Oregon has a big stake in China

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The city of Portland and Suzhou artisans partnered to create the most authentic Chinese Garden in America, Lan Su, in 2000.  Now Oregon and China are engaged in a mutually beneficial trade partnership, to a magnitude not fully understood by many.

Trade between China and Oregon has boomed in last decade. And I was surprised to learn that, unlike the nation as a whole, Oregon has a trade surplus with China; it’s our state’s biggest foreign customer.

According to U.S. Census Bureau data, Oregon’s exports to China have surged by 1,227 percent in the last decade, reaching $4.05 billion in 2010, compared to imports of $2.35 billion. That amounts to a $1.7 billion trade surplus and a vested interest for Oregon to maintain and expand its relationship with this booming economy and ever-opening society.

While agricultural exports are significant, the data shows that Oregon’s lead exports to China were high technology products, a credit to the manufacturing industry, which has led the way in job creation.

This trade will grow more prosperous. As Chinese President Hu Jintao stated in his speech at the 19th APEC summit in Honolulu in 2011, China is expected to import more than $8 trillion worth of goods in the next five years. By 2015, sales of consumer goods in China are likely to reach nearly $5 trillion.

This will further provide a larger market for the U.S. in its efforts to promote its resurgent manufacturing industry. According to Wells Fargo’s chief economist, the United States now manufactures more than it ever has in its history, although this is with fewer (but better) jobs because of automation and productivity gains. So, massive trade deficits and manufacturing decline are myths when it comes to Oregon’s relationship with China.

Furthermore, with the Chinese government adopting its “Going Out” policy and liberalization of monetary control, more Chinese than ever are interested in and able to invest in our country. According to the U.S. Department of Commerce, more than 801,000 mainlanders visited the U.S. in 2010, contributing more than $5 billion to the U.S. economy.

Also, the U.S. EB-5 visa program is popular in China. Properly viewed as a private stimulus program, with no taxpayer dollars, it allows Chinese nationals to obtain U.S. green cards by investing $1 million (or $500,000 in a targeted employment area) to create or preserve at least 10 jobs for U.S. workers.

On June 9, 2011, the U.S. Citizenship and Immigration Services office designated a regional center for the EB-5 visa program in Oregon. It is operated by the American United Development Group, which plans to pay for projects, such as a new Portland hotel, that will create construction and long-term jobs. This will attract more Chinese immigrant investors to invest in Oregon.

With a growing awareness that more Chinese visitors and investors will help create jobs and boost our economy, one arm of the federal government is supporting liberalization of immigration controls. Gary Locke, the U.S. ambassador to China (and former partner at my law firm), who has gone viral and obtained “rock-star” status from the time he was photographed buying coffee with his daughter (something Chinese officials are never seen doing), addressed the 2011 Fourth Greater China Conference in Hong Kong. He announced a new program that will allow five-year visas for Chinese nationals coming to the U.S. for business, travel or studies.

The ambassador emphasized that travel and exchanges between China and the U.S. fostered a better understanding of Chinese and American culture for people from both countries. The current U.S. visa policy is inconvenient for Chinese visitors, because it is a one-year visa and creates a hardship to constantly reapply.

In spite of all of these favorable developments, the federal government can’t help but stick its finger in the face of the Chinese leadership. It is motivated, it seems, more by fear of decline in the region – or worse, satisfying special interests – than by the development of constructive policy of engagement.

In November 2011, President Obama and Australian Prime Minister Julia Gillard announced that the U.S. will take steps to increase its military presence in the land Down Under by adding about 2,500 troops “to maintain the security architecture in the region.” This is nothing more than a symbolic gesture, and one, given the highly sensitive issue of South China Sea islands, that the Chinese government protested immediately and vigorously.

Neither the U.S. nor Australia needs this insignificant troop presence. The policy is injurious to our relationship with the Chinese government, and it has accomplished no purpose, because it is more apt to calcify the South China Sea situation than to facilitate a resolution.

U.S. Secretary of State Hillary Clinton has asserted that “a thriving America is good for China and a thriving China is good for America,” and this is even truer for the Beaver state. Oregonians should support the rhetoric and policies articulated by Clinton, and eschew the confrontational one implemented by the president.

Stephen Ledoux is a real estate law partner at Davis Wright Tremaine LLP. His work includes entitlement, financing, construction and operation of projects, including many on behalf of Chinese investors. Contact him at 503-778-5438 or [email protected].