Peking has somewhat revised American hopes of extended trade by purchasing its first U.S. what in four years and signing a contract for the largest piece of oil milling equipment it has ever bought from an American firm.
But both the $115 million sale of the million metric tons of wheat by undisclosed U.S. exporters and the estimated $25 million sale of a mat-type, pick-up offshore oil rig from a company 70 per cent owned by Bethlehem steel show Chinese buyers to be turning to American suppliers only in special circumstances.
Negotiators for China's Petroleum and Natural Gas Exploration and Development Corp. appeared to be interested in the jack-up rig, the first Peking has purchased from an American firm, because it already was under construction in Singapore and could be delivered within a year.
The unusual decision by Bethelem Singapore Private Ltd. to begin contruction without a buyer paid off, as Chinese Communist Party Chairman Hua Kuo-feng has called for rapid development of at least 10 major new oilfields, and his oil experts are trying to expand offshore exploration as fast as possible.
The Chinese recently bought one semi-submersible rig from Norway, and are reported to have bought another from the same source, but the huge barges that are kept steady over drilling sites by computer-run engines must be slowly towed all the way from the North Atlantic.
The Chinese purchase of U.S. wheat is the first since 1974, when Peking refused to accept a shipment infected with the plant disease called smut. Wheat grain trade experts here say the Chinese turned to American suppliers only because the Australians and Canadians, who had supplied the bulk of about 7 million tons sold to China last year, could not make delivery. Trade source here said port tie-ups would keep Canada from delivering more wheat than they have already contracted for until September, and an unexpectedly poor grain crop in Australia would keep them off the China market until December.
Chinese traders have indicated in the past that the lack of full diplomatic relations with Washington will continue to hinder trade. The high tariff charge on Chinese goods coming into the United States and the limited U.S. market for such goods are even greater barriers. Only when they cannot get supplies elsewhere, as in the case of wheat, or when the quality and reliability of the U.S. goods outclass other suppliers, as in the case of oil equipment, do the Chinese seem eager to buy American.
The U.S. Agriculture Department estimates an American wheat surplus of about 33.1 million metric tons for the year ending June 30. Department officials have expressed the hope Peking would purchase even more grain given last year's disappointing harvest in China.
Experts here say they estimate the Chinese might need one million more tons of U.S. wheat to tide them over the next few months until the Australians and Canadians were ready to sell again.
Trade sources here said they did know how American wheat suppliers had solved the problem of Peking insisting on a guarantee of grain quality up to 45 days after delivery in China. The Chinese demand reportedly caused a deal for purchase of U.S. wheat to fall through late last year.
Another American oil rig building company, Livenston Shipyards of Orange, Tex., reportedly has sent representatives back to Peking to resume negotiations over purchase of more jack-up rigs. The rig purchased from Bethelem allows drilling in up to 250 feet of water. It has legs that rest on an A-shaped steel mat, allowing it to operate well in areas where oil rigs' legs ordinarily would sink deep into soft sand sea bottoms.
Stanley Lubman, a San Franciscoattorney and China expert who helped Bethelem negotiate the deal, said it took seven weeks of off-and-on discussions in Peking. The negotiations were particularly aided by the presence of Ralph Scales, a designer of the mat-type rigs who was able to sketch engineering drawings on thespot in response to several Chinese questions, he said.