As California seeks to reinvigorate its economy by entering growing markets with its diverse portfolio of export products, ranging from high-end services
and technology to agriculture and wine, it looks to its neighbor across the Pacific. China boasts the largest growing middle class in history and a rising
tide of disposable income to match. And California's expertise in technology and sustainability is well-suited to help China achieve economic shifts
outlined in its most recent five year plan: moving production higher up the value chain, driving greater local consumption of higher-end services, and
improving its sustainable environmental impact.
To this backdrop, the California trade delegation landed in Beijing this month to a whirlwind tour of investment forums, academic symposia and government
meetings. Shortly thereafter, a variety of deals were penned to boost California's bottom-line. For instance, one deal is the $1.5 billion development of
an industrial waterfront in Oakland by a China-based investor. And there will be a $100 million Chinese private equity investment to develop green energy,
biochemistry, media, high-technology and real estate construction projects in California.
But commerce rarely flows shorn of politics and it has become a familiar story that Chinese investment in the U.S. is met with skepticism and sometimes
hostility by Washington on a variety of grounds, ranging from intellectual property protection, to rule of law transgressions, to national security
concerns. Few can forget CNOOCs 2005 ill-fated bid for Unocal that was effectively shut down by Congressional grandstanding.
But California is not Washington. Governor Brown clearly announced to his Chinese hosts that "We're not interested in politics. We're interested in
business." This declaration resonated clearly with the delegation zipping along more than 200 mph along high speed rail from Beijing to Shanghai as
Governor Brown sought investors to bring a similar rail project to the Golden State from Los Angeles to San Francisco.
Admittedly, there are aspects of diplomacy that only the federal government is well-equipped to handle. Issues of national security flowing from military
considerations or treaty alliances will always be the proper purview of the federal government. But perhaps there is an emerging division of labor such
that economic diplomacy should not solely be a function of the federal government, particularly in times of partisan polarization in Washington (that can
easily spill over into xenophobia).
States like California have the clout, the incentive, and the ability to move the ball forward on issues aligning with their own interests. This was
clearly underscored by the memorandum of understanding signed by the Chinese Ministry of Commerce which set up a working group and agreement to cooperate
with California to promote trade and cooperation across infrastructure, biotechnology, information technology, agriculture, energy, manufacturing, tourism
and environmental protection. Likewise, an agreement between California and China outlined terms to cooperate on reducing air pollution--starting with
California helping China set up institutions to regulate air quality. These deals were the first of their kind between China and a sub-national entity.