Talking Points: November 24 - December 5, 2014

Talking Points

November 24 - December 5, 2014  

Saturday's football battle for Los Angeles did not go well for USC. Nearly 90,000 attended the game and many more watched it on television. In Shanghai, USC and UCLA alumni gathered at the Camel Sports Bar. In Taipei, USC alumni watched the game at Tribeca. The series now stands at 44-32 in favor of the Trojans, with seven ties.

LA Mayor Eric Garcetti speaking at the Stanford Center at Peking University.

There was hope that Mayor Eric Garcetti would watch the game with USC alumni in Beijing, but he travelled from China to South Korea at just about that time. Garcetti has ties to both schools. He went to primary school at the UCLA Lab School and he taught at the USC School of International Relations. Below we review the mayor's trip and discuss trips made by his predecessors.

Garcetti spoke in October at a reception for Chinese students in Los Angeles. There are a lot of them. In 2013-14, USC had 3,689 (716 undergraduates, 2,935 graduates, and 38 visiting scholars), an increase of 21% over 2012-2013. Other private and public universities in the county are also enrolling increasing numbers of students from China. Community colleges in Los Angeles County have also begun enrolling significant numbers of students from China. Santa Monica College, for example, has both simplified and traditional Chinese character versions of its admissions website. Exact figures are not available, but there are probably 20,000 students from China enrolled in Los Angeles County schools.

It’s the close of International Education Week in the U.S. The Institute of International Education published its report on 2013-2014 enrollments, noting that 274,439 students from China were enrolled in U.S. colleges and universities, an increase of 17%. As at USC, universities are enrolling greater numbers of undergraduates than before. Not captured in those statistics, however, are the rising numbers of Chinese students studying in American high schools. The U.S. government’s October 2014 statistics show 329,927 Chinese students enrolled, up 42,000 since January. More and more Chinese parents are able and eager to prepare their children for study in the U.S. by enrolling them in international programs geared to the SAT not the Chinese higher education exam or sending them to the U.S. for high school to even more fully immerse them in an English speaking academic and cultural environment.

Mayor Garcetti went to China to promote trade, investment, and tourism. His father Gil Garcetti, a former Los Angeles County district attorney, several members of city commissions, hospital executives, and many businesspeople and organization leaders accompanied him.

Business between the Los Angeles region and China is already booming. China is our top overseas source for tourists, whose spending has malls preparing video “Chinese etiquette guides” for shops and salespeople. Union Pay, the Chinese credit card giant, is welcome in increasing numbers of businesses. In part because of the large Chinese heritage community here (with well over 400,000 people of Chinese descent in Los Angeles County alone), the region has plenty of Chinese language-friendly restaurants, hotels, shops, and tour companies, plus Chinese language television stations, and newspapers. China already accounts for 60% of trade through the ports of Los Angeles and Long Beach. Los Angeles handles almost half (45%) of all U.S.-China trade. So, in heading to China, Garcetti and company were playing to a strength.

By the end of 2013, Chinese individuals and companies had invested more than $36 billion in the U.S. (excluding purchases of U.S. government securities). More than $14 billion flooded in 2013 alone. At the end of the year, the Chinese government announced regulatory reforms that should make it even easier for companies to invest abroad. For example, most investments under $1 billion no longer require approval by the National Development and Reform Commission. So far this year, Chinese have invested over $7 billion in the U.S. More than one-third of those deals were in California.

One of the Los Angeles delegation’s Shanghai stops was at the headquarters of Greenland Group 绿地集团. In February, Greenland announced it was putting $1 billion into a hotel and residential tower in downtown Los Angeles. The city encouraged this investment with a $39 million tax break spread over 25 years. In Guangzhou, Garcetti visited China Southern airlines, one of three Chinese airlines that uses Los Angeles as a hub. With airlines and Los Angeles hospitals, the delegation is promoting medical travel. Officially, Chinese accounted for over 70,000

Gensler artist's conception: Shanghai Tower on the right.

medical visits to the U.S. in 2013. The mayor also sought to celebrate business won by Los Angeles firms such as East West Bank, which opened a branch in Shenzhen as part of the trip and Gensler, which designed the 121-story Shanghai Tower. Garcetti participated in a press briefing and tour at the world’s second tallest building, a certified “green” giant. There are 106 elevators in the structure.

