The Texas economy is 14th largest in the world with a GDP of US$1.414 trillion; this number means it is larger than Spain and Mexico. Texas has led the US in exports for 13 straight years, exporting US$289 billion. Trade with China is doubly important: Exports to China exceeded US$10 billion last year which makes it larger than all countries other than Mexico, Canada and Brazil. Imports from China broke US$45 billion in 2014. Six industries in particular dominate Texas: petrochemicals, energy, high tech manufacturing, biotech, IT and aerospace.
Texas produces 40 percent of the U.S.’s production capacity; nearly 28% exports to China are in the petrochemical industry. Even better, China removed most restrictions to foreign investment in the chemical industry with the release of this year’s Catalogue for the Guidance of Foreign Investment.
- Energy Generation
A new opportunity exists for investors in China as the country recently moved the construction of power grids from restricted to encouraged. However, the controlling shareholder would have to be Chinese (which actually could be an IP transfer).
- Transportation Equipment
China’s recent crackdown on Chinese automakers now gives Texas companies tremendous opportunities to the auto parts aftermarket. Another big sector-aerospace-will be helped by the Tianjin Free Trade Zone which focuses on Transportation Equipment.
- Electronics and Machinery
Texas makes is known for making computers. China makes a lot of their components. As China moves up the value chain, Texas companies will be able to produce higher level products in China and distribute across the globe.
Texas and China will continue to grow together as they move up the value chain.