January 19, 2011 / 3:25 PM / 9 years ago

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

WASHINGTON (Reuters) - The United States and China reached agreement on export deals worth $45 billion including a major contract with Boeing, the White House said on Wednesday at the formal start of Chinese President Hu Jintao’s state visit.

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

The agreements included China’s final approval of a $19 billion contract to buy 200 Boeing aircraft for delivery between 2011 and 2013, which U.S. officials estimated would support 100,000 American jobs.

“We value China’s support for our products and its confidence in Boeing,” said Jim Albaugh, CEO of Boeing Commercial Airplanes. “With the outstanding support provided by the United States Government, this deal is a win-win for the Boeing-China partnership which is approaching its 40th anniversary.

Other deals involved Honeywell (HON.N), Caterpillar (CAT.N) and Westinghouse Electric, a unit of Japan’s Toshiba Corp (6502.T).

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.

Altogether, the Boeing and other deals will support an estimated 235,000 American jobs, they said.

The deals appeared at least partly intended to answer 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.

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 U.S. trade deficit with China was an estimated $275 billion last year, which would be a new record.

The senior U.S. official, who briefed reporters on condition of anonymity, said there was also progress on several key areas on trade, including intellectual property, indigenous innovation and government procurement.


The $19 billion order for Boeing would be larger than a $15.6 billion deal for Airbus EAD.PA to sell 180 planes to Indian budget carrier IndiGo. That deal, announced on January 11, was touted as the biggest jet order in aviation history.

“So they’ve trumped Airbus,” said Alex Hamilton, managing director of EarlyBirdCapital.

“Obviously there is a huge pent-up demand in China. ... This order highlights not only that but it also highlights the health of the overall cycle on the heels of the Airbus order.”

Economist Derek Scissors of the Heritage Foundation think tank said he was less excited about summit-driven business.

“So far, the deals being announced mean very little. The big Boeing deal is just a package wrapping up U.S. plane exports to China that would have occurred anyway,” he said.

U.S. officials also said they made progress on a number of policy issues with China, including concerns over “indigenous innovation” policies that U.S. companies have complained would require them to transfer technology to the Chinese in order to participate in China’s vast government procurement market.

On that point, China agreed to “delink its innovation policies from its government procurement preferences,” and also repeated a promise not 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.

However, talks over the past two weeks aimed at reopening China’s market to U.S. beef appear to have failed.

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.

In addition, U.S. software manufacturers were disappointed that China did not agree to more vigorous auditing procedures to back up its promise to fight copyright piracy by increasing use of legal software.

U.S. industry estimates it losses billions of dollars in sales in China each year because of the theft.

“What we have in mind by audits is matching up the software in use against what they have actual permission to use in order to figure what’s being used with a license and without a license,” said Emery Simon of the Business Software Alliance, which represents Microsoft (MSFT.O) and other U.S. companies.

It is also disappointing that no Chinese purchases of U.S. software have been announced as part of Hu’s visit, he said.

“We have seen no evidence of increased sales in recent weeks or months,” Simon said.

Reporting by Caren Bohan and Doug Palmer in Washington and Kyle Peterson in Chicago; Editing by Will Dunham

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