General Motors plans to export thousands of vehicles to China in the next couple of years in a deal valued at roughly $US1.3 billion that reflects a loosening of import restrictions by the Chinese government, the vehicle maker said on Wednesday, according to Associated Press (AP).
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Chinese vice minister of commerce Ma Xiuhong joined GM chairman and chief executive Rick Wagoner at GM’s world headquarters to announce the agreement, the report said, adding that Ford and Chrysler Group were expected to announce similar agreements later on Wednesday.
The vehicle deals were part of an expected onslaught of purchase announcements by China as the country seeks to blunt growing unhappiness in Congress over a widening US trade deficit with China, AP said, noting that the deficit with China hit a record $103 billion last year, the largest imbalance ever recorded with any country, and this year’s deficit is on track to be even higher.
AP said commerce secretary Don Evans was scheduled to preside later on Wednesday at a signing ceremony in Washington of major Chinese purchase agreements for commercial airliners and jet engines from Boeing and General Electric’s aircraft engines subsidiary.
The news agency said Evans recently returned from China where he warned Chinese officials that they must make a greater effort to honour the market opening commitments they made to gain entry into the World Trade Organisation.
AP also noted that both president George W. Bush and treasury secretary John Snow in recent meetings with Chinese officials have raised the issue of China’s practice of tying its currency to the dollar at a fixed rate – American manufacturers claim that practice has kept the Chinese currency undervalued by as much as 40% against the dollar, giving Chinese products a huge competitive advantage against American goods.
Associated Press said GM plans to export 4,500 vehicles through its subsidiary, GM China, in 2004 and 2005, including Cadillacs, Buicks and other brands.
A Ford spokesman told AP the firm plans to use its new import licence to send 5,000 vehicles, mostly sport utility vehicles, to China by the end of 2004 – those vehicles will be sold through Ford’s growing dealer network in the country.
GM told AP it also has signed two agreements with its flagship joint venture in China, Shanghai General Motors.
As part of the first agreement, valued at $400 million, GM will supply components and assemblies for about 13,000 vehicles, including Cadillacs, while the second deal provides for GM to supply $700 million worth of component kits for the Buick Regal sedan and Pontiac Montana-based Buick GL8 wagon [which are already being built in China], AP added.
In addition, AP said, GM has signed agreements with several independent Chinese importers to import about 1,000 complete GM vehicles though the makes and models have yet to be determined – those deals account for the $200 million balance of GM’s plans.
GM said it plans to establish a network in key Chinese cities to sell and service Cadillac products and sales are expected to begin in 2004, Associated Press said.