In Beijing, Mayor Garcetti, who as a councilman represented the Hollywood area, called for the Chinese government to relax its import quota on foreign films. Reuters reported that Garcetti was confident as Chinese companies increasingly profit from investments in America’s film business that, "Our best advocates are going to be Chinese companies who have a stake in this opening up."

And there have been big entertainment bets made in America by Chinese firms. While the North

American film market is still twice the size of China’s, the Chinese market has grown by at least 21% each of the past five years. Chinese are building theaters and crowding into them. Three prominent film/film-related deals involving Chinese and Los Angeles firms have been announced over the past several months. In March, Hony Capital, headed by John Zhao, combined with another private equity firm TPG, and a couple of established Hollywood producers to launch a new studio. Altogether, $1 billion has been pledged to the venture. In June, Fosun, led by Guo Guangchang, invested $200 million into a new production company called Studio 8. In August, Wanda, run by Wang Jianlin, bought land adjacent to the Los Angeles Country Club for $1.2 billion. Having bought the AMC Theater chain in 2012 and having pleded $8 billion to create a movie studio in Qingdao, Wanda plans to house its entertainment headquarters on its new site.

Not to be left out, this week Disney and Shanghai Media Group announced they were expanding their partnership to include television program production, film co-production and distribution, and marketing. Disney, of course, is also partnering with the Shanghai government on a theme park that is scheduled to open in 2015.

In Beijing, Garcetti touted LA’s progress in green technologies and announced that he wants to bring mayors from across China and the U.S. to Los Angeles to focus on combating climate change. Garcetti’s visit came just a week after Xi Jinping and Barack Obama pledged to halt their countries growth in greenhouse gas emissions by 2030 and 2025 respectively. Los Angeles, of course, has had success in cleansing America's dirtiest air. According to Sinovision, Garcetti said, “Cities are the source of the problem and must be the solution.”

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Garcetti’s predecessors started visiting China in 1979 with the establishment of formal diplomatic

Mayor Tom Bradley, at the 1993 launching of the Los Angeles Metro.

relations. In office for twenty years, Tom Bradley earned a reputation as a traveling man. He went to China in 1979, 1982, 1984, and 1988. He also visited Taiwan in 1983, 1985, and 1988. Bradley’s 1979 visit was with 11 other mayors, the first such official delegation from the U.S. Asked what most impressed him, the mayor of car-crazy Los Angeles, told the LA Times, “I have never seen so many bicycles in my life.”

Bradley subsequently became heavily involved in the local debate over recognizing “two Chinas.” Because the city council had authorized the raising of Taiwan’s flag at City Hall on Taiwan’s October 10 national day in 1980, the Guangzhou government notified Bradley that it was rescinding its agreement to establish a sister city relationship with Los Angeles. The next year Bradley (and the U.S. State Department) succeeded in coaxing the city council to overturn itself (it had just authorized raising both flags) and to ban the raising of any countries’ flags on city property. Bradley’s apology for the 1980 Taiwan flag-raising and his pushing of the flag issue off city property meant that Guangzhou authorities agreed, again, to establish a sister city relationship.

Bradley’s 1982 visit and China’s return to Olympics at the 1984 Los Angeles games helped lead to a temporary loan of pandas to the Los Angeles Zoo. Michael Parks, then the Los Angeles Times Beijing bureau chief and now a USC professor, quoted Bradley in 1982: “Well, nobody said no. I hope they are impressed by our persistence and our plans for a special panda house. Pandas would definitely give China a bigger impact at the Olympics. But nobody has said yes, either.”

