U.S. telecommunications and computer equipment makers signed $2.3 billion in contracts with Chinese companies Tuesday, including deals worth about $1.1 billion to Motorola Inc.
Motorola, the No. 2 maker of wireless phones in the world, signed deals with wireless operators China Unicom Ltd. and China Mobile to provide equipment, including wireless base stations and switches, that will route mobile calls.
The equipment sales are the latest in a series of high-profile deals that Beijing hopes will cool protectionist sentiment in Congress. Many U.S. lawmakers see China’s estimated $125 billion trade surplus with the United States in 2003 as evidence that it is an unfair trader.
China signed a deal in November to buy 30 Boeing Co. airliners and engines from General Electric Co. for $1.7 billion. And the U.S. Agriculture Department announced Tuesday that China had purchased 1.04 million tonnes of U.S. wheat.
But concern in Congress that China’s pegged exchange rate gives it an unfair trade advantage remains strong. Sen. Charles Schumer, a New York Democrat, recently told reporters he saw broad support for a bill that would impose a 27.5 percent tariff on Chinese imports until Beijing allows its currency to float freely.
However, U.S. Commerce Secretary Don Evans said at the contract signing event in Washington Tuesday that U.S. exports to China have been growing rapidly over the last several years.
He said Tuesday’s deals were “another clear demonstration of the growing economic and trade relationships between the United States and China.”
Export controls and the trade surplus
Chinese officials said their trade surplus with the United States would fall if export controls on computer-related products such as software were relaxed. The United States has export controls on high-tech products that could have potential military uses.
“If the United States would loosen the controls that restricts exports to China, then there would be a definite decrease in the trade deficit,” Lou Qinjian, vice minister of China’s Ministry of Information Industries, said at the contract-signing event.
However, at another event in Washington on Tuesday, Robert Kapp, the president of the U.S.-China Business Council, said he saw “no sign of further liberalizing of U.S. export-control polices with regard to China.”
Contracts also were signed Tuesday by UTStarcom Inc., Intel Corp., Lucent Technologies Inc., Canada’s Nortel Networks Corp., Sweden’s Ericsson and Cisco Systems Inc.
Other Chinese companies at the event were computer makers Legend Group Ltd., also known as Lenovo, and Founder Technology Group.
Motorola, based in Schaumburg, Illinois, signed a $556 million contract to upgrade China Unicom’s GSM networks in China and 12 provinces, and expand its CDMA networks. The contract is for 2004 only.
Motorola’s $510 million contract with China Mobile is to expand the Chinese wireless operator’s GSM network and improve data services in Beijing and 13 provinces. The work is scheduled for completion by year-end.
CDMA, or Code Division Multiple Access, is a wireless transmission standard that competes globally with GSM, or Global System for Mobile Communications, technology.
Lucent said its contracts with China Unicom and China Telecom Corp. Ltd. are worth more than $350 million. Gear from Juniper networks Inc. will be part of the package of equipment supplied to China Unicom.