How the Coronavirus Is Helping China Win the Trade War

Chinese authorities successfully pushed phase one of the trade deal through seemingly before the Trump administration became aware of the full extent of the coronavirus. The crisis will make it near impossible for China to fulfill its side of the bargain.
Posted in: Op-edPolitics
Published:
February 5, 2020 3:00 AM UTC
  • The coronavirus outbreak will make it difficult for China to fulfill its end of the bargain in phase one of the U.S./China trade deal.
  • Evidence suggests that Chinese authorities hid the severity of the coronavirus outbreak until after the deal was signed.
  • A little-known clause in the deal may allow Beijing to renegotiate the agreement on more favorable terms.

President Trump fought hard to secure his trade deal with China. And the deal is one of the defining moments of his presidency. But emerging evidence suggests that the U.S president may have been manipulated and misled by Chinese authorities who intentionally downplayed the coronavirus outbreak until after phase one of the pact was signed.

While the theory is speculative, the evidence for it is strong: China intentionally hid the severity of the coronavirus outbreak in its early stages — only for Xi Jinping’s government to finally confirm human-to-human transmission on Jan. 20 after the deal was signed. China also stands to benefit from a little-known provision in the agreement that may allow the country to renegotiate some of its purchase obligations due to “unforeseen disasters.”

How China Hid the Coronavirus

The Wuhan coronavirus, an illness provisionally known as 2019-nCoV, has grown to infect almost 24,000 people, according to the latest data. The Chinese government is being remarkably forthcoming about the extent of the outbreak, but they weren’t always so open about the situation.

According to Daniel Lucey, an adjunct professor at Georgetown University, the coronavirus outbreak could have started as early as October, months before Chinese authorities revealed it. The Chinese authorities are also accused of censoring those who tried to cover the story in December and January.

Many on Twitter were outraged over China’s repression. | Source: Twitter

Such actions were taken by Beijing as well as by local Wuhan authorities.

Now, Zhou Xianwang, the Wuhan mayor, is it hot water over his actions in the early days of the outbreak. Many are asking him to resign. But is Wuhan’s local government being scapegoated for a policy that might have started in Beijing?

Trump’s Trade Deal

Regardless of who masterminded what appears to be a cover-up, Beijing stands to benefit the most from the situation. Chinese authorities successfully pushed phase one of the trade deal through seemingly before the Trump administration became aware of the full extent of the coronavirus – a crisis that will make it near impossible for China to fulfill its side of the bargain.

Phase one of the trade agreement, which was signed on Jan. 15, was designed to force China to purchase an additional $200 billion of American-made goods including agricultural products, machinery, and airplanes over the next two years. However, the coronavirus outbreak will make meeting these goals next to impossible in the short term. According to Karthik Natarajan, a supply chain expert at the University of Minnesota, China’s wide-ranging quarantines will limit its ability to fulfill the bargain.

He elaborates:

Parts of the deal are set to go into effect by mid-February, but with the Chinese government intently focused on responding to the outbreak, developing action plans to meet the trade deal commitments might take a back seat.

According to The New York Times, some in Trump’s administration are already suspicious of how China could be manipulating the situation. The Times’ article references unnamed sources and states the following:

Privately, some Trump administration officials say that China may use the virus as an excuse to delay meeting its commitments, in hopes that Mr. Trump will ultimately be voted out of office this year.

China’s Trump Card?

There is an important clause in Article 7.6 of the trade deal. Its near the end of the document in a section titled “Miscellaneous.” The clause states,

In the event that a natural disaster or other unforeseeable event outside the control of the Parties delays a Party from timely complying with its obligations under this Agreement, the Parties shall consult with each other.

With purchase agreements set to into effect in February, Chinese authorities may activate this clause and use the coronavirus outbreak to negotiate more favorable terms for themselves. It looks like China may have won the trade war.

Disclaimer: The views expressed in this op-ed are solely those of the author and do not represent those of, nor should they be attributed to, CCN.com.

Gerelyn Terzo edited this article for CCN.com. If you see a breach of our Code of Ethics or Rights and Duties of the Editor or find a factual, spelling, or grammar error, please contact us.

Last modified: February 5, 2020 2:26 AM UTC

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William Ebbs @ebbs_william

As a writer with over five years of financial experience, William Ebbs has earned millions of page views with his hard-hitting, opinionated work. When Will isn't writing, he enjoys strategy gaming, world travel, and researching for his next article. William Ebbs is based in the United States of America. Email me | Follow Me on Twitter