The principal aim of Bradley’s trips, though, was to promote business. He told the LA Times, “We are trying to create the atmosphere of friendship and understanding that later creates opportunities for private companies to expand their international trade.”

During that 1982 visit, Bradley met with Xi Zhongxun, the father of China’s current leader. Xi Zhongxun at the time was a member of the Communist Party politburo and vice chair of the National People’s Congress. Two years before, Xi, as party secretary and governor of Guangdong had visited Los Angeles. He was the driving force behind the building of Shenzhen, one of the first special economic zones. A sleepy town at the start of the reforms, Shenzhen is now home to 15 million people. The municipality has a representative office in Los Angeles and has been sending groups of officials to USC to participate in training sessions for eight years.

Bradley’s successor, Richard Riordan went to China 1998. He insisted that Los Angeles was the media center of the world, arguing that the city had more people working in multimedia jobs than New York, San Francisco, and Silicon Valley combined. One of his principal aims was to try to coax shipping behemoth COSCO to choose the Port of Los Angeles over the next door Port of Long Beach. Riordan met with Jiang Zemin, then General Secretary of the Chinese Communist Party and President of China. According to the LA Times, Jiang, mayor and party secretary of Shanghai from 1985 to 1989, told Riordan it was easier heading the country than running a city. Jiang complained that mayors get the blame for everything. Riordan said, "I know what you're talking about."

Among the individuals travelling with Riordan in 1998 was Katrina Leung (陈文英). Leung was a prominent member of the Chinese American community, serving in a number of

FBI informant Katrina Leung was accused of being a double agent. She was not convicted.

organizations for years. She later tried to get invited along when Riordan’s successor James Hahn went to China in 2002. The New York Times reported that while she was not included, she shadowed the group, staying at the same hotels and joining public events.

That was Leung’s last participation in such trips. In 2003 she was arrested and charged with possessing classified documents she intended to pass to Chinese agents. It was disclosed at the time that Leung had been both a paid informant and the lover of her FBI handler for almost two decades. The FBI concluded in 2003 that Leung was working for and not against Chinese intelligence. Leung denied this. Her attorneys argued the FBI was going after her to hide its poor supervision of her handler. She was confined for almost two years. In 2005, a federal judge dismissed the charges against her. The judge ruled that the prosecution gave the FBI handler, J.J. Smith a plea deal, and then refused to let him be interviewed by the defense team. Like Smith, Leung ultimately pled guilty to lying to federal officials and filing false tax returns. She was fined $10,000 and placed on probation. The FBI revised its rules on how informants are to be handled.

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Mayor James Hahn knew about China’s growing importance to Los Angeles. The son of the region’s longest serving politician, Hahn had represented the council district that included the Port of Los Angeles. In Beijing in 2002 he signed an agreement that would let Los Angeles firms bid on construction projects, including those associated with the 2008 Olympics. Hahn also sought a pair of pandas for the LA Zoo. Instead he was told that if the zoo built a suitable enclosure, it would receive three rare golden monkeys. (Such monkeys were temporarily loaned to the zoo in 1986.) The zoo subsequently spent $7 million on the enclosure, including $4,500 to have a feng shui expert consult so that the design would permit the “health, happiness, and fertility” of the monkeys, according to the Los Angeles Daily News. In 2009, long after Hahn had been out of office, Chinese authorities said they wouldn’t be sending the blue-faced monkeys after all.

Among those along with Hahn in 2002 was then councilman Eric Garcetti. In part because it helped to promote NBC’s Olympics franchise, the network’s local station dispatched a team to accompany Hahn. That hasn’t happened again. These trips are more intensely covered by Chinese organizations than American ones. Sinovision, a U.S.-based Chinese language network covered the trip.

