BEIJING -- American and Chinese companies have lined up $250 billion worth of deals of the kind that U.S. President Donald Trump has long promised in order to tackle his country's "horrible" trade deficit with China.
Trump and President Xi Jinping highlighted the agreements, which include Chinese investments in the U.S. manufacturing and energy sectors and purchases of American-made aircraft, in a joint news conference here Thursday. But how far the deals, many of which are nonbinding, will go in correcting the trade imbalance between the two countries remains to be seen.
During the news conference, corporate executives took the rostrum to sign documents as the two heads of state looked on.
China Investment Corp., a sovereign wealth fund, and New York-based investment bank Goldman Sachs agreed in principle to jointly invest $5 billion to establish a fund supporting U.S.-Chinese tie-ups in American manufacturing.
Another big figure is the $37 billion worth of Boeing aircraft that Chinese companies agreed to buy.
State-owned oil giant Sinopec Group, also known as China Petrochemical, signed a contract with a U.S. company to jointly develop liquefied natural gas from fields in Alaska. Other deals have Chinese businesses buying aircraft engines from General Electric, semiconductors from Qualcomm and beef from American ranchers.
According to China, the country runs annual trade surpluses with the U.S. of around $260 billion. Some of the investment and purchase contracts announced Thursday span a number of years, leaving it uncertain whether these deals can make an immediate dent in the imbalance.
No progress on trade rules
Washington began scrambling to arrange the massive package of commercial deals in September. Trump directed Commerce Secretary Wilbur Ross to assemble a delegation of U.S. executives to accompany the president on his first official visit to China. That month, Ross traveled to Beijing himself and met with officials including Premier Li Keqiang to lay the groundwork.
But that left just two months to strike deals. Though the headline figure of $250 billion approaches the U.S. Commerce Department's estimate of the annual trade deficit with China -- nearly $350 billion -- the bulk of the package consists of memorandums of understanding and similar preliminary agreements.
The Trump administration, lacking any surefire ways to reduce the trade deficit with China, has turned to the private sector for results. Trump harped on this issue in his presidential campaign last year, complaining that China was killing American jobs.
But the drastic measures he threatened then -- such as slapping a 45% tariff on Chinese goods and branding the country a currency manipulator -- never materialized, if they were ever practical. With the U.S. economy humming along, investment and consumer spending have grown, and the trade deficit has actually widened.
What American companies want from the administration's China strategy are trade and investment rules to deal with issues such as intellectual property violations. Information technology businesses in particular often are forced to hand over technology when they enter that market. The Office of the U.S. Trade Representative has opened an investigation into Chinese practices under Section 301 of the 1974 Trade Act that could result in sanctions. But Trump's third meeting with Xi passed with no assurance of action on such structural causes of the trade imbalance.
Slashing U.S. trade deficits with other partners is a key goal for the president, who has vowed to bring jobs back to the country. But a year after his election, his administration's efforts have borne little fruit. Renegotiating the North American Free Trade Agreement with Mexico and Canada is unlikely to result in a new deal this year, and no concrete proposals have emerged to rework a free trade deal with South Korea criticized by Trump.