China and the U.S. have mutually agreed to “substantially reduce” the yawning trade imbalance between the two countries, a joint statement read on Saturday, in a move that will involve the Chinese boosting more of what they buy from American producers.
Amid fears of a global trade war and rising tensions between the world’s two largest economies, both China and the U.S. have entered bilateral talks to bolster cooperation. In a statement issued by the White House, both parties forged a “consensus on taking effective measures to substantially reduce the United States trade deficit in goods with China.”
Just a day ago, both countries were sharply at odds over a claim, made by White House Economic Advisor Larry Kudlow, that China would move to cut its trade deficit with the U.S. by $200 billion annually.
Left unclear was exactly how much the Chinese would boost its purchases of U.S. goods. The Wall Street Journal reported on Saturday that American negotiators fell short in their efforts to get the Chinese to commit to an exact deficit reduction figure, with the two sides bickering all night over the statement’s language.
The trade imbalance has long been a thorny and intractable topic in the Sino-US relationship. Commerce Department data recently showed that imbalance between what China buys from the U.S. and vice versa hit a record in 2017 at over $375 billion.
However, President Donald Trump has staked a resolution of the dispute on his personal relationship with Chinese President Xi Jinping. This week, Kudlow stated that China was “meeting many” Trump administration demands to cut its U.S. surplus.
“President Xi and I will always be friends, no matter what happens with our dispute on trade,” Trump said in an April tweet.
The statement released on Saturday struck a conciliatory tone. “To meet the growing consumption needs of the Chinese people and the need for high-quality economic development, China will significantly increase purchases of United States goods and services. This will help support growth and employment in the United States,” it read.
China is a major source of demand for U.S. farmers, who have agonized over the fate of key agriculture exports in the wake of the trade dispute.
Still, Beijing and Washington agreed to “meaningful increases in United States agriculture and energy exports. The United States will send a team to China to work out the details,” the statement added.
The two countries also agreed to expand cooperation on areas such as manufacturing and intellectual property — one of the stickiest disputes between the U.S. and China, given the latter’s lax enforcement regime. In March, Trump slapped $50 billion in tariffs on Chinese goods, in retaliation for what it alleges is rampant IP theft.
“China will take down its trade barriers because it is the right thing to do,” the president said on Twitter in April. “Taxes will become reciprocal, and a deal will be made on intellectual property. Great future for both countries!”
–Reuters contributed to this story.
