Malloy sees state business growth in China
Published 11:25 am, Thursday, September 13, 2012
Gov. Dannel P. Malloy is betting that Connecticut's $1 billion in yearly exports to China will double in the coming years as more companies invest in the Asian giant.
"Sure it's going to double," Malloy said Wednesday from China during a morning conference call with reporters. Malloy is currently traveling China to boost economic investment and cooperation with Connecticut.
"The shift of manufacturing to China is dying out and they realize that. Government officials talk about investments in foreign countries. It is revolutionary for China to be thinking of investing in foreign countries," Malloy said.
Malloy is on the first official trip to China by a sitting Connecticut governor since former Gov. William O'Neill visited in 1987. The governor has attended a World Economic Summit along with representatives from 90 countries and plans to meet with a variety of business and government leaders before returning on Sunday.
After speaking to reporters Wednesday morning, the governor said he was boarding a bullet train for Shandong Province, which was designated as Connecticut's sister province after former Gov. O'Neill's visit. The governor plans to visit a statute of Mark Twain built in tribute to the famous Connecticut writer.
Although the trip is costing taxpayers about $20,000, Malloy said he was disappointed state leaders had not been back to China in 25 years.
"We kind of dropped the ball," Malloy said. "Connecticut is finally raising its flag in China after a 25-year absence. I made a decision that we had to renew our relationships here in China. I don't think we have competed on an equal footing with other states."
State Senate Minority Leader John McKinney, R-Fairfield, said he has no objection to the governor traveling to China to promote the state. "You're not always going to succeed, but it can be important for the state.
"When he goes to New Hampshire to campaign for the president, I don't think taxpayers should pay for it."
Peter Gioia, vice president and economist for the Connecticut Business and Industry Association, said Malloy's visit will mean more to the Chinese than Americans realize.
"We have been doing increasing amounts of trade with China. But the real impact of the governor going to China is how the Chinese view relationships with foreign countries. It says the top executive in Connecticut is working with Connecticut companies to embrace a relationship with China. Fifteen years from now, they will remember that Connecticut sent its top executive so they are serious about China," Gioia said.
"This is about economic relationships and they value status and relationships. They look at it differently than we do. It was a thoughtful and wise decision to go," Gioia said.
The governor noted that Maryland has offices in China, yet Connecticut has no presence, despite the fact that the country is the fifth largest importer of state products, with France and Germany being the top importers. He said Connecticut exports total just under $1 billion to China each year, and its overall exports are $16 billion a year.
"We are trying to double our exports to China. We are setting goals and finding ways to meet those goals, which includes best practices from other states. There are 1.3 billion people in China and no country has a bigger middle class and no country is going to double its middle class like China," Malloy said.
Estimates set China's middle class at about 300 million people, and that's expected to grow to 800 million in 20 years. But while federal commerce figures show Connecticut exports to China are just under $1 billion a year, the figures do not track the source of goods, which means some products, such as commodities, may not come from Connecticut directly, but through state-based hedge funds.
Major Connecticut companies, such as United Technologies, Aetna and Cigna, are pushing to expand in Asia. Malloy said his goal is to not only sell more products to China but also increase Chinese investment in Connecticut. "I've been asked to prepare a list of public and private transactions that might be of interest," he said.
Those sales, however, do not always go well. United Technologies and two of its subsidiaries, Pratt & Whitney Canada Corp. and Hamilton Sundstrand in Windsor Locks, recently pleaded guilty to several federal charges stemming from the sale of engine control software to China that enabled that country to build its first military attack helicopter.
Malloy said he understands that certain components cannot be sold to countries like China. "They understand they are going to be prohibited from buying certain things ... guidance systems. They understand that. They just want clarity in that."
The governor's call at one point was abruptly cut off as he answered a question about the overnight death of the U.S. ambassador to Libya and security in China, leaving reporters to speculate that authorities had ended the call when the subject of security came up. Malloy returned to the line a few minutes later, but said he didn't know why the call was lost and reported that security did not seem tighter as a result of the situation in Libya.