* Agriculture, energy, manufacturing opportunities
* "Are they going to steal our technology?"
By Edith Honan
SALT LAKE CITY, July 17 With the struggling
national economy and the impasse in Washington over the federal
debt limit, U.S. governors meeting this weekend in Salt Lake
City see at least one reason for optimism: new trade
partnerships with China.
Throughout the three-day National Governors Association
meeting, more than 20 U.S. governors met with delegations from
four Chinese provinces to discuss partnerships in agriculture,
energy and manufacturing in the first-ever meeting between the
governors association and Chinese provincial leaders.
For China, the partnerships could represent a back-door way
into the U.S, market that bypasses Washington, as well as a way
to gain allies in any future trade disputes between the two
For U.S. states, the economic opportunity carries hazards,
including the risk that job gains could be temporary and that
intellectual property could be lost.
"I think some states look at some strategic industries and
ask the question: So, the Chinese are going to put some money
in here, but are they going to take away our industry and bring
it back home? Are they going to steal our technology and put
our companies out of business?" said Paul Markowski of Global
Strategies-Analysis Group/MES Advisers.
But the states are also thinking "ka-ching," he said,
mimicking the sound of a cash register.
U.S. exports to China and Hong Kong totaled $118 billion in
2010, with exports from California, Washington state and Texas
each surpassing $10 billion, the U.S.-China Business Council
China imported 54.8 million tonnes of U.S. soybeans alone
last year, the group said.
"From the perspective of my state, it's a ticket out of the
recession," Washington Governor Christine Gregoire, a Democrat
and NGA chairwoman, said of trade and China specifically, which
this year became the top trading partner of Washington state --
home to Microsoft Corp (MSFT.O).
"Because one of the biggest trading partners for America is
China, we wanted to establish this new working relationship at
the sub-national level," Gregoire said.
JOBS BOTH SIDES OF THE PACIFIC
Li Xiaolin, executive vice president of the Chinese
People's Association for Friendship with Foreign Countries,
said the meeting provided a forum for both countries to
"exchange views on economic cooperation, education,
environmental protection and trade."
She said agreements will bring jobs to both countries.
Governors said there were some exciting opportunities.
"It's huge," Wisconsin Governor Scott Walker, a Republican,
said of the possible impact of Chinese investments in
agriculture and related technology.
Iowa Governor Terry Branstad said his state is looking to
increase exports of meat, corn and soybeans, while Iowa
manufacturing and financial firms were hoping to do more
business with China.
"We see some real opportunity there and we're also
interested in potential reverse investment of Chinese companies
investing in Iowa," said Branstad, who will travel to China
But there are obstacles.
"The hostility from Washington abounds because the Chinese
have attempted both front-end and back-end to steal technology.
That is the bottom line," Markowski said.
Derek Scissors, a research Fellow at the Heritage
Foundation in Washington, said Chinese investment represents
more of an opportunity than a danger.
"China wants technology first, arable land second, and
mineral resources third," said Scissors.
"The U.S. will not sell them technology but we might be
their best opportunity for buying or leasing farmland. States
with shale, coal and natural gas will also be interesting
options. There will be investments in manufacturing but these
run a high risk of eventual plant relocation back to China."
"I don't think it's a back-door so much as genuine learning
by Chinese firms," Scissors said of the governors' meeting.
"They have only recently realized that they must deal with
states, not just the federal government. They are just in the
process of realizing that courting state governments gives them
a valuable partner in political disputes in D.C," he said.
(Additional reporting by Paul Eckert in Washington; editing by