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Even before the coronavirus pandemic upended all forecasts for global trade and energy demand, analysts had doubted that China would be able to fulfill its pledge in the phase-one trade deal with the United States to buy as much as $26 billion worth of American energy products this year. COVID-19 and the resulting plunge in oil and natural gas demand and prices have made China's target to buy US energy products even more unachievable--perhaps nearly impossible to achieve--according to estimates for the first five months of 2020.
Today's dramatically lower oil prices compared to January – when the phase-one trade deal was reached – mean that even if China were to significantly boost its import volumes of American oil, liquefied natural gas (LNG), coal, and refined petroleum products such as propane, their value in US dollars would still be lower than expected at the start of the year.
Analysts believe that China will likely fall short of its target for buying US energy products this year, while Republican lawmakers and US trade groups are urging the US Administration to prioritize energy products in trade negotiations and are calling on China to increase its purchases of American goods, including energy, to meet its target under the deal.
The phase-one agreement signed in January called for China to purchase billions of dollars' worth of oil, coal, and LNG. Even before the pandemic, analysts had largely concurred that the Chinese promise to buy an additional $52.4 billion worth of US energy products in 2020 and 2021 on top of the 2017 levels of Chinese energy imports was most likely unachievable, even if China intended to fulfill all its pledges in the deal.
The additional $52.4 billion of energy products in 2020 and 2021 means that China must buy around $26 billion of those products this year.
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