China is Restarting its Phase One Trade Deal Commitments

June 18, 2020
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After a drop in purchasing during the height of the Coronavirus in China, America’s largest trade partner is now reportedly ramping up its purchases of agricultural goods.

According to a Bloomberg report released early Friday morning, China had delayed its agricultural goods purchases due to pressures created by the global pandemic. Although the Coronavirus is still a threat in China, the government now believes that it is ready to restart its purchasing programs and meet the commitments it made in the Phase One Trade Deal.

Following a meeting between Secretary of State Mike Pompeo and China’s equivalent, Beijing has now instructed its state-owned buyers to increase their purchases of U.S. farm goods.

Trump Still Confident that Decoupling from China is an Option

The latest report is good news for stock market investors and agricultural producers in the United States. China is a major purchaser of pork products, soybeans, and other agricultural exports.

The report indicates that relations are simmering between the world’s two biggest trading partners. However, President Trump said on Twitter earlier this week that his administration still has a policy option in place to completely decouple from China if necessary.

In a public post, the President said that “It was not Ambassador Lighthizer’s fault (yesterday in Committee) in that perhaps I didn’t make myself clear, but the U.S. certainly does maintain a policy option, under various conditions, of a complete decoupling from China.”

Trump’s comment came after Lighthizer had told members of the House of Representatives that he didn’t believe decoupling to be a policy option.

Decoupling would mean a complete embargo on trade to or from China. Such a policy would likely be economically disastrous, considering that China produces a majority of the goods consumed in the United States, with products ranging from sportswear to computer hardware.

Some of America’s largest companies, including Apple and Microsoft, source their manufacturing from within China.

Stocks Could Perform Well This Friday

European stocks were up on Friday, with investors feeling optimistic that the trade relationship between China and the United States is improving. European stocks often influence sentiment in the American market.

The stock market has been rallying in recent days, with investors confident that the worst of the Coronavirus impact has been accounted for. China’s decision to restart its agricultural purchases could give even more inspiration to the bulls later today.

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