China dealing more with California, New York than Washington as regional ties trump ‘political point-scoring’

China has increasingly resorted to the pro-business amity and autonomy of local authorities in the United States to advance bilateral economic ties, as the world’s two largest economies still have a wide range of unsolved issues despite the recent trip by Commerce Secretary Gina Raimondo.

The tactic was on show during the China International Fair for Investment and Trade in Xiamen, Fujian province, over the weekend when business representatives from California, Illinois and New York were presented with a suite of new energy, green economy and bioscience projects.

And such an approach seemed to work well, as Mary Ma, the China representative for the Midwestern state of Illinois, quoted Governor J.B. Pritzker as saying his state strives to be “the friendliest state in America for Chinese businesses”.

If you want to gauge the health of US-China trade, go to the Port of Long Beach

Eleni Kounalakis

“It’s a US$165 billion question,” said Eleni Kounalakis, California’s lieutenant governor, when addressing the event in Xiamen via video link, referring to California’s total value of trade with China in 2022, which was bigger than any other state.

“If you want to gauge the health of US-China trade, go to the Port of Long Beach and you’ll know. I’m confident about the enduring economic ties.”

The Californian port is a vital entry point for a large swathe of China’s exports to the US.

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Tech and talent from California, a US$3.7 trillion economy that would be the fifth-largest in the world this year if it were a country, is particularly sought after.

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Kounalakis noted California was a treasure trove for China as it combines Silicon Valley, world-class universities and corporate titans.

It already has 20 deals with Chinese provinces covering electric vehicles (EVs), pollution mitigation and climate change solutions.

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Joint laboratories will also be established at the University of California in Berkeley and Davis for exchanges on best practices, new technologies and business models to decarbonise transport, energy and industry.

The idea is to keep region-to-region contacts warm to contrast the chilly capital-to-capital relations

Beijing-based academic

California also has smart city and clean energy deals with Jiangsu and Beijing, with subnational exchanges hailed as the ballast for broader ties.

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President Xi Jinping spent three nights in the agrarian town of Muscatine, Iowa on his first trip to America in 1985, when he was running a county in Hebei province.

He visited more states on three subsequent visits in the 1990s and 2000s as governor of Fujian and Communist Party chief of Zhejiang province.

“The idea is to keep region-to-region contacts warm to contrast the chilly capital-to-capital relations and show Washington Beijing’s sway in US states, especially in major ones,” said a senior academic in Beijing, who spoke on the condition of anonymity due to the sensitivity of the issue.

china dealing more with california new york than washington as regional ties trump political point scoring 1

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Biden to introduce new restrictions on US investments in China, declares tech ‘emergency’

China’s assistant commerce minister, Chen Chunjiang, told US officials and business leaders during the event in Xiamen that long-standing exchanges between Chinese provinces and US states can transcend “political point-scoring”.

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“These exchanges with California have allowed experts from both sides to compare notes,” said Alex Wang, faculty co-director at the Emmett Institute on Climate Change and the Environment at the University of California in Los Angeles.

But Wang, who is also a member of the California-China Climate Institute, stressed that Californian experts advising China will have to be “government approved” and that sharing technology must comply with federal laws.

David Zweig, an emeritus professor with the Hong Kong University of Science and Technology, said that provincial officials may hope their peers in American states could use their latitude in trade and business to allow China to gain access to advanced technologies, but he added that any hope was “unrealistic.”

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“When exporting technologies to China has been elevated as a national security issue, states have little leeway even when many want to do more business,” he said.

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Deals with California still bear significance as America’s biggest state is engaging China when Washington is focused on derisking and decoupling.

But subnational exchanges would not pit states against the federal government, added Zweig.

“I assume that Beijing must approve any agreement between provinces and external governments (such as California), but this is really ‘bottom up’ climate diplomacy,” he said.

US states are also competing on environment and incentives to woo Chinese investment.

New York has had cooperation mechanisms with Shanghai, Jiangsu and Zhejiang since 2016, and it competes with California for Chinese funds.

China is New York’s largest trading partner outside North America and its largest export market.

There were 50 friendliness treaties signed between Chinese provinces and US states and 233 sister city agreements as of 2021, according to China’s Foreign Ministry.

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South China Morning Post

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