In a huge international development, China recently became the second largest economy in the world. Also making news were FDI trips to China by two delegations-one from the Bay Area, including Gov. Schwarzenegger, the other sponsored by the LAEDC-of political and business leaders. To highlight some of the opportunities offered by L.A.'s proximity to China, TPR/MIR presents the following excerpts from LAEDC President Bill Allen's remarks to the L.A. Business Journal & Chase China-Asia Growth Forum.
I have just returned from a ten-day trade mission to the People's Republic of China, one in a long series of such missions the LAEDC and our World Trade Center Association: LA-Long Beach subsidiary have been conducting for many years. And I am particularly encouraged by what I heard Chinese Premier Wen Jiabao say in his remarks to us at the World Economic Forum-Summer Davos conference in Tianjin.
The following are his words, as he made very clear to those of us attending the conference his continued commitment to attracting foreign direct investment into China, saying,
"China is committed to creating an open and fair environment for foreign invested enterprises. All foreign invested enterprises registered in China enjoy national treatment. In government procurement, China gives equal treatment to all products produced in China by foreign invested enterprises and Chinese invested enterprises alike. China's huge market volume, sound infrastructure, strong industrial support ability, and stable and fair market environment are attracting more and more multinational enterprises to invest and establish business in China. China is now one of the world's largest foreign investment destinations. More than 470 of the top 500 global companies have established their presence in China. By July this year, China had received 1.05 trillion U.S. dollars of foreign investment in cumulative terms, ranking first among developing countries for 18 years in a row. In the first seven months this year, foreign investment in China increased by 20.7 percent over the same period last year. Foreign invested enterprises on the whole enjoy good operation in China and have reaped good returns. Many have become the bright spot and profit center in the global business growth of their parent companies. All of these demonstrate that the efforts of the Chinese government to foster a favorable investment environment have been recognized by investors and have bolstered foreign investors' confidence. We will continue to improve the foreign-related economic laws, regulations, and policies and improve the business environment for foreign investors in China. We sincerely welcome enterprises from all countries to actively participate in China's reform and opening-up process, and hope that all types of enterprises will strictly abide by China's laws and regulations, run businesses in China according to law, and share the opportunities and benefits of China's prosperity and progress."
Those are the words of Chinese Premier Wen Jiabao.
I am also encouraged by what I learned from meeting with several fast-growing Chinese technology companies during our trade mission this month. Our delegation of L.A. County business and government leaders visited five cities to encourage more Chinese companies to open their North American headquarters in Los Angeles County. I say "more" because we have already attracted quite a few leading Chinese companies to L.A. County in recent years, including China's largest telecommunications firm, China Mobile, with more than 500 million mobile phone subscribers, and BYD, China's fastest growing auto manufacturer and the world's largest producer of lithium batteries for cell phones, cordless phones, and lap tops, both of which have established L.A. County as their American headquarters as a direct result of our recruitment efforts.
But first, let's take a moment to focus on the broader opportunity L.A. area companies like yours have as you consider growing your businesses by capitalizing on Asia's growth. Los Angeles County is the international trade capital of America. Our customs district is number one in the country, with $283 billion in the value of two-way trade flowing through our international air and sea ports in 2009. Our LAEDC Kyser Center of Economic Research projects that this number will once again surpass the $300 billion mark in 2010 after declining below that during the recession. This activity supports about 500,000 jobs in the five-county L.A. region and helps keep our county's economy ranked in the top 20 in the world. And all ten of our customs district's Top ten trading partner nations can be found in Asia, including our top five: China, Japan, South Korea, Taiwan, and Thailand. So, doing business here in the L.A. area, you have remarkable opportunities to grow by establishing the necessary connections here to help you capitalize on all of these major Asian economies.
But, as I said earlier, I am going to focus more of my brief remarks this morning on China. Another reason for that is that China represents considerably more than half of the entire two-way trade volume between our customs district and the global economy. In fact, in 2009 alone, China accounted for $155 billion of the $283 billion total. China's extraordinary rise as both an exporter, and more recently an importer (as they grow their own consumer market fueled by the entry of literally hundreds of millions of people into their middle class), has fueled the rise of our two seaports to the point where they are today America's two largest container ports and handle more than 40 percent of all the waterborne imports coming into this country. In fact, in the past 30 years since China began opening up its markets and becoming a true world economic power, the economies of Los Angeles County and the People's Republic have both grown substantially, and have increasingly grown together. For that reason, in May of this year, we published our first in a series of reports on L.A. County's economic, educational, cultural, and political ties through history with leading economies of the world. Our first report is entitled Growing Together: China and Los Angeles County and can be found by clicking on the Economic Reports tab at the top of our LAEDC website homepage at www.laedc.org. I will share with you this morning a few highlights of that report to set some context for the panel discussion which will follow my remarks.
And I hasten to add we are already at work on the second report in that series about our many long, rich, and deep ties to Japan which is our county's largest source of Foreign Direct Investment. More than 30 percent of the 4,520 foreign owned enterprises in L.A. County, which together employ more than 360,000 people (or one in ten private sector workers in our county), are Japanese-owned enterprises. For decades, these now more than 1,400 companies (including household names like Toyota, Honda, Panasonic, and Sony) have been helping grow our regional economy as they develop, produce, and market products and services for local, regional, national, and global markets. We will publish that report on our long and mutually beneficial relationship with Japan early in 2011 as part of a joint celebration of the 30th anniversary of the LAEDC and the 50th anniversary of the Japan Business Association.
