US-China Business Council Bullish on Purchase Promises in China Trade Deal
Half the companies surveyed by the U.S.-China Business Council say that it's too soon to tell if the tariffs in the China trade war were worth it for the gains won at the negotiating table, even as 78 percent of respondents welcome the phase one deal. Companies see the phase one deal -- which takes effect Feb. 14 -- as something that will prevent more tariff hikes. Of those who are directly affected by the commitments in phase one -- 60 percent of the companies -- the purchase promises matter most, with 30 percent saying that's the most relevant plank. Protection of intellectual property was a close second, with 27 percent of companies saying that's most important.
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USCBC CEO Craig Allen discussed the survey results with journalists Feb. 13, as well as the outlook more generally for phase one. Unlike most observers, USCBC expressed confidence that the purchase targets can be met. He said it requires U.S. exporters to be proactive in lining up contracts. “I would agree that the targets are very aggressive,” he said. “It's a 40 percent increase in 2021 over 2020, and another 40 percent increase for 2022 over 2021. But we are bullish on this because of the commitment of both governments.”
He acknowledged that with retaliatory tariffs in place on American goods, the purchase targets cannot be met, since those tariffs put American goods at a disadvantage to those from Europe, Japan or Australia. Jake Parker, senior vice president at USCBC, added: “These targets are very ambitious, no doubt about it,” but China “believes the targets are achievable, or else they wouldn't 've agreed to it.”
The USCBC executives also took questions on the coronavirus outbreak, and how it's affecting global supply chains. Craig said none of their companies are doing contingency planning for more than three months out, and some expect the disruption could be over in two weeks.
Parker said the disruption has reminded countries not to be over-reliant on China for inputs or consumer imports, but said, “I think the coronavirus is not any kind of inflection point for companies to shift their supply chains.” Both men said that while companies are diversifying supply chains, none are leaving China outright.