Coronavirus outbreak will not change China's commitments to buy American goods: Senior US official

People wearing face masks at a wholesale market for agricultural products, on Feb 19, 2020.
People wearing face masks at a wholesale market for agricultural products, on Feb 19, 2020.PHOTO: REUTERS

WASHINGTON (REUTERS) - The United States government expects China to honour its commitments to buy more American goods under a trade deal signed by the world's two largest economies in January despite the fast-spreading coronavirus outbreak, a senior US official said on Thursday (Feb 20).

The US Treasury official said it was too soon to make accurate forecasts for the impact of the virus on the global economy, but the base case scenario sees China's growth dropping in the first quarter and then rebounding sharply. The impact could be more significant if the outbreak worsens, said the official, who requested anonymity.

The International Monetary Fund (IMF) said this week that the epidemic had already disrupted economic growth in China and could derail a "highly fragile" projected recovery in the global economy in 2020 if it spread to other countries.

Asked if the outbreak would require changes to the phase one trade deal with China, the official told reporters: "At this stage, we're not expecting changes to implementation of phase one... We still expect them to meet their commitment, but it's over a period of time."

Under the deal, which took effect this month, China pledged to increase US goods purchases by US$77 billion (S$107 billion) in 2020 and by US$123 billion by 2021, compared with a baseline of US imports from 2017, the year before the US-China tariff war began.

Experts have expressed scepticism that China will be able to meet such aggressive purchase commitments. But the Global Times newspaper, which often speaks for the Chinese government, reported on Thursday that China was likely to buy 10 million tonnes of US liquefied natural gas despite a gas glut.

US Treasury Secretary Steven Mnuchin will discuss the economic impact of the epidemic with senior finance officials and central bankers from the world's 20 largest economies (G-20) in the Saudi capital, Riyadh, on Saturday and Sunday.

China said on Wednesday it was not sending senior central bank and Finance Ministry officials to the meeting because of the virus outbreak.

The Treasury official said lower-level officials would represent Beijing.

 
 

Mr Mnuchin and the other G-20 officials will also discuss efforts under way among Organisation for Economic Cooperation and Development (OECD) members to draft new international rules for taxation, with an eye to bridging "significant gaps" and reaching a multilateral consensus this year, the official said.

Washington plans to explain its proposal for a "safe harbour" that would allow companies to opt out of proposed reforms, the official said. That proposal has drawn sharp criticism from France and other countries and threatens to stall the reform drive.

The rules would affect big US digital companies such as Alphabet Inc's, Google, Facebook Inc, Amazon.com Inc, Apple Inc and China's Alibaba Group Holding.