U.S.-China Trade War on Display at Shanghai Expo

U.S. administration publicly rejected China’s invitation : “China needs to end its unfair trading practices that are harming the world economy.”

By James T. Areddy

Instead of visiting his company’s airplane mock-up at this week’s first China International Import Expo, Fedex Chairman Frederick W. Smith was speaking in Singapore. 

SHANGHAI—American companies occupy choice real estate at a mega-Chinese trade show here but also stand at an uncomfortable intersection: between the huge business opportunity of the China market and a U.S. president critical of their investment in it.

Artificial grass from DowDuPont Inc., Dell Technologies Inc. laptops, a limousine with windows darkened by 3M Co., candy bars from Mars Inc. and almonds from Costco Wholesale Corp. are calling to buyers at the world’s largest trade-show venue this week. 

The strong American turnout for the first China International Import Expo demonstrates corporate confidence in the Chinese market and, executives said, hope that Xi Jinping will follow through on pledges to improve the business environment.
Politics are getting in the way. 

President Trump has imposed tariffs on over $200 billion in Chinese goods—sparking retaliation from Beijing that raises the prices Chinese pay for American products, especially food from pork to cheese. 

President Trump has urged U.S. executives to rethink how their activities might strengthen China as a rival and cost American jobs.
Both countries are milking the high-profile weeklong expo for propaganda value. 

China’s Ministry of Commerce touts the participation of over 180 U.S. exhibitors as endorsement of Xi’s vision.
But the Trump administration publicly rejected China’s invitation to join the expo.
Its RSVP, delivered by a U.S. Embassy spokesman, said that “China needs to end its unfair trading practices that are harming the world economy.”

General Electric is at the expo in force, pitching the likes of jet engines and medical scanners. 

“American companies are in a difficult spot,” Craig Allen, president of the U.S.-China Business Council, said this week at the expo.
Until recently, some 98% of the council’s members said they were profitable in China, and most considered it their key international growth market. 

“Every American company is affected by the tension in different ways, and none of them in a good way,” Mr. Allen said as he rushed between meeting Chinese officials and a courtesy call to Johnson & Johnson ’sexhibit—a mock red brick house showcasing vision-care treatment and consumer items like Listerine mouthwash.
Elsewhere, visitors posed for selfies at the mouth of a General Electric Co. jet engine, the U.S. Dairy Export Council handed out cheese slices and the State of Wisconsin displayed ginseng-infused-bourbon, as well as models of sewage treatment equipment. 

In addition to the fake grass, DowDuPont showed fireproof outfits and a Kevlar motorcycle body.
Missing: America’s top CEOs. 

While Ford Motor Co.’s Jim Hackett was present for Xi’s keynote, most of the biggest American companies at the show said they were sending lower executives.

Dell is on hand with its laptops. 
General Motors Co. displayed a Corvette C7.

R and Ernst & Young showed virtual-reality technology, but their chairmen, who had been in Shanghai the previous week, left before the expo began. 

FedEx Corp. Chairman Frederick W. Smith, instead of visiting his company’s airplane mock-up, was speaking in Singapore along with Mike Roman of 3M.

Starbucks Corp. CEO Kevin Johnson was in Shanghai when the show opened but skipped it. 

The companies either didn’t respond or declined to comment on these absences.
“Surely we would like to see the two governments work out these issues together, then we as companies will feel more reassured,” said a DowDuPont spokeswoman, Gloria Xu, though she played down the impact on business, citing a deal signed this week to supply polyurethane to Chinese appliance maker Haier Group Corp.
The Trump administration says its tariffs are a response to China’s practices that stack the odds against American business—a perception that has festered for years in U.S. trade unions and more recently is taking hold in corporate suites. 

​Hungry nation: An abundance of booths devoted to edibles.

The Trump administration raps Beijing’s government-directed economy and its goals for tech supremacy. 

But tech is also where China’s huge buying power is. 

Massachusetts-based Thermo Fisher Scientific Inc. says provincial and city leaders visited its displays, which include drug-testing equipment and a genetic analyzer credited with identifying the perpetrator in a notorious stabbing in China.
Answering President Trump’s “America First” rhetoric, China’s dictator kicked off the expo saying, “Openness brings progress while seclusion leads to backwardness.”
American companies’ participation in the expo “fully shows the attractiveness of China’s market,” Vice Commerce Minister Wang Bingnan told reporters. 

The ministry, which organized the expo and also regulates foreign businesses, asked reporters to cover deal signings by U.S. companies including Honeywell International Inc., Thermo Fisher and DowDuPont.
Dozens of the show’s 130,000 Chinese corporate and government buyers expressed concern about the tensions and confidence about the quality of American products, from Dole Food Co. bananas to watercraft from Louisiana’s Metal Shark Boats. 

Scratching at the boat’s white hull, Lai Huasheng, chairman of marine-coatings maker Zhuhai Winner Anticorrosion Technology Corp., says he’s trying to advance his own company’s technology.

The U.S. Dairy Export Council answers with cheese.

“The competition in traditional industries is very tough, and we have to seek a way out,” he said.
The trade war has slowed investment in Shandong province, according to Ding Wei, head of 156-strong government delegation from the city of Tengzhou.
He said Washington should allow more high-technology exports to China: “That would be a boon for Tengzhou, especially its machine makers.”
A quarter of the show is food, illustrating the sums to be made feeding China’s 1.3 billion people.
Two massive halls are filled with Spanish ham, Thai ice cream, French wine and Japanese beer. Instead of buying Washington cherries this past summer, Bruce Liu said his Shanghai distributor Well Fruit Ltd. bought Canadian ones to avoid tariffs.
He’s now shopping to replace the 60 containers of Sunkist Growers Inc. oranges he bought for last season’s Lunar New Year.

