US companies are increasingly interested in China’s big import event despite trade war

Giant Panda statues at the China International Import Expo (CIIE) — held from Nov. 5 to Nov. 10, 2018 at the National Exhibition and Convention Center in Shanghai, China.

Fu Tian | China News Service | Visual China Group via Getty Images

BEIJING — American companies remain keen on tapping business opportunities in China, despite the trade tensions between the two countries.

More U.S. companies than last year plan to participate in this November’s China International Import Expo, Ren Hongbin, assistant minister of commerce and deputy director of the expo’s organizing committee office, said Friday at a press event.

China’s first such import expo was held in Shanghai last year in a bid to boost the country’s profile as a buyer of the world’s goods, rather than the role of exporter, which it has held for years.

The narrative also ties into one of U.S. President Donald Trump’s primary complaints in the ongoing trade dispute: The large American trade deficit in goods with China, which the U.S. Census Bureau said increased to $419.5 billion last year from $375.4 billion in 2017. The countries’ ongoing negotiations have in part centered on efforts to get China to increase its purchases of American products, particularly in agriculture.

“We have heard very positive feedback from U.S. companies who participated in (the import expo) last year,” Jake Parker, vice president of China operations at the U.S.-China Business Council, said in an email to CNBC.

“Significant numbers of purchases made at last (year’s) event were fulfilled and fully executed,” Parker said. “These commercial opportunities led to an uptick in interest from USCBC members to participate in 2019.”

Last year’s massive exhibition claimed to host more than 3,600 businesses from 172 countries, with a total $57.83 billion in purchase agreements signed. More than 170 American companies participated, making the U.S. one of the top three countries represented, Ren said in Mandarin, according to a CNBC translation.

“According to what we know so far, the majority of agreements have already been completed,” Ren said. “There are still some agreements and contracts in the process of being carried out because they are a one-year agreement.”

State-owned enterprises and regional governments accounted for the bulk of professional buyers at last year’s expo, and are expected to play a significant role at this year’s as well.

“(U.S. companies’) participating in this event would be a pretty important demonstration of commitment to the Chinese market,” Nick Marro, analyst at the Economist Intelligence Unit, said in an email. “It also signals a strong interest among U.S. corporates in resuming a sense of ‘normalcy’ — i.e., to how things were before the trade war — even though returning completely to the pre-tariffs status quo looks unlikely.”

The U.S. and China have each slapped tariffs on billions of dollars’ worth of goods from the other amid the trade tensions that have lasted for more than a year. In addition to reducing the trade deficit, the Trump administration would like China to improve the business environment for foreign companies by addressing complaints on issues such as forced technology transfer, a lack of intellectual property protection and an uneven playing field in a system controlled by the state.

Representatives from both countries are set to meet in Shanghai this Tuesday and Wednesday to discuss trade.

On the deficit front, China appears intent on signalling greater purchases, although it’s unclear how large such deals are. State-run news agency Xinhua said Sunday in an English-language report that “since July 19, some Chinese firms have inquired with U.S. suppliers about the new purchases of U.S. farm produce including soybeans, cotton, pork and sorghum.”

“Additional deals are expected to be made as long as the U.S. products are reasonably priced and of premium quality,” the article added.

However, it’s doubtful whether more Chinese buying from U.S. companies can play a significant role in reducing trade tensions at this point.

“The real challenge is the structural issues, in particular the difficulty in reconciling the very different U.S. and Chinese economic systems under the framework of a single set of international trade rules,“ Stephen Olson, research fellow at the nonprofit Hinrich Foundation, said in an email. “Increased orders for U.S. products at an import expo won’t do anything to help address that.”

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