Our visit to the Port of L.A. on Valentine’s Day coincided with a lot of global trade news during the same week.
Just two days after we cruised around the port, Chinese Vice President Xi Jinping did a little tour of his own – although he was in VIP company, with Governor Jerry Brown and Mayor Antonio Villaraigosa in tow. Both California legislators were gushing about the importance of strengthening economic ties with China.
The question is, who will benefit most from this enhanced connection? China is the lead trade partner for the Port of Los Angeles, but there’s a marked imbalance between imports and exports. As we heard from L.A. Port economist Michael Keenan, $170 billion in imports from China came through the Port of L.A. in 2011, but only $20 billion in exports went to China.
Maybe that’s why Gov. Brown announced the State will open two trade and investment offices – one in Beijing and the other in Shanghai – to give California a “distinct advantage in China.”
Nine years ago, California shut down a trade office in China. According to a report in the Sacramento Bee, in 2003, the Legislative Analyst’s Office questioned the cost and effectiveness of taxpayer funded trade offices. This time around, the offices will be financed by the private sector.
In a press release, the governor’s office states:
The California-China Trade and Investment Office will provide California companies with increased access to Chinese business contacts and provide Chinese investors with access to California projects that will benefit from increased investment. Financing for the office will be provided by partners in the private sector through the Governor’s Office of Business and Economic Development (GO-Biz).
Then on Friday, President Obama, who had met with Xi Jinping earlier in the week, announced during his visit to a Boeing plant in Washington state that he wants to double exports by 2014. He also said he’ll take steps to offer financing to U.S. companies to match the help their foreign competitors get, so they can be in a better position to compete.
As part of his commitment to boost foreign trade, the White House outlined some of the steps that will be taken:
* Creation of Global Credit Express, a pilot program aimed at helping small business exporters apply for up to a 1-year loan of up to $500,000.
* Simplifying the process for foreign trade zones, which allow companies to use special procedures to delay or reduce duty payments on foreign merchandise.
* Creation of BusinessUSA, a website that will make it easier for companies to access information in order to help their businesses grow.
But… will these measures be enough for U.S. companies to grow and really compete with the mega producer/exporter in China?