As Treasury Secretary Henry Paulson and many other officials were
about to gather for the
fourth installment of the U.S.-Chinese Strategic Economic Dialogue, which got underway Tuesday in Annapolis, Md., the two sides announced a slew of trade deals meant to show that China is buying things from the U.S. There doesn't seem to be a definitive list readily available, but according to various accounts the contracts
covered goods ranging from aircraft engines to soybeans.
But for all the handshakes and toasts, these look like supply agreements, not examples, of Chinese companies buying American ones, or investing in plant and equipment here. And some Chinese commentators, resentful about past takeover bids by Chinese companies being rebuffed for political reasons, think that's not right. Tuesday's lead story on the very interesting site Chinastakes.com bears the
headline: "U.S. to China delegates: Buy? Heavens, yes. But invest...?"
China has good reasons for wanting to invest here. The appreciation of the yuan -- one of Paulson's objectives when he took the Treasury job in 2006 -- has become a reality, with the currency up 20% against the greenback since 2005. That, in turn, puts pressure on Chinese companies to get established on the ground in the U.S., much as Japanese and South Korean companies did before them. As discussed in
another article on Chinastakes, it's Chinese government policy to make this happen, and of course they have the money to do it.
The rising cost of energy (a big agenda item in Annapolis Tuesday) is another force at work. Transport costs are a major reason why Whirlpool Corp. manufactures its appliances for emerging markets in those same markets. Transport costs also no doubt figure in the thinking of, say, China's Qindao Haier Co. Ltd. as it
considers a bid for General Electric Co.'s appliance unit, along with its interest in the brand and distribution channels.
With GE on the record as wanting to buy more assets in China -- and Paulson and other officials asking for more U.S. participation in China's financial system -- it seems unfair, not to mention counterproductive, for the U.S. not to be open to Chinese investment. But especially in the current economic and political climate, some Americans may feel as compelled to object to Chinese deals as the Chinese feel to do them. -
Kenneth Klee
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