Washington: Motor Town first citizens General Motors (GM) and Ford Motor Co. will export almost $2 billion in vehicles, parts and machinery to China over the next few years, as part of a package of 30 deals between American businesses and China (See: China, US sign $13.6 billion trade deals; eye investment pact)
These deals come in the wake of China facing increasing political pressure on Capitol Hill, over trade and currency policies. Eleven US senators have called on the Bush administration to press China on letting its currency gain value in world markets. Chinese officials are on a two-day visit to Washington this week for trade talks to resolve longstanding trade disputes between the nations.
Senators Debbie Stabenow, Carl Levin, along with a group of nine other senators which includes Democratic presidential candidate Barack Obama has written to Paulson to push the Chinese government to stop manipulating its currency.
The Big Three have been angling for a larger piece of the China's rapidly growing auto market, even more so as all three companies lost ground to more fuel-efficient vehicles made by Japanese companies. Though The Big Three have been exporting their wares to China for years, the extent of the deal is somewhat unprecedented.
According to Ford officials, its deals which are valued at $800 million will include the export of 30,000 vehicles to China from North America, along with shipments of transmission parts. In a statement, Ford CEO Alan Mulally said, "This historic export agreement with China is another step in our commitment to accelerate the development of new products that customers want and value and leverage Ford's global assets." Ford's first exports to China were in 1913. Ford will start supplying transmission components and parts to its passenger car joint venture in China this year, Changan Ford Mazda Automobile Co. Ltd.
GM officials said their deal is with its Shanghai General Motors affiliate, and covers Cadillac vehicles built in the United States, and will roll out between 2008 and 2010, notching up around $1 billion. GM spokesman Greg Martin said GM was negotiating the number of vehicles that would be exported to China under the agreement. GM owns half of Shanghai General Motors, and China's state-owned State Administration for Industry and Commerce (SAIC) holding the other half. Shanghai General Motors has boomed into one of the largest in auto companies in China, notching up sales of almost 480,000 vehicles in 2007. GM said that over the past 11 years, it had exported around $4.2 billion in goods from the United States to China, and had announced two export deals worth $1.5 billion a year ago.
Chrysler LLC will export around $400 million worth of its Jeep brand sports utility vehicles SUVs, most of which are built in the United States, by 2009, according to spokesperson Dave Elshoff.
China's trade policies have drawn flak from the US Congress during recent months. In the US, a weak US dollar has boosted US exports, accounting for most of the nation's economic growth this year, while China is keeping its currency closely tied to the value of the US dollar.
The US trade deficit with China hit a record $256.2 billion in 2007. This year, the trade deficit with China has already breached the $20 billion mark in April, touching $20.2 billion with the deficit with in auto parts accounting for $746 million during the first quarter of 2008.