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US-China tensions

USTR official says China failed to meet 'Phase 1' trade deal pledges

Talks are continuing on commitments under January 2020 agreement

WASHINGTON (Reuters) -- China has failed to meet its commitments under a two-year "Phase 1" trade deal that expired at the end of 2021 and discussions were continuing with Beijing on the matter, Deputy U.S. Trade Representative Sarah Bianchi said on Tuesday.

"You know, it is really clear that the Chinese haven't met their commitment in Phase 1. That's something we're trying to address," Bianchi told a virtual forum hosted by the Washington International Trade Association.

In the deal signed by former President Donald Trump in January 2020, China pledged to increase purchases of U.S. farm and manufactured goods, energy and services by $200 billion above 2017 levels during 2020 and 2021.

Through November, China had only met about 60% of that goal, according to trade data compiled by Peterson Institute of International Economics senior fellow Chad Bown.

The deal prevented the escalation of a nearly three-year trade war between the world's two largest economies but left in place tariffs on hundreds of billions of dollars of imports on both sides of the Pacific.

Bianchi, whose portfolio includes China and Asian trade matters, did not identify steps that the Biden administration is taking to hold China to its Phase 1 commitments, which also include some increased Chinese market access for U.S. agriculture biotechnology and financial services.

"It's not our goal to escalate here. But certainly we're looking at all the tools we have in our toolbox to make sure they're held accountable," Bianchi said, without providing details.

She said the United States was trying to foster a "stable relationship" with China, but the two countries are at a "difficult stage in the relationship."

"To be super-candid, the conversations are not easy. They're very difficult. But you know, from my perspective, what's important is that we're having conversation and they will be unflinchingly honest," Bianchi said.

She said USTR was emphasizing that China's state aid to companies and non-market economic policies and practices are a "serious threat to American economic interests."

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