Project Sponsors Ties That Bind 2014 Edition The San Francisco Bay Area’s Economic Links to Greater China A Bay Area Council Economic Institute Report Sean Randolph President & CEO Bay Area Council Economic Institute Niels Erich Global Business/Transportation Consultant Contents PREFACE: Assessing China and the Bay Area...........................................................................v Tracking an Evolving Relationship................................................................................vi Executive Summary...............................................................................................................vii Economy......................................................................................................................vii Students.......................................................................................................................vii Professional Networks ................................................................................................ viii Trade and Tourism ..................................................................................................... viii Affiliates and Invention............................................................................................... viii Key Sectors...................................................................................................................ix Architecture and Urban Planning .......................................................................ix Energy/Environment...........................................................................................ix Cleantech............................................................................................................ix Banking/Finance ..................................................................................................x Mobile/Internet....................................................................................................x Law.......................................................................................................................x Life Sciences/Health Care...................................................................................xi Investment ..........................................................................................................xi Connectors ...................................................................................................................xi Paths Forward..............................................................................................................xii Conclusion...................................................................................................................xii 1. CHINA’S ECONOMY: Slower, but More Diversified ............................................................... 1 In 2006.......................................................................................................................... 1 Today............................................................................................................................ 2 The 12th Five-Year Plan ............................................................................................... 7 Economy............................................................................................................. 7 Environment/Energy........................................................................................... 8 Agriculture .......................................................................................................... 8 Investment Reform ............................................................................................. 8 Livelihood ........................................................................................................... 8 2. THE BAY AREA CHINESE COMMUNITY: Beginnings ................................................................. 9 Chinese Communities Take Shape .............................................................................. 9 The 1906 Earthquake ................................................................................................. 10 Two-Way Trade Grows............................................................................................... 11 The Immigration Profile Changes............................................................................... 11 3. CHINESE STUDENTS AT BAY AREA UNIVERSITIES: Land of Opportunity................................... 13 Numbers Tell the Story .............................................................................................. 13 Education as an Investment ....................................................................................... 14 Student Trends........................................................................................................... 16 Unintended Consequences........................................................................................ 18 “Sticky” Students ....................................................................................................... 20 Cross-Border Academic Collaboration Runs Deep.................................................... 22 Endowments............................................................................................................... 23 Visas: The School-to-Work Transition..................................................... 24 4. PROFESSIONAL NETWORKS/ASSOCIATIONS: Staying Connected........................................... 27 The Asia Foundation: Supporting Development and Reform................ 31 5. TRADE AND TOURISM: Poised for a Breakout? .................................................................... 35 Drilling Down to the Regional Level ......................................................................... 37 Strong Export Potential for California Wine ........................................... 42 A Matter of Geography .............................................................................................. 44 Up in the Air ............................................................................................................... 44 U.S.-China Trade in Perspective................................................................................. 44 Policy Concerns .......................................................................................................... 46 A Nascent Two-Way Tourism Trade........................................................................... 47 Tourism Trends........................................................................................................... 48 Rolling Out the Red Carpet........................................................................................ 49 6. GROWING BUSINESS TIES: Affiliates and Invention .............................................................. 51 Business Presence ...................................................................................................... 51 Research Collaboration .............................................................................................. 51 Financial Investment................................................................................................... 51 7. KEY INDUSTRY SECTORS: A New Set of Synergies ............................................................... 55 ARCHITECTURE AND URBAN PLANNING: From Buildings to Towns and Districts... 55 ENERGY/ENVIRONMENT: Small Steps Matter....................................................... 61 CLEANTECH: A Bright Future…Someday........................................................... 67 BANKING/FINANCE: Slow Money ........................................................................ 71 MOBILE/INTERNET: Everything Is Interconnected ............................................... 76 Game Strategy........................................................................................ 79 The Foxconn Connection ....................................................................... 84 The Taiwan Tech Community Plans its Future........................................ 86 LAW: The Wild West Settles Down ................................................................... 88 LIFE SCIENCES/HEALTHCARE: Healthy Prospects.................................................. 91 INVESTMENT: A Two-Way Street ........................................................................ 96 8. CONNECTORS: Building New Bridges.............................................................................. 109 A New Kind of Overseas Office ............................................................................... 109 The Asian Art Museum: Come for the Art ............................................ 112 The EB-5 Advantage ................................................................................................ 113 Two Local Examples ....................................................................................... 115 Paths Forward..................................................................................................................... 119 Higher Education............................................................................................ 119 Tourism ........................................................................................................... 119 Immigration .................................................................................................... 119 Energy and Climate ........................................................................................ 120 Investment .....................................................................................................