President Hu Jintao faces a tough job on his trip to the US this month. He faces an aggressive anti-Chinese attitude, fuelled by fears for US jobs, and loss of US influence in Asia. But a cheque-book charm offensive is underway…
A corporate advance party of over 100 Chinese firms, led by Vice-Premier Madam Wu Yi, is expected to offer billions of dollars in sweeteners to US companies, including orders for 80 new Boeing 737s; a US$1 billion hi-tech deal for Flextronics; US$560 million for Motorola; US$300 million for Microsoft; US$350 million for GE Energy; as well as $306 million, US$110 million, and US$80 million contracts for General Motors, Ford and Daimler Chrysler respectively. Quite a tea party!
The PR offensive is not far behind, and Chinese officials have noted that Chinese goods save US companies US$100 billion, and that much of the profit from Chinese exports goes to US companies anyway (though licensing, patents, and offshore manufacturing operations).
But it is not only Chinese officials making the case for China in relation to the US and their trade deficit. An article in the FT notes:
- ”Oxford Economics, a consultancy, finds China’s share has hovered at about a fifth of the total US merchandise deficit since 1995. That suggests the former is as much a result as a cause of the latter’s growth. Heaping all the blame on China would be off the mark, even if US manufacturing were dying…As a forthcoming report* by the Institute for International Economics and the Center for Strategic and International Studies points out, on average two-thirds of the value of Chinese products is imported – and much more in some industries.”
The article goes on to note that a substantial re-valuation of the Renminbi, of the sort demanded in the US, would just move production to other low-cost locations (but not back to the US), while China will move up the value chain.
Specific targets for the visit are reported to include:Creating understanding of challenges and risks (at home and abroad) associated with rapid opening up and reform the Chinese economy; the Promoting US investment in China, US purchase of Chinese goods, and opportunities for Chinese corporate investment in the US; Promoting China’s position on the international political stage; and addressing issues in relation to Taiwan, Japan and North Korea.
The debate will continue, but hopefully it will become better-informed with the help of Hu’s visit.
See news sources:
China Sends Big Business Group to US, Paving Way for Hu
New York Times – United States
… there by President Hu Jintao later this month, have dispatched a large delegation of businessmen and economic officials both to display China’s buying power …
China to sign deals for more than $4 billion US goods
Reuters – USA
WASHINGTON (Reuters) – Chinese companies will sign contracts in Los Angeles on Thursday to purchases more than $4 billion worth of US electronics, autos …
Guy de Jonquières: China manufacturing myths
By Guy de Jonquières
Published: April 3 2006 20:23 | Last updated: April 3 2006 20:23
China: The Balance Sheet
Institute for International Economics and
Center for Strategic and International Studies