The U.S. and China have agreed on broad terms to grant U.S. natural gas exporters and certain other industries easier access to Chinese markets, according to people familiar with the matter.
The governments will release a joint diplomatic communiqué sometime this month aimed at rebalancing and increasing trade between the two countries, the people said. The document is the first product to come out of an agreement in April to increase U.S. exports to China, which has a large trade surplus with the U.S.
The communiqué will outline several areas in which Beijing and Washington hope to encourage U.S. trade to China, including supplies of liquefied natural gas, a key energy source used to generate power and heat homes, the people said. It will also focus on other areas of trade, including agriculture, but the exact details of the agreement are unclear.
U.S. companies have long sought better access to China, including its financial and agricultural markets. China currently has a ban on imports of U.S. beef.
President Donald Trump made the U.S. trade imbalance with China a hallmark of his campaign, threatening at times to place steep tariffs on Chinese goods and label China a currency manipulator. Mr. Trump has eased that rhetoric since taking office and said in April he offered President Xi Jinping more favorable trade terms for Beijing in exchange for help on confronting North Korea.
After Mr. Xi's visit to President Trump's Mar-a-Lago estate in April, the two leaders agreed to a strategic 100-day review of the U.S.-China trade balance.
The U.S. gas export industry is in its early stages, but could be a boon to the economy. Only one U.S. company, Cheniere Energy Inc., has shipped cargoes of liquefied gas from the lower 48 states for about a year. But dozens of companies are seeking permits for new, billion dollar facilities, setting the U.S. to become a net exporter of gas by 2018 for the first time since the 1950s.
Exporters hope to capitalize on vast gas reserves unlocked by hydraulic fracturing. The U.S. now has one of the world's five largest supplies of natural gas, with more than 300 trillion cubic feet of proven reserves, according to U.S. government data.
Gary Cohn, director of the White House's National Economic Council, has said U.S. gas exports are a priority for the administration, promising to streamline regulatory approval for new projects.
The exact provisions on gas exports in the communiqué are unclear, but will call for opening Chinese gas markets and joint investment in costly infrastructure projects in China needed to process and import the commodity, one person familiar with the matter said.
China is attempting to wean itself of coal burning as it pursues a five-year plan to reduce air pollution and is increasingly turning to gas, a cleaner power source. China imported more than 28 million tons of liquid gas in 2016, a 33% increase from the previous year, and is now the world's third largest importer of the fuel.
But, to date, China has received a handful of spot cargoes of U.S. gas, all from Cheniere, and hasn't signed any long-term commitments to offtake U.S. gas.
Chinese state-owned oil-and-gas companies have been reluctant to source a key energy supply from the U.S. due to concerns over political tensions between the two countries, the untested nature of the U.S. export market, and higher prices for U.S. gas, according to a person familiar with the matter.
A blessing from the Chinese government to import U.S. gas could open one of the world's largest markets to the nascent U.S. export industry.
(END) Dow Jones Newswires
May 11, 2017 15:59 ET (19:59 GMT)