Hu visit to Chicago gives St. Louis an opening
St. Louis Post-Dispatch
January 23, 2011
By Tim Logan
This past week, China made its pitch to boost trade with the Midwest. And St. Louis wants a piece of the action.
Many of the headlines from Chinese President Hu Jintao's visit to the United States were made in Washington at a gala state dinner and a joint news conference with President Barack Obama. But it did not go unnoticed that he wrapped up his four-day trip in the economic capital of the heartland, where Chinese trade delegations signed a flurry of export deals with iconic American companies from Caterpillar to Cargill.
These deals, and the many talks surrounding them, were a chance for the Chinese to demonstrate that their rapid growth can lift this nation's economy, too. And a chance for places such as St. Louis -- which in many ways has been on the losing end of globalization -- to angle for jobs, investment and a growing role in international trade.
Indeed, two St. Louis-area companies -- Peabody Energy Corp. and Bunge North America -- were among those who signed export deals at a massive trade forum in Chicago on Friday. And several local economic development officials made the trip Thursday to Mayor Richard Daley's state dinner for Hu, at a grand Hilton on Michigan Avenue.
The St. Louis contingent's goal is similar to the goal of the region's three-year bid to attract Chinese cargo flights: to put St. Louis on the map for Chinese investment and establish the Gateway City as a place for Chinese companies to do business. To "re-internationalize" St. Louis' economy, as Steve Johnson puts it.
"This whole thing is not just about two or three cargo planes a week," said Johnson, executive vice president for economic development at the St. Louis Regional Chamber and Growth Association. "It's about what you can build from that."
Johnson was in Chicago for the events, waving the flag for St. Louis along with Dan Mehan, president of the Missouri Chamber of Commerce. Both men remarked on the dozens of renowned Chicago companies working the halls at the trade summit. It served as a reminder of what St. Louis is competing against to become a portal for Chinese trade.
"You can just see the volume of it," Mehan said. "Chicago is big in this. That's hopefully where we'll get to, too."
Whether in St. Louis, Chicago or elsewhere, the Chinese will be buying. They announced dozens of deals topping $45 billion in imports from U.S. companies on the trip, and Chinese Commerce Minister Chang Deming said Friday that he hopes his nation is buying $200 billion a year in U.S.-made goods by 2016 -- more than twice what it bought last year.
"It's important to strike a balance between imports and exports," he said. "We need to make sure we grow our imports faster. This is going to be a good opportunity for the U.S."
It's a particularly good opportunity for the Midwest, said Chang. In recent years, China has focused much of its U.S. trade and investment in gateway cities on the coasts. Now, he said, they're looking to the middle of the country -- that's a big part of why Hu came to Illinois.
"These states are traditionally the agricultural and manufacturing centers of the U.S., and there's a strong economic complement with China," he said. "In the eyes of the Chinese, this region is so important."
Chicago, of course, is a truly global city -- Daley has his own Office of International Relations. But for smaller cities and towns across the Midwest to take advantage of that Chinese interest, they need to engage China and pursue trade deals, said former Missouri Gov. Bob Holden, rather than focus on what has been lost to globalization.
"For too long I think we in the Midwest have been in more of a defensive posture," Holden said. "At times, we haven't done a particularly good job of selling ourselves."
The benefits can mean a lot of jobs. Holden, who now heads the Midwest U.S. China Association, points to Moberly, in central Missouri, where Mamtek, a Hong Kong-based manufacturer of sweeteners, is building its first U.S. plant. When finished, the plant will employ 600 people.
"This was a town facing undeniable change," he said. "And it has built that change into an opportunity."
Chinese officials say there will be more like it. The country plans to keep boosting direct investment in the U.S. -- buying and investing in U.S.-based companies and plants, much as U.S. companies have been doing in China for years.
Last year such "overseas direct investment" by China in the U.S. grew 81 percent, to $1.4 billion, according to Chinese numbers out last week. It's still a far lower figure than what moves in the other direction, but it could keep growing by 50 percent a year if the U.S. remains open to Chinese investment.
That's not a given.
The two countries continue to butt heads about intellectual property rights and the use of U.S. technology. Some U.S. companies doing business in China say they face tougher regulation than their domestic, often state-controlled, competitors. And the Chinese say the U.S. erects too many barriers to foreign investment.
But there was a lot of noise made this week about renewed cooperation on those issues, and nearly everyone expects trade between what are now the world's two largest economies to grow ever more thick.
The trick is getting more of that trade to flow through St. Louis. And that's where events such as Friday's trade summit, and long-term projects such as the cargo hub, come in to play.
The two efforts will actually converge, in a sense, this weekend, when a small delegation led by a top official of the city of Shanghai will be in St. Louis, visiting local companies such as Express Scripts and Solutia and signing another agreement to keep talking trade.
It's yet another spinoff from Hu's stop in Chicago and the latest in a string of visits by Chinese investment groups over the past three years. If the St. Louis region hopes to turn its still-developing bid for a cargo hub into something much larger, there will need to be many more such visits to come, said Johnson.
"St. Louis is getting on the map in China," he said. "I think we'll have our shot."
