Prior to the president of China’s visit to the United States, which starts in Everett on Tuesday, our own president had a simple message.
Instead of a shopping trip, President Bush said, he expected the visit to bring meaningful political change.
Bush was concerned about manipulation of the Chinese currency, the massive trade deficit between the two countries and the widespread piracy of computer software, as evidenced by China’s stature as a major buyer of computer hardware and only a minor purchaser or producer of software.
Given Bush’s strong statements, here’s what the Chinese did: They sent a delegation on a big-time shopping trip in advance of President Hu Jintao’s visit.
First it was the order for 80 737 jetliners from Boeing. The jets are valued at $4.6 billion, although the check was probably a great deal less because of the value of the order.
Cha-ching goes the cash register.
The next day, Founder Technology Group Corp., a Chinese computer manufacturer, bought some software from Microsoft and signed an agreement offering to partner with Microsoft to crack down on software piracy in China.
The check: $250 million for licenses of a Chinese version of Windows to be loaded on computers during the next three years.
Cha-ching.
All told, the Chinese delegation is expected to sign some 107 contracts for $16.2 billion worth of U.S. products before Hu shows up on Tuesday.
Cha-ching. Cha-ching.
That’s a big number. But for the Puget Sound region, those early purchases were important.
On Tuesday, Hu tours Redmond’s Microsoft campus with co-founder Bill Gates, then heads to Gate’s palatial estate in Medina for dinner. I don’t know what the dinner will cost, but odds are Bill’s going to make out OK on the deal. I think it’s fair to say he and Melinda won’t be starting a food fight at dinner.
On Wednesday, Hu will team up with Boeing Commercial Airplanes chief Alan Mulally for a tour of the Boeing Co.’s Everett assembly plant. Hu’s jets will be made in Renton, but who can pass up the Everett building, the largest in the world by volume? Then he’ll zip across the Boeing freeway for lunch at the Future of Flight museum.
It’s a large VIP lunch – so large they’ll be clearing out aircraft from the museum floor to make room. But again, the $4.6 billion order likely makes it all worthwhile.
While at the museum, Hu is expected to make a major policy speech. He could very well announce some meaningful changes sought by the Bush administration.
Or not.
Even if Bush doesn’t want just a shopping trip, I’m calling it a great start.
Major orders for Boeing and Microsoft – the Puget Sound area’s two biggest employers – will go a long way toward aiding the area’s economy.
The trade gap between the two countries is a record $202 billion, so anything short of $5 billion worth of orders in the Puget Sound area really is a drop in the bucket. Even the $16.2 billion worth of purchases across the U.S. will only make a dent.
At first blush, it’s easy to let American pride well up and shout, “We can’t be bought for a measly $16.2 billion. Not by the communists.”
But break down what’s happening here.
China is trying to beat the capitalists at their own game. Cutthroat pricing is what capitalism is all about. And China isn’t forcing us to buy its goods, although cheapening its currency creates an unfair playing field.
Still, U.S. businesses are falling all over themselves to buy stuff produced in China.
And Wal-Mart wouldn’t be one of China’s top trading partners if shoppers here weren’t falling all over themselves to buy its goods.
Spreading cash around to promote international good will (often with no political or philosophical support) has been a U.S. diplomacy tactic for as long as there has been a U.S. Buying up some good will is an integral part of capitalism. We shouldn’t be surprised by it when someone turns the tables on us.
I understand why Bush is demanding more than a shopping spree from Hu’s visit. China should help narrow the trade deficit if it can. And it certainly shouldn’t be keeping the price of its own goods inappropriately low.
But I don’t think Bush should be spurning China’s purchases. Complex products such as airplanes and computer software are things that China needs to buy – it has all the cheap labor it needs – and we should sell all we can and thank China for it.
It is a good start for improving U.S.-China relations. Let’s see if we can also get a political bonus as part of the deal.
Mike Benbow: 425-339-3459; benbow@heraldnet.com
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