The US government expects China to honor its commitments to buy more US goods under a trade deal signed by the world's two largest economies in January despite the fast-spreading coronavirus outbreak, a senior US official said on Thursday.
The US Treasury official said it was too soon to make accurate forecasts for the impact of the virus on the global economy, but the base case scenario sees China's growth dropping in the first quarter and then rebounding sharply. The impact could be more significant if the outbreak worsens, said the official, who requested anonymity.
The International Monetary Fund said this week the epidemic had already disrupted economic growth in China and could derail a highly fragile projected recovery in the global economy in 2020 if it spread to other countries.
Asked if the outbreak would require changes to the Phase 1 trade deal with China, the official told reporters: At this stage, we're not expecting changes to the implementation of Phase 1 ... We still expect them to meet their commitment, but it's over a period of time.
Under the deal, which took effect this month, China pledged to increase US goods purchases by US$77 billion in 2020 and by US$123 billion by 2021, compared with a baseline of US imports from 2017, the year before the US-China tariff war began.
Experts have expressed skepticism that China will be able to meet such aggressive purchase commitments. But the Global Times newspaper, which often speaks for the Chinese government, reported on Thursday that China was likely to buy 10 million tons of U.S. liquefied natural gas despite a gas glut.
US Treasury Secretary Steven Mnuchin will discuss the economic impact of the epidemic with senior finance officials and central bankers from the world's 20 largest economies (G20) in the Saudi capital, Riyadh, on Saturday and Sunday.
China said on Wednesday it was not sending senior central bank and Finance Ministry officials to the meeting because of the virus outbreak. The Treasury official said lower-level officials would represent Beijing.
Mnuchin and the other G20 officials will also discuss efforts under way among Organization for Economic Cooperation and Development members to draft new international rules for taxation, with an eye to bridging significant gaps and reaching a multilateral consensus this year, the official said.