Wednesday 12 December 2018

US and Chinese firms sign deals worth billions during Trump visit

Donald Trump meets opera performers, at the Forbidden City, Beijing (AP)
Donald Trump meets opera performers, at the Forbidden City, Beijing (AP)

US and Chinese companies have signed business deals valued at nine billion US dollars (£6.84 billion) during a visit by President Donald Trump in a traditional move aimed at blunting criticism of Beijing's trade practices.

China's biggest online retailer said it pledged to buy American beef and pork worth 1.2 billion dollars (£912 million), but no other details were released of the 19 agreements signed at a ceremony attended by US commerce secretary Wilbur Ross.

Such contract signings are a fixture of visits by foreign leaders to China and often involve agreements negotiated weeks or even months in advance which Beijing have saved to showcase its importance as a market.

Mr Trump has made narrowing the multibillion-dollar US trade deficit with China a priority for his administration. He is due to hold talks with Chinese president Xi Jinping.

Mr Ross said: "Addressing the imbalance in China trade has been a central focus of collaborative discussions between President Trump and President Xi.

"And achieving fair and reciprocal treatment for the companies is a shared objective.

"Today's signings are a good example of how we can productively build up our bilateral trade."

Online retailer JD.com said it would buy beef from the Montana Stock Growers Association and pork from Smithfield Foods over the next three years. Smithfield is owned by China's WH Group, the world's biggest pork packer.

JD.com said it would buy US goods worth two billion dollars (£1.5 billion) over three years.

China's trade surplus with the United States in October widened by 12.2% from a year earlier to 26.6 billion dollars (£20.2 billion), according to Chinese customs data.

The total surplus with the United States for the first 10 months of the year rose to 223 billion dollars (£169 billion).

The chairman of the American Chamber of Commerce in China, William Zarit, expressed hope ahead of Mr Trump's arrival that the signing of business deals would not draw attention away from "structural issues", including Chinese limits on foreign activity in finance, healthcare and other industries.

China is the third biggest export market for the United States after Canada and Mexico.

US exports to China rose 77% from 2007 to 2016, but Washington reported a 347 billion dollar (£263 billion) trade deficit with China last year.

Meanwhile, motor giant Ford has announced it is launching a venture with a Chinese partner to develop electric vehicles for sale in China, the biggest market for the technology.

The announcement of the 750 million US dollar (£570 million) venture with Anhui Zotye Automobile Co adds to rising investment by global car makers in China's growing electric vehicle industry.

Zotye already has its own electric vehicle business and said sales in the first 10 months of this year were up 14% over a year earlier at 22,500.

Ford said previously it planned to offer electric versions of 70% of its models sold in China by 2025.

Mercedes Benz makes electric cars with a Chinese partner, and other global brands including General Motors and Volkswagen AG have announced or are exploring similar ventures.

Later, Chinese internet company Tencent said it had acquired a 12% stake in Snap, as the social media company struggles to boost user growth.

Tencent runs the WeChat messaging app, as well as online payment platforms and games. Earlier this year, it bought a 5% stake in Tesla.

Snap is the parent company of Snapchat, the camera app which lets people send short videos and images.

The company, based in Venice, California, said in a regulatory filing that Tencent bought 145.8 million shares.

Snap revealed Tuesday that its loss tripled to 443.2 million dollars (£336 million) during the third quarter on weak user growth and revenue. The app is set for a redesign in order to make it easier to use.

Snap faces intense competition from Apple, Facebook's Instagram and WhatsApp, as well as Google's YouTube.

Shares, which had fallen 20% before the opening bell, cut those losses in half on news of the Tencent interest.

Press Association

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