CaliCenter China Trade cover

A Golden Opportunity With China: How California Can Become an Even Bigger Destination for Chinese Foreign Investment

May 11, 2016

Research contributions by Jakob Wilhelmus and Matt Horton
Policy recommendations by Kevin Klowden

Since embarking on its era of economic growth and expansion in 1979, China has played an increasingly large role in the global economy. In addition to becoming the world’s largest manufacturer and world’s leading exporter in 2010, it now ranks as the world’s second-largest economy. California—itself the world’s eighth-largest economy and the principal trade gateway between the United States and China—has been a key beneficiary of this growth. Not only is China a major market for exports and imports for the state, but it has grown into one of the leading international investors in California.

This relationship between China and California has become increasingly complex, particularly since China’s entry into the World Trade Organization in 2001. China’s accelerating export engine has had a significant impact on California, with the state capturing the largest flow of Chinese exports into the U.S. The state has also seen a dramatic increase in its exports to China, as trade relations between the two have strengthened. In fact, between 2007 and 2014, California established itself as the single largest exporter to China, with more than $104 billion in exports, or 13.8 percent of the U.S. total.1 In terms of imports, California was even more successful, capturing an impressive 17.2 percent of Chinese imports by 2014. 6,000 per person.2

California and China stand to benefit mutually from their strengthening ties. The key will be to effectively leverage the opportunities California provides, in areas such as innovation and real estate, with China’s desire to find productive returns on its investments and to strengthen its global presence.