Gov. Brown Sees China as Ticket to High-Speed Railway

On a weeklong trade mission to China, California Governor Jerry Brown is seeking to promote Chinese investment in the U.S. state’s enormous but struggling economy, and Chinese media has been taking note. On Friday in Shanghai, the governor was at the launch of the California-China Office of Trade and Investment, California’s first overseas trade office to open in a decade. China Daily reports:

The California-China Office of Trade and Investment was launched in Shanghai on Friday as the US state’s first foreign trade office in a decade, to attract China’s huge foreign investment pool and bolster trade between the state and China.

“California is the gateway to the Pacific and this office in Shanghai will enhance trade collaborations and offer more employment opportunities for both sides,” said California Governor Jerry Brown at the opening ceremony.

The office will serve as a hub for Californian companies interested in entering or expanding in China, the world’s second-largest economy, and Chinese companies seeking investment opportunities in California, the world’s ninth largest economy by GDP.

As trends in the global flow of foreign direct investment (FDI) begin to change, China is becoming a major source of outbound funds. California’s developed industries are an attractive landing point for Chinese firms looking to move up the value-added chain, and the state is hoping to reap the economic benefits that could come with fresh Chinese capital. The Economist looks at California’s historical relationship with China, noting Governor Brown’s keen interest in attracting Chinese investment to the Golden State and the barriers that have been known to block Chinese FDI:

CALIFORNIA’S economy was almost twice the size of China’s when Jerry Brown last visited, in 1986. Today, the governor of America’s biggest state (and the world’s ninth-largest economy, down from seventh in 1986) is the first to admit that things look different, as he and a 90-strong business entourage embark on a week-long trade and investment tour of China. Chinese investors, reckons Mr Brown, have $400 billion-$500 billion burning a hole in their pockets. “They like our almonds, our wine, our brains,” he says. “Instead of buying T-bills in Washington, they should be investing in California.”

[…]But Chinese investments in the United States can jangle nerves. Security concerns in sectors like telecoms may be legitimate, but can also be used as a smokescreen for protectionist impulses. The memory of a state-owned Chinese firm’s attempt to buy Unocal, a Californian oil company, in 2005, is fresh among many Chinese executives, says Mr Hanemann. That bid collapsed after fierce opposition from American congressmen, including Californians.

One project Governor Brown wants China’s help with is a proposed high-speed railway – a project lacking funds due to  opposition from House Republicans. The governor and his delegation have been using China’s massive high-speed rail network for travel on their tour, and also to gather publicity and financial support for the embattled project back home. The LA Times reports:

SHANGHAI — Gov. Jerry Brown’s trade mission to China this week is intersecting with one of the most controversial issues of his governorship: California’s $68-billion bullet train.

[…]A few potential vendors have already expressed interest. California rail board chief Dan Richard is set to meet Saturday with the China Railway Construction Corp., the country’s second-largest government-owned construction concern.

On Thursday evening, Brown, Richard and representatives of California-based railroad companies rode China’s sleek bullet train to this bustling port city from Beijing, a five-hour trip that covered about 750 miles, roughly the distance from San Diego to the Oregon border. Strolling the aisles, shaking hands with Chinese passengers, Brown extolled the nation’s 5,000-mile complex of high-speed rail, built in the last seven years.

“People here do stuff,” the governor said. “They don’t sit around and mope and process and navel-gaze. The rest of the world is moving at Mach speed.”

While covering the trade mission for Sacramento-based ABC-affiliate KXTV, political editor John Myers has been tweeting his experiences with Governor Brown on China’s high-speed trains:

For more on the benefits that California could see from increased Chinese FDI and the political obstacles standing in front of those benefits, see an in-depth study from the Rhodium Group, and a podcast from Caixin. Also see prior CDT coverage of California.