Ties That Bind - Bay Area Council Economic Institute

5
Building Bridges, Leveraging Assets
“The Bay Area has historically been the gateway to Asia. The modern practice of global portfolio
management has elevated China’s role in global supply chain management. This also reflects
increased demand for the Bay Area to take a leadership position by utilizing its asset advantage in
technology, capital goods and intellectual property.”—Gene Huang, Chief Economist, FedEx
B
y any measure—people, trade, investment, capital, culture—the San Francisco Bay Area is
heavily invested in Greater China. The two areas’ fortunes have been closely interconnected
for more than 150 years, starting with the first Chinese immigration to America. What has
emerged is a complex, highly diversified, and mutually beneficial relationship. But in a global
economy it would be a mistake to take the relationship for granted.
Northern California has been a valuable resource for China, providing education, capital, technology,
skilled business management and financial opportunity. In return we have obtained
skilled professionals—scientists, engineers, researchers and managers; and access to a vast, rapidly
expanding market. However, neither technology, markets, or China itself are static.
Chinese universities and technical institutes turn out more than 350,000 engineering graduates
annually, and the quality of Chinese educational institutions is growing. Incentives from cash
grants to startup funding, to technical support after graduation, to exemption from military
service (Taiwan), are offered to students who stay home. The scale of China’s market offers talented
entrepreneurs and managers a unique opportunity to build global companies and industries
from scratch—something more difficult to do in the more mature U.S. market. Business opportunities
for bilingual MBA and postgraduate technical professionals in China are wide open.
Declining numbers of foreign student applications and H-1B visas since 2002 in part reflect this.
The bursting of the tech industry bubble in 2000–01 reduced Asia-U.S. travel during the SARS
and avian flu scares, and post-9/11 safety concerns about visiting the U.S. were contributing
factors. However, post-September 11 security policy has also made it more difficult for students
and professionals in specialized fields to obtain J-1 and H-1B visas.
Technology companies, working in advanced areas of semiconductor, nanotechnology and materials,
optoelectronics, biomedicine and similar research, need an assured supply of scientists and
engineers from top universities. Up to now, a significant share of this talent pool, particularly in
the Bay Area, has come from foreign nationals from China and Taiwan. The flow of people and
information worldwide warrants security and intellectual property concerns, but it is questionable
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