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China Brings Checkbook to U.S. Farm Country

posted on April 14, 2006

Hello, I'm Mark Pearson. U.S. consumers eagerly opened their checkbooks last month providing more evidence of an expanding economy. *The Commerce Department reported this week that retail sales rose 6-tenths of one percent in March. Economists watch those figures closely since retail sales account for two-thirds of all economic activity. *America's trade deficit declined in February to $65.7 billion. Though the number was lower than analysts expected, the deficit was still the third highest on record. *And, thanks to increased U.S. exports, the politically sensitive trade deficit with China narrowed to its lowest level since March of 2005. Several bills are pending in Congress aimed at reducing China's $200 billion trade advantage, including one that would impose a 27.5 percent tariff on Chinese imports. This week though, Chinese officials practiced a little "checkbook diplomacy," agreeing to buy everything from American airliners to farm commodities.

China Brings Checkbook to U.S. Farm Country

Announcer at meeting: "Next we move into the signing of cooperation agreements."

A Chinese trade delegation and the American Soybean Association signed an agreement in Washington on Monday to promote long-term trade and cooperation. It is basically a 3-year renewal of the 2003 agreement between the ASA and China's Chamber of Commerce for Import and Export of Foodstuffs, Native Produce and Animal By-products – or CFNA, for short.

Bob Metz, President of American Soybean Association. "ASA believes that free trade benefits all parties. We are fortunate that there have not been any disruption in soybean trade between China and the U.S."

China is the number one purchaser of U.S. soybeans.

Last year the Asian country imported 435 million bushels – valued at more than $2.5 billion.

Later in the week, the Chinese agreed conditionally to reopen its market to U.S. beef exports. Along with most Asian countries, China closed its borders to American beef products following the December 2003 discovery of mad cow disease. No date for reopening the border has been set, pending finalization of what Commerce Secretary Carlos Gutierrez calls, "technical protocol".

Secretary Carlos Gutierrez, U.S. Commerce Department: "We're both committed to work closely together to do this quickly. This is an important market for American farmers and American ranchers."

While the 10-day visit by Chinese officials and business executives included trips to U.S. farms, grain elevators, and the Chicago Board of Trade ... the scope of their trip went beyond agriculture.

Discussions included a crackdown on the sale of pirated computer software, elimination barriers to trade in medical devices and negotiation on allowing foreign firms to compete for Chinese government contacts.

And China's Vice Premier, who led the delegation, said her country is trying to boost purchases from U.S. companies.

One of the larger—but still tentative—deals is China's purchase of 80 Boeing 737 airplanes – valued at $4.6 (B) billion dollars.

Overall, U.S. officials are calling the negotiations a successful start.

Rob Portman, U.S. Trade Representative: "Through our discussions today very frank and construction, we were able to solve some problems."


Tags: agriculture China Mad Cow money news trade