Golden state for relations

While trade will continue to be a vital part of the relationship, it is clear that Chinese companies and individuals will focus increasingly on investing in California. This is quite understandable. According to State of California statistics, California has the US' largest population and GDP, a large percentage of Fortune 500 companies, median family incomes larger than the national average, the largest number of foreign-born entrepreneurs, and capital needs in a number of areas. Furthermore, California remains a technological powerhouse. It's home to many of the world's most renowned hardware, software, and biotechnology companies and it has many world-class universities, the largest concentration of engineers, scientists, and skilled technicians in the US, is the top state for patent production, and a treasure trove of venture capitalists and incubators.

Chinese companies are quite aware of these strengths and are quite keen to access new markets, construct distribution, sales, and service networks, develop research labs, acquire technologies, and find higher yielding investment opportunities in the state. Even wineries have proved attractive to Chinese investors.

To succeed in California, Chinese investors will have to pay attention to many variables, including California's tax and regulatory structure, sensitivities about foreign investment generally and technology loss and theft specifically, the state's stringent environment standards and the California population's high environmental expectations, job creation and job losses and relations with unions, and various corporate social responsibility requirements.

Ultimately, just as Chinese officials, opinion makers and citizens want foreign investors in China not just to make money but to contribute to China's development and the well-being of its people, similar constituencies want Chinese companies to make similar contributions to California. For its part, as a 2006 Bay Area Economic Forum report made amply clear, California will need to, among other things, offer services of all kinds to Chinese investment delegations and investors, continue to nurture the state's economy, provide better support for education and infrastructure, enhance Chinese language education, perhaps in conjunction with Confucius Institutes, and find ways to encourage cultural, business, and educational exchange.

Trade and investment is an important part of the China-California relationship. But trade and investment has the potential to do far more than fatten people's pockets. As Premier Li Keqiang said in his meeting with Governor Jerry Brown, "cooperation between China's provinces and municipalities and the American states acts as a significant river and foundation of China-US relations." At a luncheon hosted by the leaders of the Shanghai Yangpu District to celebrate the opening of the aforementioned California trade and investment office, which I attended, Governor Brown echoed these sentiments.

If China-California trade and investment not only continues to prosper, but leads to more understanding and better ties between Americans and Chinese, which will naturally help the overarching business environment, then the California-China relationship truly will have reached a golden state.

The author is assistant dean for International Cooperation and Exchange and Professor, School of International and Public Affairs, Shanghai Jiaotong University.