The U.S. and China have announced an initial trade deal that will see China buy $200 billion of U.S. goods and services in a span of two-year period in four industries. Apparently, the deal incorporates—$75 billion in U.S. manufactured goods; $50 billion in energy; $35 billion to $40 billion in services; and $40 billion in agriculture. The Phase 1 trade deal is expected to cut back some tariffs and fuel Chinese purchase of U.S. goods and services. Ever since the trade conflict kicked-off, U.S. exports of crude oil and related products have dipped significantly, emphasized Steve Cochrane, Chief Asia-Pacific economist of Moody’s Analytics. According to the U.S. Energy Information Agency, exports averaged ~7.2 million barrels per month in the span of four months, from July through October. In the fact sheet put forth by the USTR on December 13, 2019, energy products have found a special mention in the section on “Expanding Trade,†stressed Cochrane, adding that the inclusion of energy products in the details of the phase 1 trade deal is highly likely. Meanwhile, many economists and experts have raised eyebrows if China could ramp up its agriculture purchase by two-fold compared to $20 billion purchase in 2016. Beijing may have to outright cancel or renegotiate long-term energy contracts with other suppliers. Shanghai-based analyst at agriculture data provider JCI China Rosa Wang is striving to put all doubts to rest. She appeared to be sanguine of China meeting the targets given majority of the purchase would hover around soybeans, along with purchases of pork, nuts & fruits, ethanol byproducts, sorghum and corn. China is the world’s largest energy consumer, while the U.S. is the world’s largest crude oil and natural gas producer, thereby signifying the seemingly landmark phase 1 trade agreement. Source credit: https://www.politico.com/news/2020/01/13/china-energy-manufactured-goods-trade-deal-098343
