A meeting originally planned on August 15 to review the progress of the phase one trade agreement between China and the U.S. has been postponed without a new date being set. According to the South China Morning Post the review was delayed because of scheduling conflicts with the annual Beidaihe meeting, where the top Chinese leadership discusses key policy issues. However, the Beidaihe meeting is an annual tradition around this time of the year, so the question remains why the review meeting was canceled at the last minute. According to the Global Times, the postponement was likely due to the lack of a good “atmosphere” after a series of aggressive moves from the U.S. against China in a wide range of areas, including crackdowns on Chinese tech firms. Though Chinese officials never confirmed the meeting, they have repeatedly called on the U.S. to create a better environment for the implementation of the phase one agreement, while maintaining that China’s long-standing commitment to carry it out has not changed in spite of rapidly deteriorating bilateral relations.

Some Chinese analysts said the delay was “not a bad thing” as China could continue buying U.S. goods and deflect increasing demands from the Trump administration in the run-up to the U.S. presidential election. News of the delay surprised the markets because the U.S. had struck a positive note the day before, with White House Economic Adviser Larry Kudlow saying that the administration was “satisfied with China’s progress”. “We have big differences with China on other matters, but regarding the phase one trade deal, we are engaging,” Kudlow said.

The last public communication between top negotiators dates back to May 8, when Vice Premier Liu He held phone conversations with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin over economic and public health cooperation.

As China-U.S. relations have deteriorated to the worst level since the establishment of diplomatic relations in 1979, the U.S. rejected a request from the Chinese government to widen the discussions beyond the trade relationship. By the end of the first half, China had purchased about 23% of a total target of USD170 billion of goods in 2020, according to Bloomberg, showing an uptick on a month-on-month basis from the 19% by May.

In recent weeks, U.S. President Donald Trump unveiled bans on U.S. transactions with the companies owning the Chinese apps TikTok and WeChat, and imposed sanctions on Chinese officials over the enactment of Hong Kong’s national security law. Trade remains one of the very few areas on which Washington and Beijing still engage but observers said it was no longer an anchor for the overall relationship. Renmin University International Relations Professor Shi Yinhong said China was unlikely to accept demands that the U.S. considers necessary to improve the relationship.

Ren Hongbin, Assistant Minister of Commerce, said relevant government departments in China have done a lot of work to put the phase-one deal into place, despite the Covid-19 pandemic. Tighter controls imposed by the U.S. on exports to China and other restrictive measures have impacted goods and services imports from the country, he said. The official said it was necessary for both sides to work together to strengthen cooperation and overcome difficulties. China’s goods trade with the U.S. declined by 3.3% on a yearly basis to CNY2.03 trillion in the first seven months of this year, with China’s exports to the U.S. falling by 4.1% and imports by 0.3% amid the Covid-19 pandemic and other economic uncertainties.

Although the U.S. government has pressured companies to cease operations in China, 18,800 foreign-funded companies were newly established across China between January and July, including 415 Japanese firms, 860 U.S. companies and 849 South Korean businesses. Foreign direct investment from the U.S. continued to flow into China, rising 6% year-on-year in the first half of 2020, according to China’s Ministry of Commerce (MOFCOM). Zong Changqing, Director General of the Department of Foreign Investment Administration (FIA) said that according to a recent survey about 99.1% of foreign-funded enterprises indicated that they would continue to invest and operate in China.

This overview is based on reports by the Global Times, South China Morning Post, China Daily and Shanghai Daily.