President Obama’s joint press conference with Chinese President Hu Jintao at the White House Wednesday may be remembered more for its translation snafus than anything else. But the biggest news of the actual summit so far is the corporate dealmaking.
As a central feature of Hu’s state visit, the White House announced $45 billion worth of trade and investment deals with Beijing. China has approved the purchase of 200 planes from Boeing, for an estimated $19 billion. General Electric is part of several announced deals, including a project to expand high-speed rail in the U.S. using Chinese technology and a joint effort with Shenhua Gasification to building clean energy generators. American Electric Power and Duke Energy are also participating in clean energy projects in China. The Obama administration says that Chinese companies have signed 70 contracts–in the agriculture, machinery, chemical and other sectors–that could boost exports in 12 states by a total of $25 billion.
To be sure, these deals were lined up in advance of Hu’s visit, but President Obama made one thing clear during to his counterpart from Beijing during the press conference: “We want to sell you all kinds of stuff,” including planes, cars and software.
Ahead of the press conference, Obama and met with U.S. and Chinese business leaders including Microsoft CEO Steve Ballmer, Coca-Cola boss Muhtar Kent, Dow Chemical Chairman and President Andrew Liveris and Lenovo’s Liu Chuanzhi. The meeting, which lasted less than an hour, was largely symbolic.
Corporate dealmaking constitutes only one aspect of the present economic relationship between the U.S. and China, however. U.S. business concerns about Chinese protectionism and intellectual property piracy are another. For example Obama mentioned that, during the CEO meeting, Ballmer noted that just one out of every 10 of Microsoft’s customers in China is actually paying for its software.
According to the White House press office, China has agreed to better enforce its intellectual property laws and scrap its “indigenous innovation” policy that favors domestic technology over competition by foreign companies. Beijing and its provincial and local governments have also agreed not to discriminate against foreign firms in a procurement deals. What remains to be seen is the extent to which China will enforce these commitments and what the United States tends to do about it if Chinese officials don’t keep their word. Worries about protectionism so far haven’t seemed to deter U.S. businesses from investing in China.
A third aspect to the international relationship–and this part is particularly important to American exporters–is the exchange rate between the U.S. dollar and the Chinese renminbi (RMB). For years, U.S. politicians and business leaders have complained that the renminbi is undervalued against the dollar, making Chinese goods artificially cheap and undercutting U.S. exports. In his press conference with Hu Wednesday, Obama said the “RMB remains undervalued,” though he sidestepped a question about the exchange rate’s effect on U.S. unemployment. He added that both the U.S. and China want the RMB’s value to be increasingly market driven, which will help drive up standards of living in China.
“This is something that can be a win-win,” said Obama.