U.S. governors, Chinese leaders strengthen trade ties

(Reuters) - State governors and their Chinese counterparts agreed on Saturday to strengthen ties between their local governments and increase economic opportunities, as states seek help for their hefty budget struggles.

"Expanding exports is key to our economic recovery," said Washington Governor Christine Gregoire, who chairs the National Governors Association, before signing the accord along with Chinese officials and Nebraska Governor Dave Heineman.

While the longest and deepest U.S. economic downturn since the Great Depression ended in 2009, the economies of most states have yet to fully recover.

Governors are focused on driving down the U.S. unemployment rate, which has stayed at or above 9 percent for 21 straight months.

Lower income tax revenues have created billions of dollars of gaps in state budgets, forcing governors and legislatures to slash spending on assistance programs such as healthcare, which are in high demand by the unemployed.

"States are always looking for opportunities to increase trade and attract investment, both activities that create jobs," Heineman said.

Under the agreement to establish "a subnational dialogue," governors and leaders of Chinese provinces will exchange visits to explore economic development possibilities.

Speaking to reporters at the governors' annual conference, Heineman said the agreement does not address specific business opportunities or projects.

Secretary Zhou Qiang of the Hunan Provincial Committee said that through the accord, "we can resolve problems from our bilateral trade and economic disputes." Speaking through an interpreter, he called it "wonderful platform" for exchanges between American and Chinese local governments.

According to the U.S.-China Business Council, 19 states exported more than $1 billion to China in 2009, selling primarily computers and electronics, agricultural products, chemicals and transportation equipment.

California is the largest exporter to China, sending $9.7 billion worth of goods and commodities to the country, in 2009, followed by Washington, at $9.1 billion. Texas and Louisiana also exported more than $5 billion worth of products to China in 2009.

President Barack Obama's administration is under pressure to achieve meaningful results for U.S. companies that have grown increasingly frustrated with business conditions in China and earlier this month Commerce Secretary Gary Locke said China is failing to honor promises to open its market.

Feb 28^th, 20111

Source: Reuters