BEIJING (AP) -- California and China signed an agreement Wednesday to look for ways to boost trade and investment, even as Gov. Jerry Brown acknowledged the state's reputation for red tape and its limited willingness to offer tax incentives.
Brown told executives of mostly American companies that California has ranked at the bottom of nearly annual surveys of the business climate of U.S. states for 37 years. Having just resolved a $27 billion budget deficit, Brown said he's not inclined to offer deep incentives to investors.
Still, he said the aggregate income of Californians is $1.9 trillion, and that the state remains a magnet for risk-taking venture investors, start-up entrepreneurs and other smart, creative people.
"There's a problem there," Brown told the American Chamber of Commerce in China. "But somebody is getting part of that 1.9 trillion. If you don't want some of that, well then stay out."
The message contrasts with the usual sales pitches by governors who tout the advantages of their states. While Brown's administration seeks more Chinese trade and investment, California is already a well-known destination for Chinese.
Chinese Vice Commerce Minister Wang Chao told Brown on Wednesday that a third of Chinese exports to the U.S. end up in or pass through California, and that China imports electronics, machinery, chemicals, fruit and other goods from the state.
California attracted $854 million in investment from China between 2003 and 2010 when outbound Chinese investment was just starting, said a 2011 report by the Rhodium Group, a New York-based consultancy. California's colleges and universities host a quarter of the 102,000 Chinese getting tertiary education in the U.S., according to the Institute of International Education.
The agreement signed Wednesday sets up a joint task force between California, China's Commerce Ministry and six Chinese provinces and regions to look for ways to expand investment and trade. Sectors identified for cooperation include infrastructure, environmental protection, agriculture and bio- and information technology.
Brown said China's commerce minister projected that California will receive $10 billion to $60 billion in Chinese investment between now and 2010. "I'll take the latter number," Brown said.
As part of the seven-day trade mission, Brown, who is traveling with business executives from California, will highlight the state's interest in infrastructure on Thursday by traveling from Beijing to Shanghai on China's showcase high-speed rail. In Shanghai, he will open a new trade office, replacing one that was shut down a decade ago amid an earlier round of cost-cutting.
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