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Boeing, GE Plan Deals With China

Agreements for planes and engines worth as much as $2.4 billion would narrow the trade gap with the nation.

November 12, 2003|From Bloomberg News

Boeing Co. and General Electric Co. are expected to sign agreements today in Washington to sell as much as $2.4 billion of aircraft and engines to China, helping narrow the U.S. trade gap with Asia's second-biggest economy.

The purchase is among the 2,400 new aircraft, estimated at $197 billion, that Chinese airlines are expected to buy in the next 20 years as they expand. It follows months of criticism by U.S. lawmakers of China's widening trade gap, which is expected to increase by 25% this year to $130 billion.

"It is a gesture to show people that both sides are trying to deal with the trade imbalance," said Joseph Lau, who manages $13 million at Tai Fook Asset Management Ltd. in Hong Kong. "This is politically and economically correct for them. Many U.S. jobs have shifted to China, and the U.S. needs to do something about it."

Air China, Shandong Airlines Co., Xiamen Airlines Co., Hainan Airlines Co. and Shenzhen Airlines Co. said they would together purchase 30 single-aisle 737 planes from Boeing.

Chicago-based Boeing, the world's largest plane maker, accounts for about 60% of aircraft sales in China. It has been counting on Chinese carriers as it competes with Toulouse, France-based Airbus for a dwindling number of orders.

Shares of Boeing fell 51 cents to $38.32 on the New York Stock Exchange. General Electric fell 6 cents to $28.11.

The purchases may deflect criticism that China is using its pegged currency to gain advantages over its trading partners. China, the world's biggest producer of more than 100 types of goods, including cellular phones and steel, sells more to the U.S. than it imports, with a record $103-billion surplus last year.

Commerce Secretary Don Evans has denounced China as a closed market and predicted that the U.S. trade deficit with the world's most populous nation would reach $130 billion this year.

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