China to buy US energy goods over two years
China committed to buy around $52 billion worth of energy goods from the U.S. in 2020 and 2021 amid the phase-one trade deal signed by the countries.
After 21 months of imposing reciprocal tariffs, the world's two biggest economies finally reached a trade agreement and signed a phase-one deal on Jan. 15 in Washington, D.C.
The deal will see Beijing buy a total of $200 billion worth of goods and services from the U.S. this year and the next. This amount will come on top of purchases made in 2017 before the trade war started when China that year imported around $185 billion worth of U.S. goods and services.
Out of the additional $200 billion purchase commitment, $52.4 billion, or 26.2 pct, is energy-related, which makes it the category with the second-largest export volume in the phase-one deal.
Under the deal, China will buy $18.5 billion worth of energy products from the U.S. in 2020, and another $33.9 billion in 2021.
Liquefied natural gas (LNG), crude oil, refined products and coal are some of the major items within the energy category that China has committed to buy.
After the shale revolution in 2008, the U.S. increased its crude oil and natural gas output tremendously to become the world's biggest crude oil producer in November 2018, surpassing Saudi Arabia and Russia.
Exporting oil and LNG to overseas has become a major focal point for U.S. President Donald Trump in his attempt to boost his country's export volumes and narrow the trade deficit.
Services come third, agriculture fourth
Under the phase-one deal, the product category with the largest exports volume that China vowed to buy is manufactured goods.
Beijing will buy $32.9 billion worth of U.S.-manufactured goods in 2020, and another $44.8 billion in 2021, bringing the total to $77.7 billion in two years.
Some of the manufactured goods are industrial machinery, electrical equipment and machinery, pharmaceutical products, and aircraft, which include both orders and deliveries, vehicles, optical and medical instruments, and iron and steel.
Services rank the third-largest in exports volume as Beijing commits to buy $12.8 billion this year and $25.1 billion next year, bringing the total to $37.9 billion.
Some of the items in the services category are business travel and tourism, financial services and insurance, and cloud technology.
The fourth-largest category is agriculture, in which China will buy $12.5 billion worth of U.S. goods in 2020, and another $19.5 billion in 2021, making the total $32 billion over two years.
Some of the items in the agricultural goods sector include oilseeds, meat, cereals, cotton, other agricultural commodities, and seafood.
US exports to China to exceed $300B
If the phase-one deal is fully implemented, and the 2017 base year trade volume is taken into account, the U.S.' exports to China will increase to $261.7 billion this year, and reach $308.3 billion next year.
In return, the U.S. agreed to lower the rate of tariffs on $120 billion worth of Chinese imports to 7.5 pct from 15 pct.
Over the last 21 months, the U.S. imposed tariffs on $550 billion worth of Chinese imports, while China reciprocated by implementing tariffs on $185 billion worth of imports from the U.S.