China to Speed U.S. Farm Purchases After Secretive Hawaii Talks
(Bloomberg) - China plans to accelerate the purchase of American agricultural goods to comply with the Phase 1 trade agreement with the United States following the talks in Hawaii this week.
The world's leading soybean importer intends to increase soybean, corn, and ethanol purchases after corona virus purchases have dropped, said two people familiar with the matter who asked not to be named because the information is private . Another person said China's government has asked government buyers to make efforts to meet the Phase 1 pact.
US stocks rose as the reports increased risk appetite. You come at a difficult time for US-China relations. President Donald Trump escalates criticism of the Beijing government's response to the coronavirus crisis and signs the congressional complaint about the oppression of the Muslim Uyghur minority.
Trump's personal relationship with China's Xi Jinping is also under review. Former national security advisor John Bolton claims in his new book that Trump personally asked the Chinese head of state in 2019 to help him reelect by buying more agricultural products.
Nobody from the Department of Commerce replied to a fax to receive a comment. Chinese Foreign Ministry spokesman Zhao Lijian said, "I currently have no further information to provide" when asked about the purchase plans at a briefing in Beijing.
On Thursday, US Secretary of State Michael Pompeo said China's top foreign policy official has committed to honoring his country's commitments under the trade agreement.
"During my meeting with Yang Jiechi, a member of the CCP's Politburo, he again committed to fulfilling and adhering to all commitments in phase 1 of the trade agreement between our two countries," Pompeo said in a tweet on Thursday using an acronym for the Chinese Communist Party.
Pompeo didn't reveal any details beyond the tweet, but this was the first important piece of news from the secret meeting with Yang at Hickam Air Force Base, Hawaii on Wednesday. It is still unclear how the meeting came about or who asked for it. Both sides said the other had initiated it.
China pledged to buy $ 36.5 billion of U.S. agricultural products as part of the Phase 1 deal, compared to $ 24 billion in 2017 before the trade war.
However, China only bought $ 4.65 billion in the first four months of the year, according to data from the U.S. Department of Agriculture. This is only 13% of the target set in the trade agreement and almost 40% less than in the same period in 2017.
China had asked government buyers to stop some purchases of American agricultural goods, including soybeans, Bloomberg News reported earlier this month. However, Chinese importers had continued to increase their soy purchases in the United States and ingested 2.2 million tons of oilseed in the two weeks to June 11, the USDA data said.
The S&P 500 Index rose 0.9% in New York at 9:45 a.m. Soybean futures rose 0.6% and corn rose 0.2% on the Chicago Board of Trade.
(Updates with context to U.S.-China relations beginning in the third paragraph.)
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