China Wants to Rebalance Its Portfolio

President Barack Obama is having America's banker over for dinner. Two nights in a row.

Hu Jintao, the Chinese President, arrives in Washington on Jan. 18 for a state visit aimed in part at diversifying an investment portfolio that includes $906.8 billion in U.S. Treasuries, the largest foreign holdings of U.S. debt. That could mean a flurry of commercial deals, or so the White House hopes. Accompanying Hu will be Chen Deming, the Commerce Minister, and Lou Jiwei, chairman of the country's sovereign wealth fund. The Chinese government has indicated it may be shopping for some clean-energy cooperative ventures. "I'm sure when the visit wraps up we're going to see many outcomes, including in the economic and trade field," Cui Tiankai, China's vice-foreign minister, said on Jan. 12 in Beijing.

That's welcome news for the White House, which has made doubling U.S. exports key to its job creation plans, an Administration official says. Obama will treat Hu to a private supper when he arrives and to a formal state dinner the next night. (The state dinner is an honor Hu did not get during a 2006 visit.) Secretary of State Hillary Clinton will also host a lunch. "They are rolling out the red carpet," says Representative J. Randy Forbes (R-Va.), a co-founder of the Congressional China Caucus who sees Beijing's growing economic and military power as a potential threat. "You have to be careful that you temper the graciousness with also hardness and strength," he adds.

While Obama plans to raise some of the thornier issues that have bedeviled relations, including Iran, North Korea, and human rights, most of the discussions will focus on commercial cooperation. The White House hopes to replicate the success of Obama's November trip to India, where he secured $10 billion in commercial deals, says the Administration official, who requested anonymity to discuss White House planning. Obama and Hu will attend a forum of about a dozen Chinese and American chief executive officers, including Jeffrey Immelt of General Electric (GE), Jim McNerney of Boeing (BA), and Gregory Brown of Motorola Solutions (MSI). High on China's agenda is its need to tap new sources of energy to power its growing economy. Lou, the chairman of China Investment Corp., is scheduled to speak at a Washington conference on U.S.-China cooperation on clean energy. The heads of China National Nuclear and State Grid Corp. also will address the conference.

From Washington, the delegation will travel to Chicago, where Hu is expected to visit a suburban Chinese-owned auto parts company, Wanxiang America. Chicago is also home to Boeing's headquarters. In 1997, during the last full-dress state visit by a Chinese leader, Presidents Bill Clinton and Jiang Zemin announced a $3 billion Chinese order for Boeing jets.

The bottom line: Chinese President Hu Jintao's upcoming U.S. visit will include some diplomatic talk and, U.S. officials hope, commercial deals aplenty.

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