China’s investment in Los Angeles County has doubled in last 5 years, new report says

http://www.pasadenastarnews.com/business/20140605/chinas-investment-in-los-angeles-county-has-doubled-in-last-5-years-new-report-says

By Kevin Smith, June 5, 2014

The ports of Los Angeles and Long Beach maintained their ranking as the nation’s top gateway for international trade last year and container traffic through the twin ports is expected to rise 5.5 percent this year and 5.8 percent in 2015.

Those are just some of the findings included in a pair of reports to be released today by the Los Angeles County Economic Development Corp.

The LAEDC’s “International Trade Outlook for the Southern California Region 2014-2015” examines the Southland’s trade sector from a broad perspective, and “Growing Together: China and Los Angeles County” speaks to the growing trade synergy between Southern California and China.
The latter report notes that investment into Los Angeles County from China has doubled over the past five years, with China becoming one of the county’s top investors.

And tourism nearly quadrupled in recent years from 158,000 Chinese tourists in 2009 to 570,000 in 2013, making China the top overseas market for Los Angeles tourism.

Much of the growth in those areas has been fueled by the fact that Los Angeles County has the largest Chinese population of any county in the nation and the largest number of Chinese students.

“International trade is a significant industry for our local economy because we are the gateway to the U.S.,” said Robert Kleinhenz, the LAEDC’s chief economist. “It always ranks among the top three industries for Southern California from one year to the next, and it competes with entertainment.”

The ports of Los Angeles and Long Beach posted a strong year in 2013 with a combined increase in cargo of roughly 3 percent, primarily because of a stronger than expected peak season and stronger than anticipated activity in November and December.

Growth trends between the two ports have shifted as a result of shippers forming alliances to allow cargo volumes to move more fluidly between the two destinations. Because of that, total loaded cargo volume at the Port of Los Angeles was down by about 4 percent in 2013, but it was up more than 12 percent at the Port of Long Beach.

“The alliance allows multiple shippers to share space on their ships regardless of the port of call,” Kleinhenz said. “So it may be advantageous in some cases for a company to put all of their stuff on one ship as opposed to having separate ships. We tend to pay less attention to the trends at individual ports and look more at the overall activity of both ports for that reason.”

Disparities aside, the two ports still maintained their top two rankings in the U.S. in 2013, handling a total of 14.6 million containers — a 3.4 percent increase over the previous year.

More than 40 percent of the nation’s imported containers pass through the ports of Los Angeles and Long Beach.

The Los Angeles Customs District (LACD) — which includes the two ports and Los Angeles International Airport and Ontario International Airport — also maintained its top position in the U.S. last year with a two-way trade value of $414.5 billion. Los Angeles International Airport contributed to that total with $91.6 billion in air cargo.

In 2013, the value of total two-way trade at the LACD increased by 2.7 percent on a year-over-year basis.

The China report notes that over the past 30-plus years trade (goods only) between the U.S. and China jumped from about $4.8 billion to $562 billion. U.S. exports to China have likewise grown from $3.8 billion to $122 billion in 2013.

LACD exports to China have grown by more than 52 percent since 2009, setting records at the Port of Los Angeles in 2010 and 2011 in both value and the number of containers.

“That is the important message,” said Ferdinando Guerra, an international economist with the LAEDC. “That gap between imports and exports is decreasing, and that’s important.”
Last year the value of LACD exports to China totaled nearly $22 billion, well below the $147.3 billion in imports.
“We’ll continue to see that gap narrow because wages are rising in China and we’ll be importing more products from countries like Vietnam,” Guerra said. “(Vietnam is) about where China was 10 to 20 years ago in their economic development.”

Computers, machinery, appliances and parts topped the LACD’s 2013 export list to China with a value of $4.7 billion. That was followed by electrical equipment, TVs and electronic parts ($3.8 billion), plastics and items made of plastic ($2.8 billion) and motor vehicles and motor vehicle parts ($2.3 billion), among others.

Top imports included computers, machinery, appliances and parts ($41.8 billion), electrical equipment, TVs and electronic parts ($40.6 billion) and furniture, bedding and lamps ($11.1 billion).
China was the LACD’s top trading partner in 2013, followed by Japan, South Korea, Taiwan, Germany and Vietnam.

Many have speculated that the widening of the Panama Canal will reduce local trade activity because it will provide larger cargo ships with a quicker route to East Coast ports. The expansion is expected to be completed by the end of 2015 or early 2016.

Guerra admitted that is a concern, but he said those fears are largely overblown.

“We won’t have a significant loss in traffic from that, maybe 5 to 10 percent,” he said. “And we may be get larger exports from outside ports that could negate some of those losses.”