The growing commercial, military and political rivalry between the United States and China is taking its toll on California, which for decades was the connecting link between the two superpowers.
China and the state of California, said to be the world’s fifth largest economy, have a relationship that has been forged for more than 150 years through immigration, real estate investment and entertainment.
From 2008 to 2018, the relationship between the two was strengthened, but stopped with the coming to power of Donald Trump , who questioned the alleged trade disadvantage of his country against China.
The trade war, reflected in the imposition of new tariffs, affected California, which lost independence in decision-making. Policy with China was once again dictated from the capital, Washington DC, thousands of miles away.
The arrival of Joe Biden has lowered the tension, but the rivalry remains. The United States believes that China wants to challenge its world leadership; Beijing, for its part, questions US world hegemony.
And California, despite the restrictions of recent years, is still the best place to reflect the meeting between the powers.
“The relationship between California and China is the greatest diplomatic experiment between superpowers ,” says Matt Sheehan , a Stanford University political science graduate and author of A Transpacific Experiment: How China and California Collaborate and Compete for Our Future . Transpacific Experiment: How China and California Collaborate and Compete for Our Future”).
At BBC Mundo we talk to Sheehan, born and raised in California, who studied this particular trans-Pacific relationship after living in China for almost a decade.
Why do you say that there is a diplomatic experiment between California and China and that it is the largest among the superpowers?
For a long time, the relationship between the US and China was very distant. They were high-level leaders in Washington DC and Beijing having a conversation.
Ordinary people didn’t always interact with each other, Chinese companies weren’t in America, and American movies weren’t played in China.
But in the last ten years, all of a sudden, there were hundreds of Chinese students in American universities, a lot more immigration, a lot of investment in technology companies and real estate.
And California was at the forefront of each of these trends, becoming the scene of this interesting experiment when two mighty superpowers meet on an earthly level.
Does California function as an independent country, separate from Washington in its relationship with China? How would you describe that relationship and how is it different from the one between China and the United States?
For a long time, California functioned quite independently from Washington DC and the rest of the US government.
Between 2008 and 2018, there was no US national policy on how to treat Chinese students at US universities. There was no national policy, or there was one very late, around Chinese investment.
So university presidents in California or, say, Apple CEO Tim Cook became the most important people to negotiate with China.
Starting in 2018, Washington began to regain its power in the negotiations of local governments, companies and universities with China.
California mayors can no longer invite Chinese investors to build factories in their community or simply have Chinese investors buy California start-ups.
There is a kind of tug-of-war between the local leaders who were at the forefront of the negotiations for a long time and Washington.
2021 data
- 1st placeCalifornia leads the ranking of states where more foreign students choose to study.
- Four. Five%of all international students at California universities (approximately 132,000) are Chinese.
Source: OpenDoors Report on International Educational Exchange
Who is winning that battle between Washington and California ?
The federal government is winning this battle for now. Although there is still a lot of power, activity and decision making in California.
The federal government has placed some strict limits on Chinese investment and the way American and Chinese companies can interact with each other.
Also, the federal government has tried to limit many research partnerships between American and Chinese scientists, but those relationships remain very strong. There is still a lot of collaborative research.
How did China shape California life and economy? Does it happen in the opposite direction too ?
The Chinese community and investment have reshaped the appearance of California’s largest cities, they have changed the physical geography of the state to a great extent.
They have built new skyscrapers and because of them the price of housing has also increased.
They also brought a lot of money to the universities in the state and brought many people from a different culture causing change.
They reformed Hollywood and Silicon Valley.
The Trans-Pacific Experiment is a living laboratory for a new generation of superpower diplomacy on the ground.”
But California also had a huge impact on China in culture and technology.
Hollywood is the center of film culture in the country and for a long time American films dominated the screens in China. That showed the Chinese what blockbusters looked like and the Chinese tech companies what a global tech company looked like.
And people in China greatly admire the spirit of innovation and creativity in California.
California has caused changes in many aspects in terms of soft power (soft power).
And why California specifically and not another US state?
It’s a perfect storm of factors.
There is a long-standing Chinese community in California, dating back to the 1850s. When the Chinese wanted to move to the United States, they used to do so where the immigrants already were.
They often buy properties in communities that are Chinese or work through their investment firms, which can speak Chinese.
- $36.79 billionare direct investments in Chinese industries in California.
- $55.07 billionare direct investments in industries from California to China.
Source: The US-China Investment Project. The National Committee on US-China Relations and Rhodium Group (RHG)
In addition, California has a lot of what the Chinese, Chinese governments and Chinese companies want.
The Chinese want clean air to breathe, good universities for their children and the Chinese community around them.
The Chinese government wants an economy that is innovative, it can learn a lot from Silicon Valley and Hollywood.
And Chinese companies want to invest in cutting-edge technology and partner with the best movie studios in the world.
Who benefits more?
Both China and California. I think if you’re looking for a loser it’s the US federal government because it lost power and control over interactions for a long time.
Many California businesses make short-term profits while looking for long-term ones.
If there is a sale of a company to China for US$50 million, it is a great benefit for an individual or a small company. Meanwhile, what China is really doing is acquiring technology and knowledge to know how to build many other companies worth well over $50 million.
You could see an imbalance there, but it really depends on whether we’re talking about universities or companies, it’s a bit of a mixed bag.
“In many ways, China and California make an odd couple. America’s most liberal state with one of the world’s most sophisticated authoritarian regimes”
How did the Trump administration affect or benefit the California-China relationship?
The Trump administration returned power to Washington DC and set new limits on Chinese investment in technology companies.
In the past it was a decision of the company to accept investment or sell to Chinese investors.
Before, universities let in as many Chinese students as they wanted. The last government made it difficult for many of them to obtain visas or remain in the country after graduation.
In each of these areas, Trump returned power to Washington, DC But the transpacific experiment did not turn into a cold war. Trump helped make the relationship resemble a rivalry, and that can be a game changer in many areas.
In 2018, there was a greater investment of venture capital between China and the US, the majority in California.
- $19.44 billionUS invested in China.
- $4.59 billionChina invested in the US
- *Technological sectors where both countries invest the most money: biotechnology, Artificial Intelligence and blockchain.
Source: The US-China Investment Project. The National Committee on US-China Relations and Rhodium Group (RHG)
Many people in Washington DC, both Democrats and Republicans, believed that the relationship needed to be rebalanced, certain aspects of investment to be curbed.
So, Trump sped things up and made them more erratic. The former president moved the relationship (with China) in one direction, but one day they were best friends and the next day worst enemies. And that’s not good.
However, long-term change was happening and continues under Joe Biden, albeit more predictable and reasonable.
Did the transpacific experiment change with the pandemic?
The pandemic has clearly slowed everything down. There are not as many new immigrants, tourists, or business investments. Progress has been frozen.
But there are also many of the seeds that were planted during the transpacific experiment that grow and mature slowly.
Thousands of Chinese students have graduated from American universities and many are working in local companies.
Many children who were born in China and came to the United States for high school are now bilinguals who give a lot to the investments that China or Chinese companies have made in the United States.
What is the future of this bilateral relationship between California and China?
They have adjusted to a new normal and now everyone is trying to figure out how to move on.
From 2008 to 2018 there was a lot of activity, new companies and relationships. Then we had two or three years where everything was so erratic that no one could start anything new.
Now, things are much more closed due to covid and the same relationship between the US and China, although it is becoming a little more predictable.
We will start to see activity in some areas and people doing new things and starting businesses, but within a more limited space than before.
Link: https://www.bbc.com/mundo/noticias-internacional-60149847
Author:
- Analia Llorente
- BBC News World, Los Angeles