But today we see an early pattern of entry into our market from China's leading enterprises, both state owned (like China Mobile) and privately owned (like BYD), similar to that which we saw in the late 1950s when Japanese business leaders like Toyota and Honda first established their operations in L.A. County. After nearly 20 years of receiving major foreign direct investment into China that has now totaled more than $1 trillion cumulatively, China has begun a major wave of outbound investment. And they are more than ready to make this investment. Just this summer China moved past Japan to become the second largest economy in the world, behind only the U.S. As of 2009, they have 34 companies on the Fortune Global 500, but nearly all of these are state owned enterprises. A far greater number of privately owned companies are developing rapidly in China and are expected to add substantially to the representation of their state owned brethren on the fortune Global 500 in the years to come. China surpassed the United States this year to become the largest automobile market in the world. The Industrial and Commercial Bank of China is now the world's largest bank ranked by market capitalization. China is now home to five of the top ten solar panel manufacturers in a world increasingly turning towards renewable sources of energy to help reduce green house gas emissions and combat global warming. China is clearly more than ready to invest globally. In fact, its outbound investment has been growing exponentially throughout this decade from just $1 billion in 2000 to more than $50 billion in 2009 and is projected to exceed $70 billion by 2011.
So, whether you are looking to invest in China, or looking to capitalize on China's fast-growing outbound investment, L.A. County presents an ideal marketplace from which to access the investment flows going in both directions. Why? For several reasons. First, in general, Southern California is the largest consumer market in North America, with more than 20 million consumers living here, very attractive to companies of the size, scale, and ambitions of those rapidly emerging in China.
Second, our ports and airports are already China's gateway into our national economy and our gateway to the fast growing Chinese economy. And dozens of Asian companies have made significant investments in terminals, shipping lines, logistics, and distribution facilities here to facilitate that access. Our unparalleled network of highway and rail facilities also provide connections between these ports of entry and consumer markets in the other states spread across this nation.
Third, nearly 400,000 Chinese live in L.A. County, a greater concentration than can be found in any other county in the U.S. They are an important part of our highly trained regional workforce and present a ready supply of employees with the necessary technical, language, and cultural skills to help Chinese companies succeed here.
Fourth, our two largest research universities are home to more students from China than any other institution in the country. USC is ranked number one and UCLA number two as the U.S.'s top higher education destinations for China's brightest students.
Fifth, as the international trade capital of America, we have developed a very sophisticated and robust network of public and private sector resources to facilitate the successful development of trading and investment opportunities in both directions, with world leading experts such as represented on this morning's panel to enable your success in such ventures.
There are of course many more general reasons why L.A. County makes an ideal location for a Chinese company to establish its American headquarters right here in your market, but having just returned from the trade mission I mentioned earlier, I want to get even more specific with you. California is the number one state market in the U.S. for both solar energy and electric vehicles and those are two of the fastest growing sectors of the Chinese economy and represent two of the greatest growth areas for China's international business expansion plans. California has more than 60 percent of all the grid-tied solar energy generating capacity installed in the U.S. today and continues to add more than half of the new capacity in the U.S. each year. Our own Southern California Edison purchases more than half of all the solar power generated in the U.S. today. California is also the largest market for hybrid electric vehicles by far, and Los Angeles is the number one local market for hybrid electric vehicles as well.
Having already successfully attracted BYD to L.A. County over the past two years, where they are currently investing in both renewable energy projects and the electric vehicle market, we met with other leaders in China's renewable energy and electric vehicle sectors over the past two weeks and found substantial further interest in investing in and locating jobs in our market. And, this time, we brought with us senior representatives of our technology, utility, financial, legal, and business consulting sectors who made important connections that are already leading to the scheduling of follow up meetings here and in China and will likely bear fruit not only for both these L.A. and Chinese companies but for job creation in our respective areas. How can it not?
China is the second largest economy in the world today, with more than $5 trillion in GDP. California is the 8th largest economy, with more than $1.8 trillion in GDP. Both are committed to greening their economies and using their respective technology developments to improve efficiency in all manner of building, transportation, and manufacturing throughout their own and throughout the world's economies. Why shouldn't we be partnering, investing, and trading in each other's businesses, markets, and economies?
How we go about doing that in ways that minimize our risks and maximize our returns is the subject of our panel discussion this morning, and you will hear important lessons from real experts to help you capitalize on these opportunities with a greater chance of success. But I also want to offer you the free services of our World Trade Center Association subsidiary for the LA-Long Beach area, which are made possible by the generous support the LAEDC receives each year from the county of Los Angeles, more than two dozen local cities in our county, an equal number of member colleges and universities, and nearly 200 private sector leaders such as JP Morgan Chase and the LA Business Journal. These services include: education on the basics of trade; individual export and import counseling; personal referrals to state and federal agencies for trade promotion; trade financing assistance; trade leads and investment attraction; trade missions and investment conferences; and various forms of market research.
Our WTCA President Vance Baugham is here with us this morning along with key members of his staff of trade professionals and his board of advisors including Mr. Les Gold of Mitchell, Silberberg and Knupp and Mr. David Abel, Founder of the VERDEXCHANGE Conference [verdexchange.org/conference] held here in L.A. in late January each year, which brings together business, finance, and government leaders from around the world interested in collaborating with others to advance their interests in the green economy-clean and green technologies.
So let me conclude my portion of this morning's program by saying that you are not only in the right meeting place at today's forum to learn how to capitalize on the rise of Asian economies in what many scholars believe will be the Asia Pacific Century, but you are also in the right marketplace, as Los Angeles County has become very much the capital of the Pacific Rim and is poised to benefit greatly by the rise of these economies. I wish you all the best of luck and look forward to working with you as you grow globally in the years to come.