As part of the Phase One trade deal announced in January, and just weeks before the coronavirus pandemic crippled global trade, China had pledged to buy $36.5 billion worth of American agriculture products, up from $24 billion in 2017, prior to the trade war. Instead, China has so far purchased only $4.65 billion in the first four months of the year, data from the U.S. Department of Agriculture show. That’s only 13% of the goal set in the trade deal and almost 40% below the same period in 2017.
And so, long after it was confirmed that the “hard fought” trade deal was nothing but one big farce, overnight – perhaps in an attempt to spike algo buying of stocks – Bloomberg reported that China plans to accelerate purchases of American farm goods to comply with the phase one trade deal following talks in Hawaii this week.
The world’s top soybean importer intends to step up buying of everything from soybeans to corn and ethanol after purchases fell behind due to coronavirus disruptions, said two people familiar with the matter, who asked not to be named because the information is private.
A separate person said the Chinese government has asked state-owned agricultural buyers to make all efforts to meet the phase one agreement.
Naturally, Spoos – which were trading mostly unchanged until that point, Stoxx 50, soybeans and the yuan all spiked on the news.
Oddly enough, aside from the “two people familiar” nobody else confirmed the report, with China’s commerce ministry keeping silent. Chinese foreign ministry spokesman Zhao Lijian said “I don’t have any further information to provide right now” when asked about the purchase plans at a briefing in Beijing.
The report followed a Thursday comment from SecState Michael Pompeo who said China’s top foreign policy official committed to honor all of his nation’s commitments under the trade deal.
“During my meeting with CCP Politburo Member Yang Jiechi, he recommitted to completing and honoring all of the obligations of Phase 1 of the trade deal between our two countries,” Pompeo tweeted on Thursday. As Bloomberg adds, Pompeo offered no details beyond the tweet, but that was the first substantive news out of the secretive meeting with Yang at Hickam Air Force Base in Hawaii on Wednesday. It’s still unclear how the meeting came about or who had asked for it. Both sides have said the other initiated it.
Bottom line: with elections just 5 months away, expect the Trump admin to throw anything and everything at the market to push it higher which, in his view, boosts his odds of reelection. Vice versa, this also means that anyone who does not want to see Trump reelection will be especially incentivized to crash market.
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