SACRAMENTO — Gov. Jerry Brown is reopening a state trade office in China after a similar one closed nine years ago amid criticism by the Legislature.
The Shanghai office is to be funded with $1 million in private-sector funds raised by the Bay Area Council, a San Francisco-area business group. The office is expected to open by the end of the year, and Brown hopes to visit China as the head of a trade delegation in the spring, the council said.
China is California's third-largest trading partner, buying $14.1 billion in California-produced goods and services in 2011. State exports last year totaled $159 billion, an amount exceeded only by Texas' $163 billion.
The office and potentially others around the globe were authorized by a new state law signed by the governor Tuesday at a ceremony at the Redwood City headquarters of software maker Oracle Corp. The governor's office also announced the appointment of a new team of economic development officials.
"California's exports are booming, and our ties with the world economy have never been more vibrant," Brown said at the ceremony. "This law will further strengthen our position by allowing California's business development team to pursue new opportunities in countries with the strongest potential for trade and investment partnerships."
Foreign-owned companies employ 561,000 California workers, about 5% of all state employment, the U.S. Department of Commerce has reported.
For two decades until 2003, California had as many as a dozen state-financed trade offices across the globe, using the same economic development arguments cited by Brown. But lawmakers eliminated support for them from the state budget in 2003 — during the tenure of Gov. Gray Davis.
Several studies by state agencies criticized the efficiency and economic benefit of the offices. A 1999 review by the California Research Bureau, an arm of the state library, said that "most trade offices have been established based on a varying mix of quantitative and qualitative factors related to political issues and constituent requests, rather than being guided by a comprehensive state trade policy."
New trade offices are expected to be more tightly controlled by Brown's office and "will be focused on facilitating business-to-business partnerships that will increase exports for California companies and connect foreign investors with financing opportunities in the Golden State," according to a fact sheet distributed by the governor's Office of Business and Economic Development, known as Go-Biz.
Private industry has agreed to fund the trade offices and partner with the state but only if the finances and operations remain transparent and a clear set of guidelines exist for measuring the success of the program, said John Grubb, the Bay Area Council's chief of staff.
The law, AB 2012 by Assembly Speaker John Perez (D-Los Angeles), transfers the authority for creating a state trade strategy and for operating trade offices from the Business, Transportation and Housing Agency to the governor's office. Go-Biz will use existing state resources and private funds to operate the China office and possible future representations, the governor's office said.
The bill enjoyed strong bipartisan support in the recently adjourned legislative session, passing the Senate on a 31-3 vote and the Assembly 74 to 5.
"This law will attract international business to California by ensuring that foreign investors have a point of contact with California in nations like China and Mexico," Perez said.
The last trade office, in Armenia, closed in 2006 after lawmakers refused to reauthorize it and critics wondered why the state was operating an office in a small nation that accounted for only 0.02% of California's exports.