UOB Group’s Economist Ho Woei Chen, CFA, comments on the US-China Phase One Trade deal.

Key Takeaways

“We estimate that China has met around 61% of the goods purchase target and only 52% for services in 2020-21 under the Phase One trade agreement.”

“The structural imbalances have remained. US’ goods trade deficit with China widened to US$355.30 bn in 2021, up 14.5% from US$310.26 bn in 2020. This was the highest trade deficit since the record high of US$418.23 bn in 2018 before the trade tensions were ratcheted up.”

“China has lost market share in the US amidst the trade tensions even as it remained the largest import source for the US.”

“There is an avenue for bilateral evaluation and a process for dispute resolution under the agreement. For now, both sides have not announced any concrete steps for follow-up actions to address the shortfall in Phase One or a new trade deal but US-China trade relations will undoubtedly be marked by the race for technology supremacy in the coming years.”