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January 14, 2020 | Reuters

Phase 1 Commodity Targets Too Much for China?

Traders and analysts struggle to map out how China will reach commitments

Commodity traders and analysts are struggling to map out how China will reach the eye-popping amounts it is committing to buy from the United States under Phase 1 of their trade deal, reports Reuters.

China has pledged to raise US agriculture purchases by some $32 billion over two years above 2017’s $24 billion baseline, according to a source briefed on the deal to be signed on Wednesday.

Analysts who study Chinese commodity flows, however, remain skeptical that Beijing can absorb such quantities of US goods without threatening trade ties with other suppliers, hurting its own domestic producers, and making substantial changes to import standards and quotas.

The pledge to boost U.S. farm imports by over $30 billion over two years is “shocking” since that increment is more than the value of farm products it has purchased from the U.S. in a single year, a China-based grains trader told Reuters.

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