By Robert O’Brien and Kristi Heim, June 7, 2013, Seattle Times
This week features yet another milestone in the relationship between California and China — U.S. President Barack Obama and Chinese President Xi Jinping will meet at Sunnylands, a desert retreat in Rancho Mirage.
The presidential summit on Friday and Saturday follows a string of recent high-level meetings between officials from the Golden State and the People’s Republic, including a session between Los Angeles Mayor Antonio Villaraigosa and President Xi in Beijing last month, and California Gov. Jerry Brown’s pathbreaking weeklong trip to China in April. Meanwhile, the last time a senior Chinese leader came to Seattle was almost a decade ago, when President Hu Jintao stopped here for a two-day visit in 2006.
The recent success of states such as California in creating such fruitful relations with China should sound alarm bells in Washington, the most trade-dependent state in the country. The rapid development of California-China ties highlights weaknesses in our state’s engagement with the world’s second-largest economy.
Washington state has an illustrious history of ties with reform-era China. Chinese leader Deng Xiaoping visited Seattle during his first trip to the U.S. after the establishment of diplomatic relations with the People’s Republic in 1979. Washington state boasts the nation’s highest rate of exports per capita to the Middle Kingdom. But the export rate, which is heavily inflated by Boeing’s massive volume of exports to China, masks a darker truth — Washington may be falling behind in the race to capitalize on the benefits of China’s economic rise.
The success of Gov. Brown’s trip to China underscores a few of the myriad opportunities that Washington has failed to tap. While there, Brown met with Chinese Premier Li Keqiang, signed an agreement on cooperating to reduce China’s air pollution with the country’s environment minister and championed California’s clean-tech industry, leaving with nearly $2 billion worth of new Chinese investment in his state.
California’s deepening engagement with China should serve as a call to arms for Washington. The Evergreen State is known for its environmentalism and its clean-tech industry. Yet it was Gov. Brown who was signing pollution-cooperation agreements and lauding his state’s leadership in clean technology. Washington has numerous attractive features for foreign investment — its vibrant economy, well-educated populace and strengths in both technology and manufacturing.
Yet California is the choice destination for 29 percent of Chinese investment in the U.S. China’s demand for clean energy and rapidly increasing investment abroad are likely to drive the country’s economic development in the coming decades. California realizes that. Does Washington?
Other opportunities created by China’s rise also remain untapped by local companies. Take the case of Washington’s export of services to China. Last October, a report released by the Trade Development Alliance of Greater Seattle and the Washington Council on International Trade revealed that of the state’s $23 billion in 2011 service exports, only $900 million went to China. The Puget Sound region boasts some of the most elite service providers in the world, representing industries such as software, cloud computing, health care, senior care and architecture. These, incidentally, are all areas where China’s development is lagging behind.
Tourism and education represent more major opportunities for Washington to benefit from China’s rise. Tourists pump money into the local economy. Students educated in Washington, meanwhile, could greatly contribute to the region’s economic development. Forty percent of America’s largest companies, after all, were established by immigrants or their children.
In both areas, Washington is benefiting from organic growth: 2011 experienced a 48 percent increase in Chinese tourists visiting Seattle. When classes started at the University of Washington in 2012, there were more freshmen from China than from California. Yet the true potential of these opportunities is likely under-realized because of our state’s inaction. Washington is the only state in the country without funding for tourism promotion, and the UW is not formally recruiting in China this year.
Washington’s economic vibrancy, natural beauty, sizable ports and geographic proximity to Asia all make it well-placed to capitalize on China’s rise. Optimizing the benefits from China’s continued growth, however, requires that local governments, trade groups and companies all understand and seize these opportunities.
For more than 30 years Washington has been the vanguard of economic and political engagement with Asia. But it’s going to take a renewed commitment to engage with China for the state to remain at the head of the pack.