Xi Jinping's Empty Promises

China puts on a big show, but not everyone is buying its trade message
By Evelyn Cheng

SHANGHAI, China — China's largest city rolled out the red carpet this week to help Xi Jinping try to show other nations how "serious" his country is about becoming their best customer.
By official figures, more than 400,000 buyers — including representatives from nearly all of China's state-owned enterprises — had the chance to meet with more than 3,600 businesses from 172 countries at the China International Import Expo. 

Johnson and Johnson, Honeywell, General Motors and Google were among the nearly 180 American companies reportedly attending.
To welcome the businesses, a handful of international state leaders and the Chinese dictator, Shanghai lit up its buildings across town on Sunday night. 

Roads shut down, local schools and government offices closed for two days and tech giant Didi partially suspended its ride-hailing service. 

Roughly 300 students from the local prestigious colleges volunteered to direct visitors around a four-leaf clover exhibition space the size of at least 55 football fields near Shanghai's Hongqiao Airport on the western edge of town. 

An army of security officers hovered the grounds, and sometimes made guests walk through gated entrances with roughly 30 turns.
Of the Communist government's many goals for the import expo — billed as the first of many — "one is to increase China's prestige as a market, as a global leader in international commerce," said Craig Allen, president of the U.S.-China Business Council.
But as for Xi's stated aim of turning China into a global market importer, "a trade show is probably not particularly relevant," Allen said. 

Rather, he said, "the real test is whether or not the policy measures promised by Xi will be implemented in the near term."
Xi kicked off the expo on Monday with a speech that mostly reiterated past empty promises to further open up the world's second-largest economy to foreign players.
As his country faces rising tensions with its largest trading partner, Xi pledged again greater punishments for intellectual property theft — a point of contention with the Trump administration. 

The Chinese dictator who this year abolished presidential term limits also said his country will further lower import tariffs and speed up the opening of sectors such as education and culture.
Those are moves in the direction the West would like to see, but not enough.
"What matters to us is that concrete actions are forthcoming and that reforms are clearly timetabled," Carlo D'Andrea, vice president of the European Union Chamber of Commerce in China and chairman of the Shanghai Chapter, said in a statement. 

"If China really will continue to open up, we would have expected additional and specific commitments to have been announced by Xi (on Monday)."
Although many companies may not yet have the open access to China they would like, they may be selling more to the country if promises sealed at the expo are met.
"What we are hearing anecdotally, both state-owned enterprises and municipal provincial governments are here in a big way," Allen said. 

"They are working on lots of contracts. I hope at the end of the show there will be a final accounting (of deals)."
When contacted by CNBC, the expo said provinces, autonomous regions, municipalities directly under the central government and those with independent planning status, the Xinjiang Production and Construction Corps, state-owned enterprises and the National Health and Health Commission have set up 39 trading groups with 592 subdivisions, for a total of more than 400,000 buyers. 

There are also several thousand foreign buyers, the expo said.
Information on how much the groups were purchasing was not immediately available.
On Tuesday, the country's State-owned Assets Supervision and Administration Commission announced that so far, 13 of China's state-owned enterprises have signed deals "with large foreign businesses and enterprises on imports, services and technology cooperation projects."
The companies include Volkswagen, Westinghouse Electric, robotics and power grid company ABB, Carnival, Rolls-Royce and Standard Chartered, according to the announcement. 

Total deal amounts were not disclosed, although two of the agreements had a listed combined value of about $3 billion. 

A press event scheduled for Thursday on the transactions of Chinese state-owned enterprises during the expo was cancelled without explanation.
Carnival and Standard Chartered confirmed the deals. 

Volkswagen said it signed a memorandum of cooperation with its Chinese joint venture under which the Asian arm will import parts and vehicles worth a total of about 62 billion yuan ($8.9 billion). 

The other companies did not immediately respond to an emailed request for comment.
Many other businesses and buyers were busy signing purchase agreements throughout the exhibition halls and country pavilion. 

Swedish medical equipment company Elekta said many hospitals came to sign such contracts.
"During the past two days, many purchasing (delegations have) expressed their positive intentions, further indicating the huge demand of (China's) market," Richard Hausmann, president and Chief Executive Officer of Elekta, said in a statement to CNBC.
Liu Qianqian, a marketing supervisor for U.S.-based industrial diagnostic equipment company Fluke, said in an interview the company had signed purchase agreements with many state-owned and private companies. 

Chinese e-commerce giants Alibaba and JD.com also used the expo to announce plans to help China import $200 billion and $14.4 billion of foreign goods, respectively.
It's not clear if these agreements or purchases would have happened anyway without the expo. 

China wants to boost consumption as it is in the middle of a years-long process of reducing reliance on manufacturing-driven growth.
Shanghai residents also paid a cost to host the event. 

Last-minute road closures for motorcades of visiting dignitaries caused traffic jams that more than doubled travel time. 

The office holidays merely shifted the working days to the weekend. 

Anecdotally, tickets to the expo itself were also very difficult to get.
Still, China is already gearing up for round two. 

Advertisements in the exhibition center encouraged businesses to sign up for next year — an office at one end of the building was set up for that very purpose. 

If Beijing is short on reforms, Xi appears set on trying to make good on his Monday pledge to import $30 trillion in goods and $10 trillion in services in the next 15 years.