Californian advantage

California has competitive advantages in high-tech sectors including software, information technology, electronics design and renewable energy. Historically strong cross-Pacific ties to China complement the state's other attributes, such as an ethnically diverse, highly educated workforce. If it were a country, California would have the eighth biggest economy in the world.

Although the Rhodium report sees Chinese direct investment in California soaring to between $50 billion and $60 billion by 2020, it cautions that the state will need a focused strategy to reach that goal.

"California ... is in a position to lead the nation in attracting Chinese investment in the decade to come," according to the report's authors, Daniel Rosen and Thilo Hanemann of Rhodium.

The state, they said, must pitch its assets: quality of life, a creative workforce and diverse economic centers in the San Francisco Bay and Los Angeles areas. Other US states have been more aggressive in organizing trade missions and other forms of outreach, the report said.

China's escalating direct investment in the US, the report noted, "has rekindled old arguments about foreign firms and the national interest". It said that although screening of foreign investment on security grounds is necessary and legitimate, "concerns can be politicized for protectionist ends".

"California has more self-interest than any other state to offer solutions based on its experience with successful, and failed, deals and a sophisticated understanding of cutting-edge industries."

Robert Berring, a University of California, Berkeley, law professor, expressed concern that "parochial and backward interests within the United States may see increasing Chinese investment as a threat.

"Chinese capital can provide a much-needed boost for the California economy," he said. "If the 21st century is to be a good one, the US must see China as a partner in progress."

Chinese investment is a boon to the US economy and can help draw the two countries closer, Berring said.

 

Contact the writers at chenjia@chinadailyusa.com and josephboris@chinadailyusa.com