- The Washington Times - Wednesday, November 12, 2003

From combined dispatches

Detroit’s Big Three automakers have reached trade pacts with China allowing them to export thousands of vehicles and increase their stakes in a growing automotive market that could become the world’s largest.

Separately, Boeing and General Electric yesterday signed agreements in Washington to sell as much as $2.4 billion worth of aircraft and engines to China, helping narrow the U.S. trade gap with Asia’s second-biggest economy.

The deals were also part of an expected onslaught of purchase announcements by China as the country seeks to blunt growing unhappiness in Congress over a widening U.S. trade deficit.

America’s trade deficit with China hit a record $103 billion last year, the largest imbalance ever recorded with any country, and is on track to reach $130 billion this year.

Lawmakers and some domestic industries blame that imbalance, and its underlying causes, for job losses. The manufacturing sector has been especially hard hit during an economic downturn, shedding 24,000 jobs as recently as last month, the Labor Department said. The sector averaged 53,000 new unemployed a month from August 2002 to August 2003.

A broad-based group of lawmakers in October demanded that the Bush administration restrict clothing imports from China, and a decision is due next week. Meanwhile, Sen. Charles E. Schumer, New York Democrat, and Sen. Lindsey Graham, South Carolina Republican, are pushing a bill to counter apparent Chinese currency manipulation with high tariffs.

American manufacturers say China has kept the yuan undervalued by as much as 40 percent against the dollar, giving Chinese products a competitive advantage against American goods.

U.S. farmers and some manufacturers, meanwhile, have complained that China has failed to open its markets as promised when it joined the World Trade Organization almost two years ago.

Commerce Secretary Donald L. Evans left China after a recent visit without a promise on currency but with a pledge that the country would buy more U.S. goods.

Mr. Evans yesterday presided over a signing ceremony of major Chinese purchase agreements for Boeing and General Electric.

Air China, Shandong Airlines, Xiamen Airlines, Hainan Airlines and Shenzhen Airlines said in separate interviews with Bloomberg News that they will together buy 30 single-aisle 737 planes from Boeing.

General Electric, the world’s biggest maker of jet engines, will sell $360 million worth of engines to the Chinese carriers. The company expects $5 billion in revenue from China by 2005, up from about $2.6 billion this year, Chief Executive Officer Jeffrey Immelt has said.

On the auto front, General Motors, the world’s largest automaker, said yesterday it plans to export thousands of vehicles to China in 2004 and 2005 as part of agreements valued at roughly $1.3 billion.

In one deal, GM will export 4,500 vehicles through its subsidiary, GM China, including Cadillacs, Buicks and other brands.

Every major automaker is trying to increase its presence in China, which this year is expected to surpass Germany as the world’s third-largest vehicle market behind the United States and Japan.

“As vehicle ownership grows in China, the luxury segment is beginning to open up,” said Rick Wagoner, GM chairman and chief executive officer. “We believe now is the right time to introduce our Cadillac luxury brand to China.”

GM said it has also signed two agreements with its flagship joint venture in China, Shanghai General Motors. As part of the first agreement, valued at $400 million, GM will supply components and assemblies for about 13,000 vehicles, including Cadillacs.

The second deal provides for GM to supply $700 million worth of component kits for the Buick Regal sedan and Pontiac Montana-based Buick GL8 wagon.

In addition, GM has signed pacts with several independent Chinese importers to import about 1,000 complete GM vehicles. The makes and models have yet to be determined. Those deals, along with the 4,500 Cadillacs and Buicks that will be exported through GM China, account for the $200 million balance of GM’s plans.

GM estimates China’s total passenger-vehicle sales will grow 29 percent to 4.4 million this year. That compares with roughly 17 million vehicles expected to be sold in the United States.

Staff writer Jeff Sparshott contributed to this report.


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