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California looks to China for investments

Sunday, April 07, 2013    

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SACRAMENTO, California (AP) — California Gov Jerry Brown has designs on building some of the most expensive public works projects in the nation and wants to keep the state moving forward in its slow recovery from the recession.

Where better to go searching for the money to further those interests than the world's second largest economy and a country that has piles of cash to invest around the globe?

The governor of the most populous US state heads to China this week for a week-long trade mission that he hopes will produce investments on both sides of the Pacific. Brown will lead a delegation of business leaders in search of what he calls "plenty of billions".

"They've got $400 billion or $500 billion they're going to invest abroad, so California's got to get a piece of that," Brown said in an interview last week ahead of his seven-day trip to China.

The governor and business leaders accompanying him are trying to rebuild the state's official relationship with China after the state closed its two trade offices and others around the world a decade ago in a cost-cutting move. California finds itself playing catch-up to other states that have had a vigorous presence in China for years, among them Pennsylvania, Missouri, Florida and Arkansas.

The Republican governors of Iowa, Virginia, Wisconsin and Guam also are visiting China this month and meeting with provincial leaders to discuss trade and the environment.

California, which would be the world's ninth largest economy if it were a separate country, will open a trade office in Shanghai during Brown's visit. The Bay Area Council, a coalition of business interests from the San Francisco Bay Area and Silicon Valley, is raising about $1 million a year in private money to operate it.

"California shouldn't be the only state in the union not to have a presence with key foreign trading partners like China," said Jim Wunderman, president of the group.

The council opened its own office in Shanghai in 2010 to fill the void after the closure of the trade offices. Bruce Pickering, executive director of the Northern California office of the Asia Society, called the 2003 decision "penny wise but pound foolish".

Asia Society, a non-partisan, non-profit organisation that promotes collaboration between the US and Asia, reported in 2011 that businesses from China have established operations and created jobs in at least 35 of the 50 US states, including California.

Asia Society reported this year that China's direct foreign investment is poised to skyrocket to between $1 trillion and $2 trillion by 2020. California is ideally situated to capture some of that money if it goes after it: China already is California's third-largest export partner after Mexico and Canada.

And Brown already has a relationship with President Xi Jinping. The two met to discuss trade issues last year when the then-vice president visited California.

Technology, life sciences, real estate, banking, health care and agriculture are among the industries state business leaders and officials hope to target. The concentration of skilled technical engineers and the clean-energy sector in the Silicon Valley also are a draw for emerging companies, along with Chinese tourism to California.

State and local tourism officials are among those joining Brown on the trip, along with winemakers, cheese proprietors and almond growers. In all, about 75 business and policy leaders from a cross-section of California industries will be part of the mission, which will include stops in the capital city, Beijing, as well as Shanghai and Guangzhou.

Those cities are among the most developed and important in China. Shanghai, a port city, is an important centre of industry and finance, while Guangzhou is in the heartland of the Pearl River Delta region, which is home to the myriad processing and assembling factories that have made China the world's factory floor.

The nearly $4 billion a year in computer and electronic products California sends to China account for the state's largest export, followed by waste and scrap, non-electrical machinery and transportation equipment. The agriculture products such as strawberries, almonds and lettuce are fifth.

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