Chad P. Bown
This PIIE Chart, originally published on May 18, 2020, tracks China’s monthly purchases of US goods covered by the phase one deal between the United States and China.
Hexuan Li provided outstanding data assistance, and William Melancon and Oliver Ward assisted with graphics.
On February 14, 2020, the Economic and Trade Agreement Between the United States of America and the People’s Republic Of China: Phase One went into effect. China agreed to expand purchases of certain US goods and services by a combined $200 billion over 2020 and 2021 from 2017 levels. This PIIE Chart tracks China’s monthly purchases of US goods covered by the deal, relying on data from both Chinese customs (China’s imports) and the US Census Bureau (US exports). It then compares those purchases with the legal agreement’s annual targets, prorated on a monthly basis, above two baseline scenarios (see methodology below). As set out in the legal agreement, one 2017 baseline scenario allows for use of US export statistics and the other allows for Chinese import statistics. Note that prorating the 2020 year-end targets to a monthly basis is for illustrative purposes only. Nothing in the text of the agreement indicates China must meet anything other than the year-end targets.
According to the agreement, China has committed to purchase no less than an additional $63.9 billion of covered goods from the United States by the end of 2020 relative to these 2017 baselines. Defining the 2017 baseline using Chinese import statistics implies a 2020 purchase target of $172.7 billion (red in panel a). Defining the 2017 baseline using US export statistics implies a 2020 target of $142.7 billion (blue in panel a).
THE LATEST NUMBERS
Through July 2020, China's year-to-date total imports of covered products from the United States were $48.5 billion, compared with a prorated year-to-date target of $100.7 billion. Over the same period, US exports to China of covered products were $39.4 billion, compared with a year-to-date target of $83.2 billion. Through the first seven months of 2020, China's purchases of all covered products were thus only at 47 percent (US exports) or 48 percent (Chinese imports) of their year-to-date targets.
For covered agricultural products, China committed to an additional $12.5 billion of purchases in 2020 above 2017 levels, implying an annual target of $36.6 billion (Chinese imports, panel b) and $33.4 billion (US exports, panel c). Through July 2020, China's imports of covered agricultural products were $9.9 billion, compared with a year-to-date target of $21.3 billion. Over the same period, US exports of covered agricultural products were $7.6 billion, compared with a year-to date target of $19.5 billion. Through the first seven months of 2020, China's purchases were thus only at 39 percent (US exports) or 46 percent (Chinese imports) of their year-to-date targets.
For covered manufactured products, China committed to an additional $32.9 billion of purchases in 2020 above 2017 levels, implying an annual target of $110.8 billion (Chinese imports) and $83.1 billion (US exports). Through July 2020, China's imports of covered manufactured products were $36.1 billion, compared with a year-to-date target of $64.6 billion. Over the same period, US exports of covered manufactured products were $27.9 billion, compared with a year-to-date target of $48.5 billion. Through the first seven months of 2020, China's purchases were thus only at 58 percent (US exports) or 56 percent (Chinese imports) of their year-to-date targets.
For covered energy products, China committed to an additional $18.5 billion of purchases in 2020 above 2017 levels, implying an annual target of $25.3 billion (Chinese imports) and $26.1 billion (US exports). Through July 2020, China's imports of covered energy products were $2.6 billion, compared with a year-to-date target of $14.8 billion. Over the same period, US exports of covered energy products were $3.8 billion, compared with a year-to-date target of $15.2 billion. Through the first seven months of 2020, China's purchases were thus only at 25 percent (US exports) or 17 percent (Chinese imports) of their year-to-date targets.
For all uncovered products—making up 30 percent of China's total goods imports from the United States and 39 percent of US total goods exports to China in 2017—the phase one agreement does not include a legal target. Through July 2020, China's imports of all uncovered products from the United States were $19.2 billion, 28 percent lower than over the same period in 2017. US exports of all uncovered products to China through July were $19.1 billion, 30 percent lower than over the same period in 2017.
Though the agreement also sets targets for China's purchases of certain traded services from the United States, those data are not reported on a monthly basis and are not covered here. The agreement also contains targets for 2021 not illustrated here.
Note on Data Release: This update is based on July 2020 data released on August 25, 2020 (Chinese imports) and September 3, 2020 (US exports). The next update will be based on August 2020 data to be released on September 25, 2020 for both Chinese imports and US exports.
METHODOLOGICAL APPROACH
Assessing progress toward meeting the phase one targets for goods trade requires information from both US export statistics and Chinese import statistics, given that the agreement's Chapter 6, Article 6.2.6 states "Official Chinese trade data and official US trade data shall be used to determine whether this Chapter has been implemented." One implication is that there are two sets of monthly data to track (Chinese imports and US exports). A second is that there are two different annual, and hence monthly, targets, since the 2017 baseline level of Chinese imports differs from the 2017 baseline level of US exports. Finally, the products covered by the purchase commitments are set out at the 4-, 6-, 8-, or 10-digit level in the agreement's Attachment to Annex 6.1; these are then mapped to the US or Chinese trade statistics for 2017 and for 2020.
For US goods exports, the agreement is estimated to cover products that made up $78.8 billion, or 61 percent, of total US goods exports to China ($129.8 billion) in 2017. Of the 2017 total exports of covered products, exports worth $20.9 billion were in agriculture, $50.2 billion were in manufacturing, and $7.6 billion were in energy. Products uncovered by the agreement—and thus with no targets for 2020—made up 39 percent ($51 billion) of total US goods exports to China in 2017.
For Chinese goods imports, the deal is estimated to cover products that made up $108.8 billion, or 70 percent, of total Chinese goods imports from the United States ($154.4 billion) in 2017. Of the 2017 total imports of covered products, imports worth $24.1 billion were in agriculture, $77.9 billion were in manufacturing, and $6.8 billion were in energy. Uncovered products made up 30 percent ($45.6 billion) of total Chinese goods imports from the United States in 2017.
For both the US export data and the Chinese import data, the 2020 phase one targets of additional trade (on top of 2017 baseline) are $12.5 billion (agriculture), $32.9 billion (manufactured goods), and $18.5 billion (energy). These targets are found in the agreement's Annex 6.1.
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