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.