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No Sale: China Visit Yields Scant Results

Fri., Oct. 10, 1997

For all his tough talk about trade, U.S. Commerce Secretary William Daley will return from his first trip to China with no deals in hand.

Daley and China’s trade minister, Wu Yi, had been widely expected to announce an agreement on a Chinese purchase of 30 Boeing aircraft for $2 billion.

But the officials ended several days of talks Thursday with only broad agreement to increase cooperation on discussing trade issues.

“We are not announcing any contracts, any deals,” Daley told reporters as he wrapped up his four-day visit to China.

Daley had said earlier in the week that he hoped to have something to announce on Thursday.

In Everett, Wash., Boeing Co. Chairman Phil Condit told reporters after a speech to the local Chamber of Commerce that China might be delaying an announcement to gain political leverage. He said he hoped an announcement would be made within the next two months.

“We went through a pretty rough period in the relationships between China and the U.S., and I think that clearly has been an issue,” Condit told the Seattle Post-Intelligencer.

The on-again, off-again Boeing deal was set earlier in the week, but the two sides wavered on the timing of the announcement, according to well informed company and government sources.

Chinese President Jiang Zemin may be saving the news for his state visit to the United States later this month. Such a deal would come in handy if Jiang is confronted, as he inevitably will be, over China’s growing trade surplus with the United States.

In one sign of progress, Wu told Daley that China would send a purchasing mission to the United States. Officials on both sides declined to provide details.

A Boeing deal would help soothe frustrations over China’s purchases of some 60 Airbuses in the past two years, including the sale of 30 announced during French President Jacques Chirac’s visit to Beijing in May.

That deal was widely viewed as a reward to France and other European nations for their willingness to tone down criticism of China’s human rights record.

An aircraft purchase also would make a noticeable, but small, dent in the U.S. trade deficit with China, which according to U.S. reckoning is expected to rise to $44 billion this year and is second only to Japan’s.

Daley made the “dramatic imbalance” in trade, as he described it, a key issue in his meetings with Jiang and other leaders.

Both Daley and Treasury Secretary Robert Rubin, who visited China just two weeks ago, were actively involved in the talks over the Boeing deal.

Top executives of the Seattle, Washington-based company and Washington state Gov. Gary Locke also were in town this week, heightening speculation that a deal was imminent.

But aircraft were not the only urgent issue on Daley’s agenda. He strongly urged China to do more to open its markets to a wide range of foreign goods and services, saying more must be done if Beijing is to join the World Trade Organization.

China wants WTO membership on concessionary terms for developing countries. The United States and other industrialized countries contend that China’s economy is strong enough to withstand a faster pace of market-opening reforms.

On Thursday, Daley did not announce any new promises by China to ease trade barriers that American officials say are a major factor in the yawning U.S. trade deficit.

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