U.S. Deputy Trade Representative Sarah Bianchi has raised concerns at a Washington trade conference about the Chinese regime’s failure to honor its commitments under the “phase one” trade deal signed in January 2020.
Under the agreement, which expired at the end of 2021, China promised to ramp up purchases of U.S. energy, agricultural, and manufactured products and services by $200 billion in excess of what China imported in 2017.
Speaking virtually at the 2022 Washington International Trade Conference, Bianchi said it was “really clear” that Beijing had fallen short of commitments made under the deal, according to a Reuters report. Figures from the Peterson Institute for International Economics show that through November 2021, China had imported only $221.9 billion out of a two-year target of $380.5 billion.
According to Reuters, Bianchi stopped short of advocating specific steps that the United States and allies could take to redress Beijing’s failure to meet its commitments, and said that high-level conversations between the two powers over this issue have been “very difficult.”
“It’s not our goal to escalate here. But certainly we’re looking at all the tools we have in our toolbox to make sure they’re held accountable,” Bianchi said, without providing details, Reuters reported.
While some may be tempted to give Beijing a pass for its failure to meet its phase one commitments on the grounds of the pandemic and supply-chain disruptions, a number of observers believe that a supine U.S. leadership is at least partly responsible.
“The main objective of Phase 1 is to punish the Chinese Government’s unfair trade practice and push it to make meaningful structural changes. But now, the Biden administration has given up on pushing the Chinese Government to make changes. So, Phase 1 has lost its original goal under Biden,” said Shaomin Li, a professor of international business at Old Dominion University in Norfolk, Virginia.
In the absence of a clearly articulated policy and a tough stance on the part of the Biden administration, Beijing simply may not feel the pressure over trade that is needed to encourage or compel effective change and the honoring of commitments.
“I think it is likely that the Chinese leadership will revert to its old practice, playing Tai Chi: making promises, dragging on, and never delivering. And the Biden administration is likely to regress to the practices of the Clinton, Bush, and Obama eras of endless complaints to and meetings with the Chinese leadership with no real consequences or results,” Li said.
“Knowing this, the Chinese leadership may have concluded that they don’t need to exit or fulfill the agreement, just drag on and blame the U.S. for ‘cold-war mentality’ and ‘protectionism,’” he added.
But change is still entirely possible with a firmer stance and a shift in attitude at both the diplomatic and commercial levels. Li envisions one possible future where the United States takes measures to lessen its reliance on China and where U.S. companies better grasp the risks—with regard to intellectual property, technology transfers, and import quotas and commitments, among other issues—of U.S.-China commerce.
“This will further isolate China, and the increasing isolation may prompt the Chinese leadership to make some meaningful changes,” Li said.
The Chinese regime’s failure to meet its phase one commitments is part of a larger pattern of non-adherence to commitments and promises made to trading partners around the world. Since officially joining the World Trade Organization (WTO) on Dec. 11, 2001, Beijing has routinely flouted or ignored WTO rules and guidelines, notably by relying heavily on and maintaining tight oversight over state-owned and state-controlled enterprises, which currently number around 150,000 at the local and central levels throughout China and employ some 30 million workers, according to a recent report by Washington-based think tank Information Technology & Innovation Foundation.
Moreover, Beijing is engaged in an expansive program of state-sanctioned intellectual property theft, has engaged in forced technology transfers, and has banned imports from such nations as Lithuania and Australia in a campaign described as “economic coercion.”