China’s purchases of US goods will fall way short of ‘phase one’ trade deal due to the coronavirus - think tank

CNBC reports that according to a forecast by think tank Center for Strategic and International Studies the coronavirus pandemic will cause China's purchases of U.S. goods this year to fall way short of what was agreed to in the "phase one" trade deal.

The American think tank projected that exports of U.S. goods to China could come in at only $60 billion for all of 2020 - much lower than the $186.6 billion needed to meet requirements in the agreement that both countries signed in January.

That forecast was "admittedly" a "worst-case scenario" because Chinese purchases of U.S. goods could rise later in the year as the economy recovers, but any increases still "will not change the overall picture, just the details," Scott Kennedy, senior advisor and trustee chair in Chinese business and economics at CSIS, wrote in report.

"The targets were never realistic; they were just gaudy numbers meant to impress. The pandemic made the unrealistic the impossible," he said.

The coronavirus was first detected in China late last year, and Beijing responded by taking measures that many considered draconian - such as locking down cities, suspending public transport and shutting businesses - to contain the outbreak. Those measures led to a plunge in demand for goods and services in China, one of the world's largest consumer markets.

Consequently, U.S. goods exports to China fell by 10% year over year in the first quarter of 2020, noted Kennedy, citing data from the U.S. Commerce Department. Official U.S. data for services is not yet published, but "it is likely to show a huge falloff due to the collapse of Chinese travel and tourism and the early closing of U.S. universities," he added.