China: Phase One and US Trade Review

Published on February 2, 2021

The administration of US President Joseph Biden has announced that it will be reviewing all aspects of the Phase One trade accord with China that was concluded under the Trump presidency between China’s Vice-Premier Liu He, former Treasury Secretary Steven Mnuchin, and former US Trade Representative Robert Lighthizer on January 15, 2020.

Senior Chinese officials say indications from Washington are that the Biden team is “on the whole positive about the agreement,” and will seek to improve on the deal rather than tear it up. For their part, the leadership in Beijing has relayed that it is ready to resume talks at any time.

To be more precise, while the January 15 one-year anniversary of the signing of the deal has come and gone, Beijing sources tell us they look forward to holding a videoconference to review the first year with the US side once the Biden administration is familiar with the agreement and its implementation, and hope that might happen, at the earliest date, before the advent of the Chinese New Year on February 12.

At the same time, China’s Ambassador to Washington Cui Tiankai has been in touch with the White House to ensure that high-level US officials attend the Chinese Embassy’s New Year reception as a sign of goodwill, and President Biden, from what we understand, has been consulting with his advisers about the possibility of a direct phone call with China’s President Xi Jinping, tentatively, on February 20.

Tempered Optimism on S&ED

In the bigger picture, officials in Beijing have been taking in stride the characterizations by senior incoming Biden cabinet nominees during their confirmation hearings of China as the US’ top “strategic competitor,” including by Treasury Secretary Janet Yellen, who furthermore vowed to use America’s “full array of tools” as needed.

They believe that while the harsh rhetoric over trade and other issues will persist, on specific trade measures the Biden administration will restore some degree of “normalcy” to Sino-US relations, marked, they hope, by a resumption of the regular Strategic and Economic Dialogue (S&ED), especially the bilateral trade and economic dialogue, by Vice-Premier Liu and Secretary Yellen.

Having said that, Beijing recognizes that the most pressing focus and challenges for the White House are for now domestic, including the economic recovery and fighting Covid-19, and not China. Realistically, they are not expecting any major bilateral breakthrough or announcements during Biden’s first 100 days, except, perhaps, for a partial normalization of communication channels.

 

 

 

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