The Atlanta Journal-Constitution
Sources: China offers a path to eliminate U.S. trade imbalance
China has offered to go on a six-year buying spree to ramp up imports from the U.S., in a move that would reconfigure the relationship between the world’s two largest economies, according to officials familiar with the negotiations.
What it means
By increasing imports from the U.S. by a combined value of more than $1 trillion over that period, China would seek to reduce its trade surplus — which last year stood at $323 billion — to zero by 2024, one of the people said. The officials asked not to be named as the discussions aren’t public.
The offer, made during talks in Beijing earlier this month, was met with skepticism by U.S. negotiators who nonetheless asked the Chinese to do even better, demanding the imbalance be cleared in the next two years, the people said. Economists who’ve studied the trade relationship argue it would be hard to eliminate the gap, which they say is sustained in large part by U.S. demand for Chinese products.
Why it matters
It’s not the first time China has made an offer to reduce the deficit as a way of trying to break the deadlock between the sides that has darkened the global economic outlook and roiled financial markets since last year. In May, President Donald Trump scrapped a framework for a deal negotiated by Treasury Secretary Steven Mnuchin that would have seen China “significantly” increase purchases of U.S. goods.
By agreeing to buy more goods from the U.S., China may just shift its trade surplus toward other trading partners, said Tom Orlik, the chief economist for Bloomberg Economics.
“If China switches its imports from other countries to the U.S. — less Brazilian soybeans, more U.S. soybeans — that might help deal with their bilateral problem with the U.S., but at the expense of worsening imbalances with other countries,” he said.
Additionally, the types of products China offers to buy more of could matter more than the overall target for a dollar amount, Orlik said.
Airplanes, soybeans and automobiles were among China’s top U.S. imports last year.
What’s next
No decisions were finalized in the latest Beijing talks and discussions are set to continue at the end of January, when Chinese Vice Premier Liu He is scheduled to travel to Washington.