China Uses Shopping to Deflect Tension
Chinese officials hoping to ease trade tensions before President Hu Jintao’s upcoming visit to Washington are kicking off a coast-to-coast buying spree today in Los Angeles that will include $15 billion in orders for U.S. electronics goods, airplanes, auto parts, farm goods and other products.
Although the new bookings will benefit many big names in industry, particularly in California, analysts were quick to express their skepticism about the Chinese trade mission. They characterized the super-sized shopping extravaganza -- the largest ever for a Chinese trade mission -- as a not-so-subtle effort to win over Americans without addressing the significant issues of the ballooning U.S.-China trade imbalance, piracy and China’s currency policy.
Even business groups warned that any gains from China’s commercial diplomacy would be short-lived unless they were accompanied by concrete action on issues such as stronger intellectual property protection.
“We recognize the value of having Boeing planes sold,” said Myron Brilliant, chief China strategist at the U.S. Chamber of Commerce. “We recognize the value of [China’s] buying U.S. products. But we also need the Chinese to understand that more needs to be done.”
China has a history of using high-visibility commercial deals to garner goodwill or punish other governments.
A senior Chinese official, speaking to reporters Wednesday in Beijing on condition that he not be named, said one aim of this week’s buying blitz was to “show average American people that trade is mutually beneficial,” a point he expected would be noted by some members of Congress.
But analysts said China’s efforts could backfire because the timing of today’s announcement was so clearly intended to smooth the way for Hu’s April 20 summit meeting with President Bush.
Jason Kindopp, a China strategist for Eurasia Group, a political risk consulting firm, said a large “government-orchestrated buying spree” simply provided “fodder for critics who are saying this is a manipulated trade relationship.”
Despite the current tensions, China’s growing importance to the balance sheets of leading U.S. firms is evident from the high-caliber roster of senior executives expected to attend today’s contract signing ceremony at the Universal Hilton Hotel. More than $4 billion in contracts are expected to be signed.
Flextronics International Ltd., a Singapore-based electronics manufacturer with a large U.S. operation, topped the list with a $1-billion order from Chinese firms, according to the Chinese Consulate in Los Angeles. Other big beneficiaries include Cisco Systems Inc. of San Jose and Qualcomm Inc. of San Diego.
Representatives from the U.S. companies did not respond Wednesday to calls.
China’s state-run media reported that Beijing would purchase as many as 80 737 jetliners from Boeing Co., whose Seattle-area plant will be the site of a major policy speech by President Hu on his way to Washington. Linda Lee, a Boeing spokeswoman, said Wednesday that the Chicago-based company did not comment on pending orders.
But Richard Aboulafia, an aerospace analyst with Teal Group Corp., said those airplanes were part of an order for 150 next-generation 737s announced last fall by the Chinese government. As of January, the Chinese had yet to purchase 80 of those planes, which have a list price of $4 billion to $6 billion.
California, already the leading U.S. point of entry for China trade, is expected to benefit from China’s largesse, because high-tech goods and aerospace products rank high on the list. The Chinese delegation also will be hearing today from Los Angeles Mayor Antonio Villaraigosa and others eager to attract Chinese investment dollars to the state.
After today’s ceremonies, members of the delegation will fan out across the country with their shopping lists, making stops in politically important Midwest and Southern states where job losses have stoked anti-China sentiments.
In the next few weeks, more than 200 entrepreneurs from 110 state-owned and private companies from China will make $15 billion worth of purchases in 13 states, said Xiaomei Zhou, a spokeswoman for the Chinese Consulate in Los Angeles.
Chinese Vice Premier Wu Yi, the head of the delegation, is on her way to what could be an acrimonious meeting Tuesday in Washington of the Sino-U.S. Joint Commission on Commerce and Trade, a bilateral group set up to address economic concerns. The U.S. is seeking specific commitments on the piracy front, including an agreement that Chinese government agencies won’t purchase illegally copied products.
Some congressional leaders have made China’s currency the rallying cry. They say the yuan is undervalued by as much as 40% and gives Chinese exporters an unfair advantage in trade. Several bills pending in the House and Senate would penalize China if it didn’t reform its currency system.
In July, under heavy American pressure, Beijing lifted the value of the yuan 2.1% against the dollar and said it would allow the yuan to float within a tight band against a basket of foreign currencies, instead of being pegged to the dollar.
Back home, news of the Chinese trade mission sparked little enthusiasm.
“I don’t support the government doing that,” said Chen Dawei, a professor at the School of Economics at Renmin University of China in Beijing, questioning whether it would bring results.
He recalled that just a week after China made similarly large-scale purchases of American goods around the time of the Sino-U.S. commission meeting in 2003, Washington announced an anti-dumping tax on Chinese-made home appliances.
“It’s OK to send a large gift, but our government should bargain more,” Chen said. “Now it’s become a custom.... I hope our government can be tough enough.”
Iritani reported from Los Angeles and Lee from Shanghai. Mark Magnier of The Times’ Beijing Bureau contributed to this report.
