Washington, D.C. — The Trump administration has made a big push to sell more natural gas to China, but a new report from the Center for American Progress shows how the plan makes no commercial sense and risks undermining broader U.S. competitiveness with China.
U.S. Secretary of Commerce Wilbur Ross is the latest Trump administration official to call for China to purchase more natural gas from the United States as a way to reduce the trade deficit. Secretary Ross has even suggested that a natural gas deal is one of the key trade concessions China could make to reduce or avoid threatened tariffs.
But all these claims are dubious, the report finds. Trying to export more natural gas to China won’t create more U.S. jobs or drive U.S. economic growth. The United States would have better comparative advantages exporting natural gas to other countries. It does not have much to gain from pushing for China natural gas market access and treating that access as a major concession.
The hard truth is that shipping natural gas from the United States to China is expensive. That makes it hard for U.S. companies to make a profit exporting to China—the gas shipments China receives from the United States are more expensive than 83 percent of its supply chain, and that is largely due to transport costs. The United States is better placed to serve other growing markets with shorter transport distances, and those opportunities are plentiful and growing. Some observers think China should make long-term investments in U.S. natural gas infrastructure, but those observers are failing to account for global market and technology trends that make those investments less attractive.
“While the Trump administration chases natural gas deals that bring no strategic benefit to the United States, Chinese leaders have their eye on what they view as the real battlefield: clean energy technology,” said Melanie Hart, lead author of the report and senior fellow and director of China Policy at CAP. “Beijing is launching an all-out effort to dominate global clean energy markets, but the Trump administration is undercutting U.S. clean tech innovation on multiple fronts.”
Beijing views this dynamic as an unparalleled opportunity to gain a substantial edge over the United States in the energy technologies of the future, the report says. That dynamic alone risks undercutting U.S. competitiveness for decades to come. If the administration accepts natural gas deals as a major trade concession that will give Beijing a pass on much bigger trade issues, that will only magnify the damage.
Read the report: “Do Not Fall for the Hype on U.S.-China Natural Gas Trade” by Melanie Hart, Luke Bassett, and Blaine Johnson
For more information or to talk to an expert, please contact Sam Hananel at [email protected], or 202-478-6327.