U.S. and China tout $45 billion in export deals

WASHINGTON Thu Jan 20, 2011 1:18am EST

Final assembly takes place on passenger planes at Boeing's Everett, Washington plant, April 30, 2009. REUTERS/Robert Sorbo

Final assembly takes place on passenger planes at Boeing's Everett, Washington plant, April 30, 2009.

Credit: Reuters/Robert Sorbo

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WASHINGTON (Reuters) - The United States and China on Wednesday agreed on $45 billion in U.S. export deals and to give U.S. companies greater access to China's $88 billion-plus government contracts market at the start of Chinese President Hu Jintao's four-day state visit.

White House officials said the agreements included China's "final" approval of a $19 billion contract to buy 200 Boeing (BA.N) aircraft for delivery between 2011 and 2013.

"From machinery to software, from aviation to agriculture, these deals will support some 235,000 American jobs -- and that includes many manufacturing jobs," U.S. President Barack Obama said at a joint press conference with Hu.

The announcements served to underscore the theme of economic cooperation struck by Hu and Obama. But the size of the deals will do little to dent the huge bilateral trade deficit the United States runs with China, estimated to be running in 2010 at a record of $275 billion.

Many of the orders had been in the works for a while, and shares in the companies affected by the deals weakened on Wednesday more steeply than the broader market.

Another deal involving GE (GE.N) builds on an existing partnership with the Chinese Ministry of Railways to bring Chinese high-speed rail technology to the United States, and for GE to manufacture locomotives for China.

The White House also trumpeted deals in various stages of development involving Honeywell (HON.N), Caterpillar (CAT.N), Westinghouse Electric, a unit of Japan's Toshiba Corp (6502.T), and other companies.

While the pacts are significant, Jeremie Waterman, director for China at the U.S. Chamber of Commerce, said they also "highlight how much the Chinese economy is directed by the state," often to the detriment of U.S. companies.

The U.S. Chamber has called forcefully for more opening of the Chinese market to U.S. companies.

GOVERNMENT CONTRACTS

Perhaps more encouraging, Waterman said, was progress in opening up the government contract market by addressing "indigenous innovation" policies that U.S. companies say would require them to transfer technology to the Chinese.

China agreed to "delink its innovation policies from its government procurement preferences," and also repeated a promise not to discriminate against foreign goods or services based on where their intellectual property content is developed or maintained, the White House said in a fact sheet.

"That arguably is the most significant commercial commitment, assuming it is implemented," Waterman said.

The Chinese central government buys more than $88 billion annually in goods and services, and provinces and municipalities buy even more. U.S. companies such as GE have complained of restrictions.

"The notion was if we're part of the Chinese economy, we should be allowed to win," GE's CEO Jeffrey Immelt said in a Reuters Insider Television interview after corporate executives met with Hu and Obama at the White House.

SOFTWARE

Hu's visit coincides with rising U.S. criticism that China does not play by the rules as it amasses economic power and uses a number of policies to maintain a large trade surplus with the United States.

In the meeting with U.S. and Chinese business leaders, Hu said he saw "a promising future" for U.S.-China trade and pledged to maintain a "transparent, just, fair, highly efficient investment climate" for foreign firms.

Although China is one of the fastest-growing export markets for the United States, that is overshadowed by imports from China that reached an estimated $370 billion in 2010.

The two leaders also discussed intellectual property rights protection and Obama said China needed to make more progress to stop piracy and counterfeiting of U.S. goods.

Microsoft's CEO Steve Balmer, who attended the corporate executives meeting, expressed disappointment that no new software sales were announced. U.S. software manufacturers say they lose billions of dollars in China each year because of illegal copies.

Although Obama touted software exports to China, "we have seen no evidence of increased sales in recent weeks or months," said Emery Simon of the Business Software Alliance, which represents Microsoft (MSFT.O) and other U.S. companies.

New software auditing procedures agreed between the two countries also aren't tough enough to ensure China lives up to its promise to increase use of legal product, Simon said.

FAKERY

Boeing, while crediting the U.S. government for helping to seal the $19 billion deal, acknowledged the orders had been on their books for a while.

That prompted some criticism of Obama's announcement.

"This kind of fakery is an insult to the American people, and especially to America's legions of unemployed," said Alan Tonelson of the U.S. Business and Industry Council.

A huge Chinese business delegation has accompanied Hu on his trip to the United States, and will cap the week in Chicago where more deals are expected to be announced.

Chinese officials told the Obama administration that Chinese companies had signed 70 contracts worth $25 billion in U.S. exports from 12 states, U.S. officials said.

Obama, who hopes to reduce high U.S. unemployment in part by doubling exports in five years, at times acted as U.S. salesman-in-chief during the press conference with Hu.

"We want to sell you all kinds of stuff," Obama said.

But talks over the past two weeks aimed at reopening China's market to U.S. beef showed no success yet.

China slapped curbs on U.S. beef in 2003 after the first case of mad cow disease was found in the United States, and has been slower than many other countries to reopen its market.

(Reporting by Caren Bohan, Doug Palmer and Paul Eckert in Washington and Kyle Peterson in Chicago; Editing by David Storey)

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