Tuesday, April 16, 2013

Chasing the China dragon

An old relationship presents fresh opportunities

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.”

Under China’s so-called “going out” policy, outward direct investment grew from $5.5 billion in 2004 to $65 billion by 2011. That figure should continue to rise, as should the relatively small share enjoyed by America so far. California’s strong brand in China—everyone knows where Hollywood is, and the Lakers are fervently followed across the country—leave it well placed to take advantage. A new office in Shanghai aims to attract Chinese investors as much as to help Californian exporters.

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