United States reaps in China contracts

United States reaps in China contracts

BEIJING (AFP): China's U.S.$4 billion buying mission to the United States has promised big wheat and aircraft contracts to chip away at the massive U.S. trade deficit, Xinhua reported yesterday.

With contracts with Ford, General Electric and General Motors already under his belt, mission leader Zeng Peiyan said 700,000 tons of wheat and up to $3 billion of Boeing aircraft would also purchased in the next few days.

"The contracts to be signed during this buying mission include the purchase of Boeing airplanes worth between $2 billion and $3 billion," said Zeng, who is also vice chairman of the State Planning Commission.

Industry sources said the Boeing deal is scheduled to be signed in Washington on October 28, during President Jiang Zemin's state visit.

But the previous figure put on the deal, by the China Aviation Supplies Corp., was only $1.7 billion for an order of 30 aircraft, comprising 20 single-aisle Boeing 737s, five Boeing 777s and five Boeing 757s.

"This new figure of $2 billion to $3 billion indicates that China's order is going to be more than 30 planes," said an aviation expert in Beijing.

"We expect that two more Boeing 757s will be included," he added.

Zeng's buying mission will also purchase 700,000 tons of wheat in a bid to lower Washington's massive trade deficit with Beijing.

Speaking in New York after a series of major deals in engine production, power generation, oil exploration and fertilizer, Zeng said total deals would be worth around $4 billion.

"This move shows that China has been taking active measures to solve the trade deficit problem and we want the U.S. side to understand this practical attitude on the Chinese part," Zeng was quoted by Xinhua as saying during a media briefing in New York.

According to U.S. figures, the Sino-U.S. trade deficit rose 15 percent for the second consecutive year in 1996 to a record $39.5 billion.

In the first eight months of this year, the gap reached $31 billion against $24.2 billion a year earlier, and is now approaching the size of trade deficit with Japan which was $56 billion last year.

While China disputes the size of the deficit, it recognizes the gap and has called on the United States to lift sanctions on the import of nuclear power technology in order to boost U.S. exports.

But the United States insists the deficit is caused by China's closed service sectors and is calling for market opening in finance, insurance and distribution networks to work towards a balance.

The deals already signed by the Chinese buying commission comprise a $250 million joint venture for the Ford Motor Co. to produce engines in China, a $100 million purchase of fertilizer and a $200 million vehicle component agreement between General Motors Corp. and its Shanghai joint venture.

Also agreed were a deal to explore offshore gas reserves in the South China Sea with the Atlantic Richfield Corp. and a memorandum of understanding involving the Foster Wheeler Corp. and the General Electric Co. to provide boiler and power generators for the Dezhou power plant in eastern China.