Wal-Mart, China, Want to Do Even More Business Together

This AP article in the New York Times today examines the fact that the U.S. and China are looking to increase trade, despite “protectionist tendencies” (read: consumer outrage) in both countries. The article comes on the tails of a product safety summit that harshly criticized the quality of products made in China as well as the country’s poor enforcement of intellectual property laws. Huh, that’s strange. Why would the U.S. want to do more business with a country that’s having such a hard time getting its regulatory act together?

Perhaps the answer lies with the fact that today Wal-Mart announced plans to expand operations in China by 30% this year alone. As the eighth largest economy in the world, Wal-Mart knows how to throw its weight around. When the U.S. government signs trade deals with China (and looks the other way when dangerous products turn up) Wal-Mart is the one that stands to benefit, even if it comes at the cost of consumer safety.

US, China Say Must Work Together [Associated Press via New York Times]

The United States and China, with increasingly dependent economies, have to work together to fight protectionist sentiment in both countries, officials from the countries said Monday.

The comments came on the eve of high-level meetings this week between U.S. Treasury Secretary Henry Paulson and Chinese officials at which China’s massive trade surplus with the U.S. and its product safety record are expected to be key issues.

‘’We have to continue opening global markets. America and China must work together to stem the tide of projectionist sentiment in out nations,’’ said U.S. Secretary of Commerce Carlos Gutierrez.

‘’It is ironic that we have found that protectionism does not protect. The only thing that does protect is innovation and engaging with the world, competing, being more productive,’’ Gutierrez told a seminar on innovation in Beijing.

Gutierrez also pointed to China’s reputation for lax enforcement of intellectual property rights, calling for ‘’consistent, transparent and equitable’’ rules to guarantee that innovation will not be stifled.

Congress has been demanding the U.S. administration act more forcefully to get China to halt what critics see as unfair trade practices. They contend China is manipulating its currency to keep the value low to boost Chinese imports into the United States while making U.S. goods more expensive in China, inflating the U.S. trade deficit with China, which last year reached a record $233 billion.

U.S. Health Secretary Mike Leavitt said China and Western countries needed to cooperate because the global market had changed so much that governments had lagged behind in regulation their booming trade.

‘’Our systems our different and yet we need to achieve a common result ... it’s a question of building bridges,’’ Leavitt said in a separate speech to the American Chamber of Commerce in Beijing.

Leavitt, who will sign an agreement Tuesday on food and feed product safety, and a second on drugs and medical devices, quoted a Chinese proverb in saying the bridge-building would take time.

‘’The man who removes a mountain begins by carrying away small stones,’’ he said.

‘’This is not about the U.S. and China, this is about the world,’’ Leavitt said.

Their comments were echoed by published remarks from Chinese officials.

Finance Minister Xie Xuren said in an interview with the official Xinhua News Agency that the protectionist sentiment in the U.S. Congress was alarming.

‘’At present, the tendency within Congress toward protectionism is in fact rather worrying,’’ Xie said.

He added the passage of such legislation would ‘’seriously harm China-U.S. trade cooperation, and in the end, harm America’s own interests.’’

Vice Commerce Minister Chen Deming was also quoted Monday in the official China Daily as saying the trade disputes with the United States should be resolved through talks.

He said a narrow focus on the value of the yuan and intellectual property rights risked ‘’hindering the normal development’’ of trade links.

Paulson said last week in Washington that U.S. worries about Chinese product safety will be a major topic at the Strategic Economic Dialogue meeting to be held just outside Beijing starting Wednesday.

China’s ability to manage the safety of its goods will be an important part of Beijing’s future growth and its trade relations with the United States, he said.

Paulson and other senior Bush administration officials in China for the third round of the talks. Paulson launched the effort a year ago, but so far it has produced few results. Vice Premier Wu Yi leads the Chinese side.

Gutierrez later attended a ceremony where Wal-Mart China announced it had received approval to open its 100th store in China. It will open in Loudi, Hunan province.

About 80 Wal-Mart employees wearing red shirts were on hand in a Beijing hotel. American products sold in Wal-Mart stores in China, such as Hunt’s barbecue sauce and apples from Washington state, were on display.

At the same time, Timken Co., a Canton, Ohio-based specialty steel company, announced it had signed a $110 million deal with Xiangtan Electric Manufacturing Company of Hunan province to form a joint venture to make bearings for wind turbines.

Posted by Alex Goldschmidt on Monday, December 10, 2007