Is the U.S.-China Trade Agreement a Big Deal?

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In a press conference with Chinese President Hu Jintao on Wednesday, President Obama announced a slew of bilateral trade deals that will ramp up U.S. exports to China by over $45 billion. Obama said the 70 deals--which include a $19 billion contract for 200 Boeing airplanes and $2 billion worth of clean energy, aviation, and railway joint ventures between GE and its Chinese partners--will support 235,000 American jobs in 12 states.

Obama raised concerns about China's undervalued currency at the news conference as well, but Hu stayed silent on the topic. Earlier in the day, Obama and Hu met with American and Chinese business leaders to discuss Chinese trade barriers and intellectual property theft, among other issues.

Diplomatic visits, of course, are highly orchestrated affairs, with agreements often ironed out far in advance of the summits. Should we consider these trade deals major developments in America's economic relationship with China?

  • Trade Deals Are 'Band-Aids,' claims David Dayen at FireDogLake. "The trade announcements were essentially band-aids to make it look like China is cooperating on rebalancing the trade relationship legitimately ... China will keep on its mercantilist course, the US will point to these tiddly-winks proposals to defend their efforts to hold China accountable, and nothing much will change." Dayen says the Administration should have put more pressure on China to stop its currency manipulation and lift trade restrictions on U.S. businesses operating in China.
  • $45 Billion Is Nothing, contends Brij Khindaria at The Moderate Voice: $45 billion in export deals "is small change by the standards of [China's] hoarded wealth estimated at $2.5 trillion in currency reserves and $3 trillion in domestic savings.
  • Actually, It's A Sizable Amount, says Cornell's Eswar Shanker Prasad, as quoted in The Washington Post. But Prasad adds that it's unclear whether China is now committed to opening its markets more widely than it has in the past. "The firms that get access to the Chinese market are the firms where the Chinese see some significant benefits," Prasad explains, citing as an example foreign firms that equip the Chinese with the technological expertise they need for their domestic industries.
  • This Isn't Just Diplomatic Theatrics, states AFP's Andrew Beatty: "While foreign leaders frequently bring a fistful of trade agreements to Washington, the scope of Wednesday's deals pointed to rapidly deepening business links between the United States and its emerging rival."
  • Economic Agreements Went Beyond Trade Deals, note Sheryl Gay Stolberg and Mark Landler at The New York Times. On the intellectual property front, China pledged to more closely monitor whether government ministries and state-owned companies are using licensed software. On the market access front, the Chinese agreed to tweak regulations on "indigenous innovation," which American companies claim bar them from landing lucrative Chinese government procurement contracts.
  • GE's Joint Venture Is Troubling Case Study, argues Foreign Policy's Clyde Prestowitz. GE, he explains, is partnering with China's state-owned Avic to produce airplane electronics in China for sale to Chinese and other airplane manufacturers:

The investment and production will be in China and the technology (much of it initially paid for by U.S. tax payers and the Defense Department) will be transferred from the United States to China, thereby enabling China's aviation industry to move more quickly toward its goal of overtaking the U.S. and Europe in commercial and military jet production ...

Why don't Obama and his Commerce, Defense, and State Departments make it clear to the Chinese that if they want to sell in the U.S. market they need to produce something here and transfer some technology here?

This article is from the archive of our partner The Wire.