bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

sponsorType

urlAlias

moreOnThisArticles

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

SCMP Reporter

CHINA'S high-level purchasing mission to the United States has signed deals valued at US$160 million with Detroit's big three vehicle makers for more than 14,000 cars and trucks.

  The contracts with General Motors, Chrysler and Ford represent the mission's second major purchase and are said to be the biggest single North American vehicle export order.

   The trip has been timed to occur shortly before the debate in Congress on renewal of China's Most Favoured Nation (MFN) status.

  Before arriving in Detroit on Monday, the delegation - headed by the deputy head of the State Planning Commission, Mr Gan Ziyu - had signed a US$800 million order with aviation giant Boeing in Washington for 20 medium-range 737s and one 757 aircraft.

  Mr Gan stressed at the Detroit signing ceremony on Tuesday that ''the unconditional renewal of MFN . . . would provide favourable conditions and a reliable guarantee for the expansion of bilateral trade''.

  The deputy minister thanked the big three car firms for their efforts at securing renewal of China's MFN status.

  ''In the past couple of years, the Chinese Government has made every possible effort within its power to maintain MFN. We also appreciate what the big three have done towards the same end,'' Mr Gan was quoted by the official New China News Agency as saying.

  Analysts noted that although the deal was slightly larger than a similar agreement signed in Detroit last year, it was still tiny in comparison with the volume of cars produced at China's major vehicle joint ventures.

  For example, total imports from the big three US groups this year would be less than one third of the yearly production at the Shanghai Volkswagen plant. And it would add only a week or two to production at the US firms' production plants.

 ''The US still has a very small share of the Chinese car market: it is the Japanese and Europeans who dominate the market,'' one industry analyst said.

    ''Although all three US companies have signed co-production agreements in China, only Chrysler is actually manufacturing at the moment.''       The order from China's State Planning Commission comprised 5,200 Ford Tempo sedans, and 1,000 minivans and 3,600 Plymouth Sundance sedans from Chrysler.

   China will also buy 3,600 Chevrolet Corsica sedans and 1,000 Chevrolet Lumina APV minivans from General Motors.

  The vehicles will be used as taxis and to transport tourists, government and business officials in China.

   Independent observers said the purchasing delegation to the US was more show than substance and did not address the fundamental issues of market access.

    ''The contracts signed this week will not make much of a dent in the US trade deficit with China,'' a Western diplomat said.

  ''Unless Beijing takes more concrete measures to adjust the structural trade imbalance with the US, very few legislators in Washington will be convinced China is serious in trying to address the deficit,'' he said.

   The order comes less than nine months after China spent about $130 million to buy 7,000 completed Big Three cars and vans with kits for about 2,000 sport-utility trucks to be assembled in China.

 ''The American vehicles are competitive,'' said Mr Gan. ''We think the automobile made by the US is reasonable [in price] and can fit the demands of the Chinese market.''    GM, Ford and Chrysler each expect slightly more than $50 million in revenues from the transaction.

 ''If there's acceptance for the product, there are opportunities down the road for manufacturers in local assembly of vehicles in China,'' said Mr David Garrity, an automotive analyst with McDonald & Co in New York.

   GM and Chrysler are competing with other manufacturers to participate in a joint venture to assemble up to 150,000 minivans a year in China. Mr Gan said selection of a major partner for that project was ''still in the early stages''.

   China wants to expand its vehicle assembly capacity from the current 1.1 million units a year to more than three million units by the end of the 1990s, analysts say.

   Chrysler now owns 42 per cent of Beijing Jeep Co, a joint venture with China's state-owned Beijing Automobile Works which assembles Jeep Cherokee sport-utility vehicles. A GM joint venture last year began assembling a version of the Chevrolet S-10 pick-up truck.

   Mr Jerry Wang, vice-president of General Motors Asia, said GM had not determined whether to propose the current model APV vans or a future minivan for assembly in China.

   GM sold about 10,000 North American-built vehicles in China last year, including the 2,708 vehicles in the last Chinese fleet deal.

   Mr John Brinkley, general manager of Ford's North American export sales, said Ford was interested in starting a production venture in China, but ''hasn't really decided on a vehicle''.

   Ford will have six dealers in China by mid-year and plans to begin selling its Tempo, Taurus, Aerostar, Crown Victoria and Lincoln Town Car models there.



Visitors sign US$160m car deals