In keeping with China’s rapid economic rise, Antonio Villaraigosa made three trips there as mayor. In 2006, Villaraigosa attended a fashion show featuring “Made in LA” clothes and pushed trade

Mayor Antonio Villaraigosa and President Xi Jinping

and tourism. He opened a tourist promotion office in Beijing, perhaps the first American city to set up shop in China. (Like Hong Kong, China’s Shenzhen already had an office in Los Angeles.) On his later trips, Villaraigosa met with Xi Jinping when he was the heir apparent in 2011 and in 2013 after Xi had become party general secretary and president. In 2013, Xi was preparing to travel to California to meet with Pres. Barack Obama at Sunnylands. Xinhua quoted Xi as stressing that U.S.-China ties were strong at local and non-governmental levels and that these should be further developed.

Mayor Antonio Villaraigosa, Commerce Minister Bo Xilai

Along with meeting Xi twice in China (and twice in California), Villaraigosa also met now the disgraced and imprisoned Bo Xilai twice. In 2006, Bo was Minister of Commerce. In 2011, he was the party secretary of Chongqing. When Villaraigosa returned to China in 2013, Bo was in jail. Tom Bradley had met Bo when he was mayor of Dalian.

Los Angeles mayors and other California politicians have brought in investment. Not all of the high profile efforts, though, were quick to yield results. For example, in 2010, Shenzhen-based BYD won $2 million in tax subsidies to locate its North American operations in Southern California. It has secured a deal to sell electric buses produced in one Los Angeles County city to two other such cities. And ten of its electric cars were being used, thanks to a special waiver, by the Los Angeles City Housing Authority. Actually retooling a Lancaster plant and employing workers, though, has been a slow process. At one point, California authorities fined BYD $100,000 for not paying some of its Chinese workers a minimum wage. BYD now has about 60 or so workers, but says it will be expanding. In recent months, however, BYD electric buses have been used on test runs in downtown Los Angeles and at the airport.

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Mayoral trips such as these are demanding and are sometimes criticized at home. Bradley, who became known as America’s top travelling mayor and for whom the international terminal at Los Angeles International Airport is named, defeated his predecessor Sam Yorty in part by arguing that he was an absentee mayor. In his first run for mayor in 1969 he argued, Yorty’s “lack of full-time leadership is one reason why this city is in trouble today." Yorty argued that the trips built business connections for Los Angeles. In 1973, Bradley defeated Yorty. A couple months later, Yorty joined a law firm. One of his Yorty’s law partners stressed that he would be traveling for them. The LA Times quoted the partner as saying the former mayor would go to “Red China in three months.”

By April 1993, it was a year since riots ravaged South Central Los Angeles and a verdict was expected soon in the federal trial of police officers who beat Rodney King after a traffic stop. It was the acquittal of those officers in a California court that had triggered the 1992 unrest. Bradley was due to leave office in a couple of months. Criticism of the trip was widespread. The city controller balked at authorizing $250,000 for it. Bradley reluctantly gave in and cancelled the trip, saying “the foundation of our economic success has been foreign trade and tourism” and that both were boosted by such trips. Worried about the possibility of civil unrest if O.J. Simpson were convicted of murder in 1995, then Mayor Richard Riordan cut short an Asia trip before getting to Hong Kong and Guangzhou.

In this even more global age, most seem to understand that cities benefit from such promotional efforts, but attention is still paid to who pays for the trip and whether or not they get special favors in return or if backers get to go on such trips in order to gain access to deals abroad. The cost for the public officials participating in Garcetti’s trip was $570,000. This was paid for by the city’s harbor and airport commissions.

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Don’t miss Wednesday's special Thanksgiving 感恩节 issue of Talking Points. We’re back again with a celebrity Chinese chef offering a festival treat. Can’t wait? Please take a look at Madame Wu’s suggestions and Ming Tsai’s suggestions from past issues of the newsletter.

The calendar below gives additional information about these and events and exhibitions across North America. Please join us on Facebook and Twitter, we look forward to hearing from you at uschina@usc.edu.