Energy, not tech or finance, in CEO lineup for Trump’s China visit
Tech firms limited by market access barriers
BEIJING: US energy and commodities firms will make up a major part of a business delegation visiting Beijing at the same time as US President Donald Trump goes to China in November, according to an initial list seen by Reuters.
Prominent technology and financial companies are mostly absent from the list, reflecting the slow progress Washington has made in opening up China in those sectors.
Commerce Secretary Wilbur Ross, who will lead the 29 companies that have been approved to travel on the trade mission starting on Nov. 8, said they will be looking for “immediate results” and “tangible agreements”. But, speaking at the Paley International Council Summit in New York on Wednesday, he acknowledged that market access, intellectual property rights, and tariffs are more complex and will take a longer time to negotiate.
Some major industrial companies - General Electric Co, Honeywell International Inc and Boeing Co - are among the companies on the current list.
Whether executives from all the named companies end up attending could be subject to agreements or deals being negotiated in time for the visit, according to multiple sources whose companies are involved. One of the few tech companies going with Trump is Qualcomm, which earns about half of its global revenue in China and faces a series of tricky legal issues there, including a lawsuit with Apple and the Chinese government’s review of its pending $38 billion merger with NXP Semiconductors. Qualcomm said its CEO, Steve Mollenkopf, planned to attend.
An industry source told Reuters tech firms were reluctant to go, given China market access issues, the unpredictability of the Trump administration, and a “Section 301” US trade investigation alleging Chinese abuses of intellectual property.
“(These) issues are extremely sensitive for tech companies said another source in the US business community.
“Very few want to stick their heads up and be perceived as complaining directly, and even fewer trust this White House to do anything helpful on their issues,” he said. Particularly galling to foreign tech firms are a slate of new national security and cyber security regulations, which mandate companies store crucial data within China and pass security reviews they argue could put business secrets at risk.
Testy relationship
Trump, a real estate magnate who had never before held public office, has had a sometimes testy relationship with corporate America since taking office in January. He disbanded two high-profile business advisory councils in August after several chief executives quit in protest over his controversial remarks on racist violence in Charlottesville.
US industry sources say it has been years since a major business delegation has gone to China during a US presidential visit. Calls for such a delegation during Trump’s visit originated in the China-based US business community, according to several sources, who saw a need to match growing efforts by Germany, France and Britain to promote their nation’s firms in China.
Trump, who has frequently cited the substantial US trade deficit with China as a reason why Washington should take more protectionist measures, was an easy sell on incorporating a group of executives into the visit, according to the sources. Nonetheless, some trade analysts say China has done a good job of taming Trump’s combative trade impulses. They worry the U.S. administration will be willing to paper over market access concerns during the visit in its focus on getting Beijing to take action against North Korea over its nuclear and missile programs.
Beijing agreed in May to grant limited US access in financial services in bilateral talks aimed at reducing China’s trade surplus with the United States which reached $347 billion last year, but business groups complained it was too little, too late.
William Zarit, the chairman of the American Chamber of Commerce in China, told Reuters he didn’t expect Trump to push hard on market access issues on this trip.
“Unfortunately, I think the Chinese aren’t going to start to respond until they feel some pain,” Zarit said. “We’re all wondering what that is going to mean.”
Scott Kennedy, at the Center for Strategic and International Studies think tank in Washington, said Beijing has deflected commercial issues “using a combination of leadership flattery, coaxing up to his (Trump’s) family, token concessions, adjusting their level of help on North Korea sanctions, and threats of retaliation should the US take any unilateral action”.
Gas exports Agribusiness and energy firms dominate the delegation list. They include Archer Daniels Midland Co (ADM), one of the world’s largest grain companies, and chemicals and agribusiness giant DowDuPont.
Ten of the companies are involved in gas or other energy fields, including Cheniere Energy Inc, which operates the only US liquefied natural gas (LNG) export terminal, three that are building new projects, and Freepoint Commodities, founded and run by David Messer, who led power utility Sempra’s vaunted commodities division.
Their presence underscores the US ambition to sell more of its excess gas abroad as its shale revolution contributes to a global LNG glut.
Others on the list who confirmed plans to attend include GE, Houston-based LNG company Delfin Midstream, SolarReserve, Stine Seed Company, biotech firm Drylet, wastewater-processing firm Viroment and the US Soybean Export Council.
Bell Helicopter and crane-maker Terex Corp are also on the delegation list. Honeywell, DowDuPont and ADM did not respond immediately to a request for comment and Freepoint, Cheniere, Sempra Energy, and Texas LNG Brownsville LLC said they had no comment.
Boeing told Reuters it does not yet have plans to send anyone but that may change. Alaska Gasline Development Corp said it had no information to release.
The US Commerce Department, which is leading the delegation, has not yet issued its own list. At least one of the companies on the list tried to distance itself from Trump. SolarReserve told Reuters in a statement that it had been selected to participate in the commerce department’s delegation but stressed that “we are not part of the business delegation travelling to China with President Trump.”
Toting existing deals
One US official told Reuters on condition of anonymity that Trump will tout deals announced during the trip, but they would have likely happened regardless.
The risk is that commercial deals “distract from longterm political solutions” to trade issues, the official said. Evan Medeiros, former President Barack Obama’s top Asia adviser, made a similar point in Washington. Beijing would avoid seriously addressing the “underlying systemic problems” such as market access for high-tech goods and intellectual property protection during the visit, he predicted.
“The Chinese will be happy to buy a lot of American goods. That’s what they know Trump wants - big export numbers,” he said, predicting that China would announce big business deals and allow the president to tout them during his visit. —Reuters
China world’s third-largest gas buyer