China / US Trade - it swings both ways

When Dubya was in China last November Boeing announced an order for 150 single aisle 737 airliners.Chinese airlines confirmed orders for 50 of them in December and a further 20 at the end of January.In advance of the visit of Chinese President Hu Jintao's visit to the United States next week (April 18 to 22) have confirmed the remaining 80 single aisle aircraft.

This is part of 27 contracts that have been sealed with a total of US$16.2 Bn to be to coincide with his visit by 200 Chinese businessmen representing 110 enterprises.

These contracts include (as well as the Boeing deal) US$1 Bn with electronics service provider Flextronics (HQ in Singapore, Software Div. was Hughes Software 60% of Flextronics' Asian operations are located in China.) and a software contract of US$ 300 Mn with Qualcomm Inc.,(leading developer and innovator of Code Division Multiple Access (CDMA)) US$ 560 with telecommunications giant Motorola and a US$ 350 Mn contract with General Electrics (named "World's Most Admired" Company in FORTUNE magazine's annual poll of executives), for power equipment and other machinery.

Major US car manufacturers were also awarded contracts including one worth 300 million dollars for General Motors and a 110-million-dollar deal with Ford Motor, the report said.

It must be remembered of course that whilst this is heralded as a big hi tech deal a great deal of the composites fabrication of the forthcoming twin engined Boeing 787 Dreamliner will be made in China to be shipped to Everett to join parts from a worldwide supply chain, including leading edge French and Japanese In Flight entertainment systems.Chengdu Aircraft Industrial (Group) Co. Ltd will provide rudders Today, more than 3,400 Boeing airplanes -- one third of Boeing's world fleet -- have major parts and assemblies built in China. Examples of major parts and assemblies built for Boeing by Chinese industry include the 737 horizontal stabilizer from Shanghai Aircraft Corp., 737 vertical fin from Xian Aircraft Corp., 737 tail section modules from Shenyang Aircraft Corp., and 757 empennage and aft fuselage section from Chengdu Aircraft Corp. All are AVIC I affiliates.

Danish wind turbine company Vestas have decided to double the size of their new Tienjin factory by the middle of 2007, will double the original factory’s annual production capacity from approximately 600 blades to approximately 1,200 blades and increase staff from 240 to 400 employees.Total investment will be Euros 13 Mn.

In the US 2006 is expected to be an even bigger year for wind energy installations (now in 30 states) thanks to the extension by Congress of the wind energy production credit before it expired for the first time in the credit’s history. Installations will exceed 3,000MW. The final tally of 2,431MW boosted the cumulative US installed wind power fleet by over 35%, bringing the industry’s total generating capacity to 9,149MW.

As a result, Vestas who have a huge share of the US market (they continue to lose money however, year on year) will be shipping many of those blades (and turbine nacelles) to the US from China

So Hi tech transfer goes both ways.... so long as the tax credits bear up for Salomon Bros one of the US' biggest wind energy investors.


China / US Exports Imports Balance Millions of US$

January / Feb 2006 Exports 7,581.1 Imports 39,331.5 Net Balance -31,750.4
January / Feb 2005 Exports 5,691.4 Imports 35,790.0 Net Balance -29,100.4

Total 2005 Exports 41,836.5 Imports 43,462.3 Total -201,625.8