For China's Xi Jinping, strong trade ties ensure a warm welcome in Seattle

Chinese President Xi Jinping, shown in Beijing with his wife, Peng Liyuan, plans a three-day visit to the Puget Sound region next week. China and Washington state have a 35-year economic and cultural relationship.

Sept. 17, 2015 3 AM PT

Reporting from SEATTLE — When President Xi Jinping arrives in the Emerald City on Tuesday to mingle with aerospace and tech titans, he will complicate matters for the Obama administration, which has been weighing sanctions against China for various cybercrimes.

But don’t expect to hear much about the Asian powerhouse’s misdeeds during Xi’s three-day visit to the Puget Sound region. China and Washington state have a 35-year economic and cultural relationship, and the welcome here is expected to be warmer than in Xi’s other U.S. destinations.

Washington exports more to China than the other 49 states; in 2014 trade between the two exceeded $29 billion. Former Gov. Gary Locke, who co-chaired the welcome committee for Xi, estimates that exports to China in 2014 supported “close to 90,000 jobs in our state.”

The outlines of Xi’s itinerary, announced by current Gov. Jay Inslee on Wednesday, include a visit to Microsoft’s main campus and Boeing’s Everett, Wash., factory. Xi will deliver the only policy speech of his U.S. trip at a Seattle banquet — all before heading east to meet with Obama and visit the United Nations.

“In my view, the best thing President Xi can do when he visits here is address uncertainty,” said John Frisbie, head of the U.S.-China Business Council. That uncertainty includes the Chinese government’s response to the country’s economic slowdown and “uncertainty on strategic issues, too, including cybersecurity.”

Xi will be the fourth consecutive Chinese leader to visit Seattle, a record that elected officials here boast about. He also will be the fourth to call on Boeing, underscoring a relationship that began when then-President Nixon arrived in Beijing in 1972 on Air Force One, a Boeing 707.

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China is the aerospace giant’s largest international market, the company said, and so far in 2015, Chinese customers have taken delivery of a quarter of Boeing’s commercial airline production.

“Today, more than 50% of commercial jetliners operating in China are Boeing airplanes,” the company said in a statement. “Over the next 20 years, China will be Boeing’s largest commercial airplane market with a projected need for 6,330 new airplanes, worth an estimated $950 billion.”

But China is more than just a growth market for Boeing, said Leon Grunberg, coauthor of the upcoming “Emerging from Turbulence: Boeing and Stories of the American Workplace Today.” It also is a competitor.

The Chinese have been building a single-aisle jet, the C919, which will go head-to-head against Boeing’s 737 and Airbus’ A320, Grunberg said, although availability of the jet has been pushed back to 2017. So far the only orders have come from state-owned Chinese companies.

“It’s a delicate balance to both have access to the market and not give away some of the crown jewel technology of Boeing and Airbus,” said Grunberg, an emeritus professor at the University of Puget Sound. “The balance is between giving the Chinese what they want — more technology — but not creating a competitor that can eat into your market share down the road.”

According to the Seattle Times, Boeing and the Chinese government are working on a deal for the aerospace giant to open a 737 jet completion and delivery center in China, although details must still be worked out. Boeing spokesman Tom Kim declined to comment on the possible deal, saying the company does not talk about “options we may be exploring.”

The first Chinese leader to visit Seattle was Deng Xiaoping in 1979. Before his visit, China had purchased three 707s, and Boeing set up a China office the following year. Hu Jintao was the most recent, visiting Boeing and Microsoft before heading to Washington, D.C., in 2006.

At the time, the U.S.-China relationship was facing some similar — if less intense — difficulties. There were strong accusations swirling in the United States that the Chinese currency was being manipulated and undervalued; the trade balance between the two countries was a friction point. There were concerns about China’s military buildup even then.

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Beijing was worried that the tensions would damage Hu’s first visit to the United States, so Vice Premier Wu Yi sent a vanguard of purchasing groups, and the government announced deals for $16 billion in American goods.

On his second day in Seattle, Xi will attend what has been described as a two-hour dialogue at the Westin Hotel among 15 business leaders from China and 15 from the United States. The event is sponsored by the Paulson Institute, a Chicago think tank that focuses on U.S. and China economic issues. Among the industries represented will be entertainment, finance, tourism and, of course, technology.

Today, technology is among the biggest sticking points between the two countries.

Microsoft is hosting the annual China-U.S. Internet Industry Forum next week. Xi is expected to attend and meet with leaders of both nations’ technology industries. Lu Wei, China’s cyberspace administrator, also is expected to attend.

Yu Yongjun, an expert with the China Information Security Assn., said Xi’s visit is “more about promoting and encouraging U.S. companies to operate in China and to respect the Chinese operating environment.”

The association is an industry group of Chinese tech companies. Yu said the visit’s message is that “China is still a good potential market, and China wants to build a closer relationship between the two nations in this area.”

But he said it was unlikely that Xi’s visit would signal any shift in policy toward relaxing the censorship that has kept companies, including Facebook and Twitter, from operating on the mainland.

Yu pointed to companies such as Microsoft — which have acceded to Chinese censorship policies in order to operate in China — as examples of how China was open to U.S. companies that “respect the law in China.”

“It is impossible,” he said, “that China will change its law to accommodate companies” like Google or Twitter.

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La Ganga reported from Seattle and Makinen from Beijing.

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