China has agreed to more than double its annual purchases of US agricultural products to as much as $50bn, it has emerged.
The announcement was one of the few positives to emerge from last week’s trade talks between the US and China in Washington.
However, it appears that China’s hopes to have US sanctions against two Cosco subsidiaries, which has driven VLCC rates to over $300,000 per day, failed to materialize.
“My deal with China is that they will immediately start buying very large quantities of our agricultural product, not wait until the deal is signed over the next three to four weeks,” US president Donald Trump said via Twitter.
In return China is reported to have convinced the US to hold off another round of tariff increases set to kick in this week.
“We have a lot of work to do, but I am confident that both sides are going to work very hard and anticipate we will be closing this,” US Treasury Secretary Steven Mnuchin told US media.
Last year US agricultural trade with China sank to its lowest level in five years to just under $10bn. The previous four years it has averaged between $20bn and $25bn.
“Past experience is that US-China trade agreements aren’t worth the paper they are written on, and this one hasn’t even been written down,” said Bloomberg economists Tom Orlik and Yelena Shulyatyeva.
“For now, though, indication on trade are a little more positive. If that persists, it could help put a floor under sliding global growth.”
The official Chinese response to the “phase one” trade deal reached with the US on Friday was wary, but welcoming.
China’s Ministry of Commerce said the two sides had made “substantial progress” in a number of areas and “agreed to work together in the direction of final agreement”.
"China is buying time for its companies to adjust to shifts in demand and the supply chain," Chua Hak Bin, an economist at Maybank Kim Eng Research in Singapore told Bloomberg.
"This looks more like a 'goodwill plus' than a breakthrough trade deal."
