U.S. Department of Agriculture reported sales of 126,000 tons of soybeans to China, marking the eighth consecutive weekend with large sales to Chinese buyers.

U.S. oil traders, shipwreckers and Chinese importers also told Reuters that Chinese oil companies in the state have reserved tankers to carry at least 20 million tons of U.S. crude for August and September, indicating a rise in energy purchases.

Trump administration officials have signaled satisfaction with the pace of purchases in recent weeks and have no plans to abandon the trade deal, which also includes some increased access for U.S. financial services companies in China, strengthening intellectual property protection and removal of some agricultural trade barriers ..

Delaying the meeting, even briefly, could allow China to complete more purchases, which would help persuade Lighthizer Trump to stick to the deal.

Signs of Chinese compliance could also help dumb critics of Democratic presidential candidate Joe Biden, who last week said the agreement that Trump called a historic win “fails.”

“I think Trump is a little bit scared that this triumph will be hung around his neck, but more purchases and a little bit of delay would clearly help,” said Mary Lovely, a senior fellow at the Peterson Institute for International Economics.

“But he owns it, so they’ll have to put in the best face,” she said of the Phase 1 deal.

The trade deal emerged as a single source of stability amid significant tensions in the US-China relationship over the coronavirus pandemic, human rights crackdowns and US sanctions on Chinese companies and phone apps.

Report by Andrea Shalal and David Lawder; Additional Reporting by Steve Holland; Edited by Dan Grebler and Daniel Wallis

Our standards:The Thomson Reuters Trust Principles.