by Bloomberg News
The White House expects to announce upwards of $250 billion in business deals in China this week, an administration official said -- exactly the sort of U.S. jobs-based diplomacy that President Donald Trump likes to deliver when traveling abroad.
Commerce Secretary Wilbur Ross boasted of that number in a meeting with chief executives in China on Wednesday, but offered few details, according to two people who attended the meeting. A U.S. official confirmed the amount.
Earlier in the day, Ross announced $9 billion in deals involving about 20 companies, with energy and industrial businesses featured prominently. They included industrial giants such as DowDuPont Inc, Honeywell International Inc., General Electric Co. and Bell Helicopter. Many of the agreements involved existing Chinese partners.
"Addressing the imbalance in China trade has been the central focus of collaborative discussions between President Trump and President Xi,” Ross said before a signing ceremony in Beijing. “Achieving fair and reciprocal treatment for the companies is a shared objective.”
The exact details of pending deals could not be learned Wednesday night. Many of the deals are expected be in the form of nonbinding memorandums of understanding, not contracts.
Representatives from more than 20 companies planned to accompany Trump, who arrived in Beijing on Wednesday and sits down for formal talks with President Xi Jinping on Thursday. Among the CEOs taking part in the visit are Kevin McAllister of Boeing Commercial Airplanes, Steve Mollenkopf of Qualcomm and Keith Meyer of the Alaska Gasline Development Corporation, according to a list provided to U.S. companies in China that are part of the trade mission, obtained by Bloomberg News.
Trump has long complained that China engages in unfair trade practices and has pledged to fix the trade deficit with China, the U.S.’s largest. Trump has long argued that his background as a businessman makes him uniquely qualified to attract business deals.
The deals are expected to focus heavily on the energy sector. One of the biggest deals the Trump administration is currently negotiating is a multibillion-dollar energy investment from Chinese oil and gas giant China Petroleum & Chemical Corp. that would bring thousands of new jobs to hurricane-ravaged areas in Texas and the U.S. Virgin Islands. This deal, too, would be a memorandum of understanding.
According to a government document obtained by Bloomberg News, the companies tentatively listed as working on China-related deals in conjunction with the trip include names such as Westinghouse Electric Co., Alaska Gasline Development Corp., the Boeing Co. and Qualcomm Inc. Also on that document were General Electric and Honeywell, the deals Ross announced Wednesday.
The companies represent a variety of sectors from life sciences to heavy machinery. Other companies that may have deals in progress, according to the document, include Cheniere Energy Inc., Terex Corp., Thermo Fisher Scientific Inc. and Applied Materials Inc.
Details of the project in the hurricane zones in Texas and the Virgin Islands are yet to be finalized, but the Chinese company, known as Sinopec, is in negotiations to partner with ArcLight Capital, a Boston-based infrastructure investment firm, and Freepoint Commodities LLC, a Connecticut commodity trading firm. The deal is expected to be worth more than $7 billion in investments in the U.S.
The project would include construction of a 700-mile pipeline from the Permian oil field in western Texas to the Gulf Coast, as well as a storage facility there. Separately, Sinopec would expand the existing oil storage facility known as Lime Tree in St. Croix, according to a person familiar with the proposal.
The deal will still need final approval from officials in both the U.S. and China.
Most of the deals announced Wednesday weren’t broken out with separate valuations from the $9 billion package. In a separate statement following a signing ceremony, JD.com Inc. agreed to buy $1.2 billion of beef from the Montana Stock Growers Association and pork from Smithfield Foods Inc. over the next three years, as part of a larger agreement by the Chinese online retailer to import $2 billion of U.S. goods over that period.
Among the other deals, DowDuPont Inc. signed a tire contract with bicycle-sharing startup Beijing Mobike Technology Co. The U.S. company last year began to work with Mobike on development of new tires, and about 2 million bicycles already use their tires, the official China Daily reported Tuesday.
Honeywell International Inc. inked a memorandum of understanding with China’s Oriental Energy to cooperate on an ethane dehydrogenation project of 600,000 tons a year. Like DowDuPont, its deal also involves an existing Chinese partner. Honeywell announced in May that two Oriental Energy subsidiaries had licensed its technology to begin producing propylene.
Honeywell also signed a service contract with Spring Airlines Co., China’s biggest budget carrier that flies over 130 routes with a fleet of Airbus A320 planes. The deal would further develop Honeywell’s ties to China’s aviation industry. The U.S. company is a supplier to the C919, a new single-aisle plane being produced by state-owned Commercial Aircraft Corp. of China Ltd.
Bell Helicopter signed a helicopter purchase contract with Reignwood Group. The subsidiary of Textron Inc. already had orders from Beijing-based Reignwood for 60 helicopters, according to a China Daily report in July, including an order for 50 made at the China Airshow in 2016.
Caterpillar Inc. signed a cooperation deal with Shenhua Group Corp., China’s largest coal miner that also has major electricity and railroad assets and is in the midst of a merger with China Guodian Corp. The U.S. Soybean Export Council reached a soybean purchase agreement with a Chinese industry association.
General Electric Co. and China Datang Group also signed a cooperation contract. The two companies had announced an agreement last year to use GE technology to manage the performance of Datang power plants.
At the ceremony, Ross said any pending deals would have to go through a national-security review process, a sore point for the Chinese government. In September, the White House blocked the sale of U.S.-based Lattice Semiconductor to a Chinese firm citing national security concerns, and a month earlier the president authorized an investigation into Chinese intellectual property theft.
The administration is also weighing whether to impose penalties on Chinese aluminum foil imports amid accusations the product is being sold at below-market rates, though the Commerce Department said it would delay its determination on the anti-dumping probe until after the president’s visit.
Ahead of the trip, the U.S. and China announced an agreement to recognize each other’s aircraft safety approvals. The deal may boost China’s aviation industry and make it easier for companies like Boeing to sell products there.
The Sinopec deal alone could reduce the trade deficit between the countries by as much as $10 billion a year, according to one person with knowledge of the negotiations. And the project’s focus on areas impacted by recent hurricanes could also provide a political benefit to the president, who has faced criticism over his handling of storm damage, particularly in Puerto Rico.
Just 44% of Americans approve of the president’s handling of the federal response to recent hurricanes, while 47% disapprove, according to a CNN poll released Monday.
The president will likely emphasize U.S. liquefied natural gas and its role in lowering the trade deficit, and negotiate for China to buy more LNG from the U.S. in the future, two people familiar with the matter said.
--With assistance from Li Hui, Jeff Sutherland and Nick Wadhams.
To contact Bloomberg News staff for this story: Peter Martin in Beijing at pmartin138[email protected]; Jennifer Jacobs in Beijing at [email protected]; Bruce Einhorn in Hong Kong at [email protected]
To contact the editors responsible for this story: Craig Gordon at [email protected]
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