China, the U.S. agrees to enforce trade negotiations given the virus controversy

Chinese Vice Prime Minister Liu He's introducing the U.S. President Donald Trump signed a "Step One" trade deal with China in the Oval Office at the White House on October 11, 2019, in Washington, DC, in a letter from Chinese President Xi Jinping.

Chinese and US trade negotiators decided on Friday to "establish favorable conditions" for the phase one trade agreement concluded in January, officials said, given recent strains over the coronavirus pandemic.

Vice-Prime Minister Liu He, who led the Beijing talks, had a morning call with US Trade Representative Robert Lighthizer and Secretary of State Steven Mnuchin.

“Both sides said they should strengthen macroeconomic and public health cooperation, strive to create a favourable atmosphere and conditions for the implementation of the phase one US-China economic and trade agreement, promoting positive results,” a notice from China’s Ministry of Commerce said.

U.S. officials said, following the meeting, that the sides settled on "strong steps" in developing the policy structures required to make the deal a success. They also agreed that in spite of the current global health emergency, both countries fully expect to meet their obligations under the agreement in a timely manner, said the Office of the US Trade Representative and Treasury in a statement. The countries have also agreed to maintain communication and coordination.

The call is believed to be the first time they have officially spoken about the agreement since it was signed, and comes after both nations traded barbs over the deadly virus.

Last week, US President Donald Trump announced fresh tariffs against China, alleging that there was information tying COVID-19 to the top security lab in the central city of Wuhan, where the pathogen first appeared late last year. The claims have been refuted by China.

In January, Beijing decided to buy an extra USD 200 billion in US goods over two years, double the amount obtained in 2017, signaling a pause in the grinding trade war that had battered the global economy for almost two years.

Analysts, however, doubt whether China would be able to fulfill its optimistic obligations after the virus epidemic nearly stopped commercial activity earlier this year. Recovery has been slow since, and consumption has yet to bounce back to pre-virus levels.

China's imports plummeted 14.2 per cent in April, following a 0.9 per cent decline in the month before, given the fact that the nation had already put coronavirus under local regulation.

Nick Marro of The Economist Intelligence Unit said that “shipments from the US remain well below the levels needed to achieve the purchase pledges under the trade accord”. He added that the pandemic has disrupted supply and demand on both sides of the Pacific, highlighting risks around the survival of the deal.

While China's exports exceeded forecasts of an increase of 3.5 per cent in April, analysts agree that this is unlikely to continue as data has been bolstered by imports of medical supplies against the global pandemic, as well as by the backlog of sluggish market resumption in the first quarter.

Mnuchin said this week, though, that he expected China to stick with the agreement reached this year, speaking of "extremely serious implications" if that did not happen.

The US has a trade deficit with China and the goal has been to realign the trade relationship between the two nations.