Trade deal won’t help trim deficit

China agrees to open market to US beef, natural gas

Anew China-US trade deal will help sate the growing Chinese appetite for beef and allow more liquefied natural gas imports to fuel the country’s expanding economy, but it steers clear of bigger issues that would have more substantial impact on the US trade deficit.

The agreement announced yesterday Beijing time appears a step toward easing discord between the world’s two largest economies. Tensions have been stoked by President Donald Trump’s aggressive rhetoric against Chinese exports and barriers to US goods and investment.

It also suggests still wider room for compromise. The last item of 10 listed in a joint statement says a US delegation will attend an international gathering in Beijing, beginning tomorrow, that will showcase a plan by President Xi Jinping to invest in vast networks of ports, railways and roads expanding China’s trade with Asia, Africa and Europe.

“The decision to lift by no later than July 16 a ban on imported American beef imposed in 2003 over mad cow disease concerns is good news for Chinese consumers,’’ said Peking University Professor Yu Miaojie.

Homegrown cattle herds are not keeping pace with the rising demand in the increasingly prosperous country.

In turn, China will be able to send cooked poultry to the United States once the two sides resolve “outstanding issues’’ — mostly related to concerns over safety and hygiene.

On a more symbolic level, the deal reflects the positive tone of relations between Chinese President Xi Jinping and Trump since their first face-to-face meeting last month in Florida.

“China is willing to cut the trade deficits with the US in order to avoid trade frictions between the two sides,’’ Professor Yu said.

America’s trade deficit in goods and services with China totalled $310 billion last year, by far the largest imbalance with any country.

The deficit with China represented about 60% of the country’s total deficit last year of $500.6 billion.

The new deal does not touch on issues such as Chinese exports of steel and aluminium that are a growing source of trade friction.

For exports of LNG, the US will now treat China “no less favourably’’ than other countries for which is does not have a free trade agreement, according to a joint statement released by the sides.

LNG exports to such countries are not allowed without US Department of Energy signoff under longstanding US law.

“Approval still will be needed for China and there’s currently little infrastructure along US coastlines to allow for overseas gas shipments. As a result, economic benefits to US energy companies would not immediately materialise,’’ said Jake Parker, vice president of the US-China Trade Council.

Chinese officials lavishly praised their US counterparts, saying the agreement resulted from “intimate’’ cooperation.

Vice Commerce Minister Yu Jianhua, one of China’s top trade negotiators, was effusive in his description of the US administration, something not often heard from Beijing.

“Although the US team is new, they’ve settled in quickly and (their) adaptability is very strong,’’ Professor Yu said. “They have a great professional spirit that’s worth studying.’’

Underscoring the shared emphasis on cooperation, the Trump administration’s delegation to the Beijing conference is to be headed by Matt Pottinger, a special assistant to the president and senior director for east Asia at the National Security Council.