May 10th, 2007
Chinese to buy lots of US technology to smooth over trade relations
Government leaders hailed an agreement with Chinese business leaders in which the Chinese would buy $4.3 billion of US technology, a move to smooth over US anger over the growing trade imbalance, AP reports. The trade imbalance with China stands at $232 billion.
California Lt. Gov. John Garamendi hailed 27 contracts signed Wednesday as an "important step in furthering the deep relationship between this state, this country and China." In Silicon Valley, the Chinese visitors inked deals with Cisco, Oracle, Microsoft and HP. Hundreds of Chinese executives met with American counterparts in 23 states.
But those with long experience dealing with the Chinese on trade issues were deeply skeptical.
"They are not going to change their ways. This is all part of a political smoke screen," said Peter Morici, a business professor at the University of Maryland and the former chief economist for the U.S. International Trade Commission.
China's previous shopping sprees in the United States have had little impact because of perceptions that the country's companies were merely bundling together deals that were going to be made anyway, said Nicholas Lardy, a China expert at the Peterson Institute for International Economics in Washington, D.C.
"You can put me in the skeptical category," Lardy said.
Much of the anger centers of China's policies aimed at keeping its currency, the yuan, trading far below the dollar.
U.S. Rep. Sander Levin, D-Mich., convened an unusual joint hearing of three House subcommittees to address the currency policies of both China and Japan. Levin, chairman of the House Ways and Means Trade Subcommittee, said the yuan has been undervalued by as much as 10 percent to 50 percent because of the Chinese government's manipulation.
It seems ironic, though, that US government should be trumpeting the sale of technology to China, when in 2005 the Defense Department reported that Chinese computers were behind extremely damaging breaches of military computers.
