China says it will import record volumes of US crude and will probably import more commodities from the United States in an effort to stave off a trade war between the world’s two top economies. AFP/CNN photo.
US/China trade war could damage global economy
China and the United States are signalling that the two countries are backing away from a possible trade war that could have damaged the global economy.
According to two Reuters’ sources, China has agreed to import record volumes of US crude and increase its purchases of soy from the United States. The US is looking for better access for imports of genetically modified crops into China under the deal.
China is the top importer of crude and soy and buys significant amounts of both commodities from the US. At this time, it is unclear how much Beijing will boost its purchases of soy and oil from the US. The additional imports will help cut the Chinese trade surplus with the United States.
As well, the government of China announced tariff cuts on car imports.
In return, the US could lift the ban on American companies supplying ZTE Corp telecoms gear.
On Wednesday, Trump said the negotiations remained short of his objectives, adding any deal would require a “different structure”.
Sinopec, Asia’s largest oil refiner, says it will purchase an all-time high of about 533,000 barrels per day of US crude to load in June. The $1.1 billion deal is the largest volume ever to be lifted in one month by Sinopec.
“The government has encouraged us to lift more US crude,” one of the sources told Reuters.
China has been one of the largest buyers of US oil since the Obama administration lifted a 40-year ban on exports in late 2015.
US shale output has risen to all-time highs and the rising exports have strained US pipeline and port capacity which may be maxed-out until capacity expansions currently underway are completed, according to one Reuters’ source.
“We want to buy more but they might not be able to export more,” the source said.
Another Reuters’ source said other Chinese refiners are considering reconfiguring their plants to process US crude.
Other Chinese refiners are looking to reconfigure their plants so they could buy and process US oil, one trade source said.
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