Open Source: NC’s ‘love affair’ with China strains under trade war and tariffs
I’m Brian Gordon with The News & Observer, and this is Open Source, a weekly newsletter on business, labor and technology in North Carolina.
In December 2016, a month before Donald Trump became president, the magazine Business North Carolina published an article titled “China’s N.C. love affair.”
The story described a uniquely intertwined relationship between the country and state.
North Carolina officials, the article noted, were “ardently courting China.” Agriculture Commissioner Steve Troxler completed three trade missions to the country and John Skvarla, the late former commerce secretary, made additional visits. According to the research firm Rhodium Group, Chinese companies created more jobs in North Carolina (15,000) from 2000 to 2016 than in any other state.
After the election of Trump, some say this budding “love affair” noticeably soured.
“It changed dramatically, our relationship dealing with the Chinese government, after the trade war started,” said Tony Copeland, who served as state commerce secretary from 2017 to 2021. “You could physically feel it when you were there (in China.)”
In an email to The News & Observer, the North Carolina Department of Agriculture and Consumer Services said the escalation of tariffs between the U.S. and China “has affected NC’s ag exports to some degree.”
While also noting the impact of COVID-19, the department said North Carolina agriculture exports to China dropped 20% last year compared to 2021 and 11% in 2021 compared to 2020.
Troxler has not made an official trip to China since 2016. Copeland last visited in 2018, while current Secretary of Commerce Machelle Baker Sanders has yet to visit the country.
Perhaps the clearest N.C. casualty of the U.S.-Chinese trade war has been the once-promised Triangle Tyre plant in Edgecombe County, which was supposed to bring 800 jobs to rural Eastern North Carolina when it was announced in 2017.
But Triangle Tyre is Chinese-owned, and the subsequent trade war delayed the facility’s construction. In 2022, the company said it was abandoning the project.
Under President Joe Biden, the trade war persists. The Trump tariffs remain intact. And ahead of U.S. Treasury Secretary Janet Yellen’s visit to Beijing this week, China put export controls on key metals used in semiconductors.
Such escalations could spell particular trouble for Wolfspeed, the Durham semiconductor chip maker. Last year, the company reported more than a quarter of its revenue came from China. The country has been Wolfspeed’s fastest-growing market. In 2020, the company generated $65 million in revenue from China; two years later, that figure had jumped to $211 million.
In its most recent annual federal filing, Wolfspeed said the persisting tariffs could “negatively impact demand and/or increase the costs for our products.”
Despite these economic and geopolitical strains, the business connections between North Carolina and China remain, in many ways, quite robust:
Since 2018, Chinese companies have committed “$391.88 million in capital investment and have created just under 1,000 jobs in the state,” wrote Christopher Chung, CEO of the Economic Development Partnership of North Carolina, in an email.
This includes CARsgen Therapeutics Corp., a Chinese biotech startup that in 2021 selected Durham for its first manufacturing site. The company committed to hire at least 200 workers and invest $157 million in the facility.
According to Chung, China’s imports from North Carolina “totaled $6.26 billion” last year, while “exports from China to North Carolina totaled $9.37 billion.”
Citing the pandemic and trade disputes, Chung said there’s been a shift in the types of exports the state sends to China since 2019, with the primary products being pharmaceuticals.
The state agriculture department says it has seen a 135% increase in agriculture exports to China so far in 2023 compared to last year.
“Pork exports to China are dominated by Smithfield Foods,” the agriculture department said. Smithfield, now a Chinese-owned company, operates multiple plants in North Carolina.
According to the agriculture department, China continues to be one of the state’s top two export markets, while Chung said China “is now (North Carolina’s) second-largest source of imports into the state.”
“China plays a fairly large role in the economic impact of our state,” Chung said. The size of that role, and the economic impact, will hinge on how the U.S-Chinese trade war proceeds.
Apple Watch: New details on RTP campus
Apple’s arrival to Research Triangle Park continues to be the most closely watched area business development in years. Late last week, new details emerged about the future $552 million campus where Apple says it’ll eventually employ more than 3,000.
According to plans submitted to Wake County, the site will cover 281 acres and feature commercial offices, a parking deck, streets and a central utility plant. A first stage of construction will include six buildings, with the largest covering 241,900 square feet.
Apple, known for its secrecy, hasn’t publicly shared any information about the campus since the news was first announced in 2021.
Wake County must approve the proposed site before the project can proceed. For now, Apple continues to accommodate its RTP workforce by leasing space on MetLife’s global tech campus in Cary.
Short Stuff: Home-building robots, Apple vs. Epic to Supreme Court?
Robots building houses? The Durham startup BotBuilt says it’s already doing it.
Next step for the Epic Games vs. Apple case could be the Supreme Court. Apple lawyers say they will appeal the latest decision in its three-year fight with Epic, the Cary-based creator of the wildly popular Fortnite and more.
Apple is seeking Supreme Court appeal of the District Court and 9th Circuit court verdict that found its anti-steering policies illegal. Their policy censors developers who want to tell consumers about better deals on digital goods out-of-app.https://t.co/oRZBsXP5P1
— Tim Sweeney (@TimSweeneyEpic) July 4, 2023
The Triangle Tweener Fund added 14 companies to its profile of early-stage local startups. Among the newbies: A firm that offers an AI-driven solution to filing taxes and a creator of sugarless, date-sweetened vegan chocolates. Between April and June, the Tweener Fund invested $860,000, a record for the emerging fund.
A new $3 billion dollar public company officially launched in Research Triangle Park as the life sciences firm Fortrea completed its separation from the lab-services giant Labcorp. Fortrea is headquartered near Labcorp’s campus in Durham. Monday was its first day on the stock market (under the ticker FTRE).
The Durham semiconductor chip maker Wolfspeed secured a $2 billion deposit in a 10-year deal with the Japanese semiconductor manufacturer Renesas. This cash should help the firm fuel its growth in North Carolina and beyond.
National Tech Happenings:
Is Threads better than Twitter? We’re going to find out together. Meta has released a competitor to Twitter, and it’s already drawn tens of millions of users (including me).
Silicon Valley Bank, the failed financial institution purchased by Raleigh’s First Citizens in March, has resumed lending to early-stage startups, The Wall Street Journal reports.
In international news with a local connection, The Financial Times wrote a feature on North Carolina-bound VinFast. The headline: “The carmaker from Vietnam looking to take on Tesla.”
Thanks for reading!
Open Source
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