China to Buy $4.3B in U.S. Technology
By MICHAEL LIEDTKE
A delegation of Chinese business leaders on Wednesday committed to buying $4.3 billion in U.S. technology, hoping to soften a political backlash to the massive trade imbalance dividing two of the world's economic powers.
The agreements were trumpeted at a ceremony staged two weeks before the scheduled start of government talks in Washington, where leaders will try to tackle the United States' $232 billion trade deficit with China and other prickly issues.
California Lt. Gov. John Garamendi hailed 27 contracts signed Wednesday as an "important step in furthering the deep relationship between this state, this country and China."
But the event's timing spurred immediate skepticism about the sincerity of China's efforts to narrow a trade gap that has tormented the U.S. for years.
"They are not going to change their ways. This is all part of a political smoke screen," said Peter Morici, a business professor at the University of Maryland and the former chief economist for the U.S. International Trade Commission.
To underscore China's resolve to explore more U.S. investments, executives from more than 200 Chinese companies are meeting with their U.S. counterparts in 24 cities scattered across 23 states, said Ma Xiuhong, vice minister of China's Ministry of Commerce.
In its first stop, just north of Silicon Valley's high-tech heartland, the Chinese coalition primarily sealed deals with computer software, semiconductor and telecommunications companies. The U.S. beneficiaries included high-tech bellwethers Microsoft Corp, Oracle Corp, Cisco Systems Inc, and Hewlett-Packard Co.
Already boasting the world's largest population, China has become an increasingly attractive market for makers of high-tech gear as the country's rapid economic growth feeds the demand for more powerful computers and more sophisticated mobile phones.
China's previous shopping sprees in the United States have had little impact because of perceptions that the country's companies were merely bundling together deals that were going to be made anyway, said Nicholas Lardy, a China expert at the Peterson Institute for International Economics in Washington, D.C.
"You can put me in the skeptical category," Lardy said.
Much of the criticism over China's trade policies revolves around government restrictions that have helped keep the country's currency, the yuan, well below the U.S. dollar. The spread fuels the trade imbalance between the two countries by making China's exports to the United States cheaper while raising the prices of the U.S. exports to China.
The exasperation with China's handling of the yuan surfaced again in Washington on Wednesday, when U.S. Rep. Sander Levin, D-Mich., convened an unusual joint hearing of three House subcommittees to address the currency policies of both China and Japan.
Levin, chairman of the House Ways and Means Trade Subcommittee, said he believes the yuan has been undervalued by as much as 10 percent to 50 percent because of the Chinese government's manipulation.
U.S. Treasury Secretary Henry Paulson is expected to focus on the yuan during May 23-24 meetings with the Chinese government.
Reps. Tim Ryan, D-Ohio, and Duncan Hunter, R-Calif., already have introduced legislation that would enable U.S. companies to seek tariffs on Chinese goods in retaliation for its currency policies. Ryan and Hunter sponsored a similar bill in 2005 that made little progress.
Separately, an aide to Sen. Charles Schumer said Wednesday that the New York Democrat is working with Sens. Lindsey Graham, R-S.C., Max Baucus, D-Mont., and Charles Grassley, R-Iowa, to introduce a China currency bill by early June.
AP Business Writer Christopher S. Rugaber in Washington contributed to this report.
http://www.forbes.com/feeds/ap/2007/05/09/ap3705046.html
By MICHAEL LIEDTKE
A delegation of Chinese business leaders on Wednesday committed to buying $4.3 billion in U.S. technology, hoping to soften a political backlash to the massive trade imbalance dividing two of the world's economic powers.
The agreements were trumpeted at a ceremony staged two weeks before the scheduled start of government talks in Washington, where leaders will try to tackle the United States' $232 billion trade deficit with China and other prickly issues.
California Lt. Gov. John Garamendi hailed 27 contracts signed Wednesday as an "important step in furthering the deep relationship between this state, this country and China."
But the event's timing spurred immediate skepticism about the sincerity of China's efforts to narrow a trade gap that has tormented the U.S. for years.
"They are not going to change their ways. This is all part of a political smoke screen," said Peter Morici, a business professor at the University of Maryland and the former chief economist for the U.S. International Trade Commission.
To underscore China's resolve to explore more U.S. investments, executives from more than 200 Chinese companies are meeting with their U.S. counterparts in 24 cities scattered across 23 states, said Ma Xiuhong, vice minister of China's Ministry of Commerce.
In its first stop, just north of Silicon Valley's high-tech heartland, the Chinese coalition primarily sealed deals with computer software, semiconductor and telecommunications companies. The U.S. beneficiaries included high-tech bellwethers Microsoft Corp, Oracle Corp, Cisco Systems Inc, and Hewlett-Packard Co.
Already boasting the world's largest population, China has become an increasingly attractive market for makers of high-tech gear as the country's rapid economic growth feeds the demand for more powerful computers and more sophisticated mobile phones.
China's previous shopping sprees in the United States have had little impact because of perceptions that the country's companies were merely bundling together deals that were going to be made anyway, said Nicholas Lardy, a China expert at the Peterson Institute for International Economics in Washington, D.C.
"You can put me in the skeptical category," Lardy said.
Much of the criticism over China's trade policies revolves around government restrictions that have helped keep the country's currency, the yuan, well below the U.S. dollar. The spread fuels the trade imbalance between the two countries by making China's exports to the United States cheaper while raising the prices of the U.S. exports to China.
The exasperation with China's handling of the yuan surfaced again in Washington on Wednesday, when U.S. Rep. Sander Levin, D-Mich., convened an unusual joint hearing of three House subcommittees to address the currency policies of both China and Japan.
Levin, chairman of the House Ways and Means Trade Subcommittee, said he believes the yuan has been undervalued by as much as 10 percent to 50 percent because of the Chinese government's manipulation.
U.S. Treasury Secretary Henry Paulson is expected to focus on the yuan during May 23-24 meetings with the Chinese government.
Reps. Tim Ryan, D-Ohio, and Duncan Hunter, R-Calif., already have introduced legislation that would enable U.S. companies to seek tariffs on Chinese goods in retaliation for its currency policies. Ryan and Hunter sponsored a similar bill in 2005 that made little progress.
Separately, an aide to Sen. Charles Schumer said Wednesday that the New York Democrat is working with Sens. Lindsey Graham, R-S.C., Max Baucus, D-Mont., and Charles Grassley, R-Iowa, to introduce a China currency bill by early June.
AP Business Writer Christopher S. Rugaber in Washington contributed to this report.
http://www.forbes.com/feeds/ap/2007/05/09/ap3705046.html
