*This is part one of “China n' USA: On State Business,” a new series by NBC News that will look closer at the efforts by state governments to assist American companies doing business in China and attract foreign direct investment from the mainland.

BEIJING – For Nevada businessman Tim Wallace, one of the biggest challenges doing business in China was figuring out what Chinese chicken tastes like.

“When it comes to custom flavors … every region has its own particulars,” said Wallace, whose company makes food flavoring.  “The cheese in the U.S. doesn’t taste exactly like the cheese in Europe and the milk in China is not the same as milk in the U.S.”

And Chinese chicken?

“Chicken flavor was a unique one. This was a little different from the normal.”

Twenty years ago, Wallace was busy selling food ingredients in a crowded and mature market in the United States. At that time, many of his fellow import-exporters viewed international exports as a prohibitively expensive logistics nightmare. Wallace, however, saw an increasingly saturated domestic market with shrinking growth potential.

So his eye started to drift east – toward China.

“People were telling me that only 5 percent of people in China can afford packaged food,” Wallace said in a conversation with NBC this week.  “But I’ve always been pretty good at math, and China had 1 billion customers – and 5 percent of 1 billion still sounded like a pretty good chunk of business.”

With that simple math, Wallace struck out into China and gradually pecked out a business.  Along the way, however, he learned that developing chicken flavoring for the Chinese market was easy to mess up.

A Chinese client had approached his company, the Las Vegas-based Flavor Consultants, to create a chicken flavoring for a new instant noodle product to be sold in China.  However, the client complained that the flavoring Wallace’s company produced just didn’t taste like Chinese chicken.

“We had the standard chicken flavors … and they found one they liked, but it wasn’t quite the same style they were looking for,” said Wallace, who worked closely with flavor chemists, known as flavorists, in the United States.

“One of the flavorists I was working with out of Cincinnati said, ‘Man, it’s kind of a weird flavor.  It’s kind of like a barnyard after a rain.’”

And with that, Wallace suddenly understood the flavor profile the client was looking for: the taste of chicken fresh from the yard right into the cooking pot.

“If that’s what the customer is looking for, let’s give it to them,” Wallace thought.  “It may taste terrible to us, but then again there are a lot of things that may taste terrible to us that the world loves.”

Growing ties
Bucking recessionary trends across America, Flavor Consultants has continued to grow over the years, chalking it up in no small part to the more-than 50 percent increase in exports to China during the past five years.

Wallace's success has, in part, led to his home state now having China as its third largest foreign trading partner. From 2000 to 2010, Nevada’s exports to China grew an astounding 4,797 percent – compared with the 270 percent increase in worldwide exports during the same time period.

Picking up on this success, the Nevada Commission on Economics (NCED) has appointed no fewer than three independent state representatives to China.  A fourth is designated to handle just tourism.

It’s a far cry from the days when Wallace first encountered the NCED nearly 17 years ago and ended up wring a $250 check to the agency’s underfunded international trade representative to help him pay the application fee for federal funding to attend international trade shows and missions.

That investment, and the subsequent ones by state agencies and other business people, has proved a wise one. With natural resources like lithium and copper, vast geothermal and solar potential, gold deposits that make the state the world’s fifth largest gold producer, Nevada can only benefit by close ties with a resource-driven economy like China.

Nevada.com.cn

The Nevada Council of Tourism created a Chinese language tourism page as one way to help Chinese tourists learn more about the state.

Trade will be critical as Nevada begins the laborious task of diversifying revenues long dependent on the travel and hospitality industries. In particular, green energy has become a rallying cry for state officials looking to rebalance the economy.

And they’ve been aggressively courting China, one of the few countries with plentiful financial capital to invest, and seeking to persuade Chinese companies to open their American operations in their state.

Putting Nevada on the map
Travel and tourism, however, are not being ignored.

“The saying goes in China, 'If you haven’t been to America, you have not really traveled abroad.  If you haven’t been to Las Vegas, you haven’t really seen America.’" So says Karen Chen, Chief Representative of the Nevada Commission on Tourism’s (NCOT) China Office.

The siren song of deep-pocketed Chinese tourists has simply become too alluring to ignore. According to figures from the China Travel Academy, in 2010 more than 57 million Chinese traveled abroad and spent $48 billion dollars.  And the World Tourism Organization estimates the total number of outbound tourists from China will reach 100 million by 2020.

Since Nevada's tourism office opened in Beijing in 2004, the office has worked aggressively to promote the state as a destination tourist site and a gateway for America’s West Coast.  It opened a second office in Shanghai last year.

Establishing a presence early on in Beijing was wise.  Many of the major Chinese travel agencies, national tourism organizations and media agencies are headquartered in the capital.  And as the nation’s burgeoning middle-class have begun spreading their wings and beginning to travel internationally in earnest, Chen and her team have persuaded tour operators to include Las Vegas as a stop in large-scale mass tours of America.

In essence, Nevada forced its way – via Las Vegas – into the Chinese people’s roadmap of the United States.

“Based on our sources, about 1 million Chinese tourists visited the United States by the end of 2010 compared with 300,000 when our office opened in 2004,” said Chen.  “Exactly how many tourists visit Nevada is a difficult statistic to acquire, but we know that most Chinese visitors to the U.S. make a stop in Las Vegas and the Grand Canyon.”

Come for the sin, stay for the sun
Las Vegas may be Nevada’s tourism crown jewel, but it has some stiff competition on China’s home turf: Macau.

As early as 2005 the former Portuguese enclave’s vast potential was evident in one stunning example: The Sands Macau opened in 2004 at a cost of $240 million -- and paid for itself in just one year.  Just last month, Macau's casinos earned $3 billion in revenue.

When NBC News interviewed William Weidner, COO of the Sands Corporation, back in 2006, he observed, “Within a five hour flight of Las Vegas there are approximately half a billion people. Take that same flight circle, move it to Macau, and there are 3.1 billion people. That's the enormity of the opportunity."

Macau’s success and impressive statistics have not fazed Las Vegas backers, largely because Nevada-based casinos are profiting handsomely through their own branded operations in Asia, allowing them to compensate for sluggish growth back home during these tough recession years.  

Jae C. Hong / AP

With more than 57 million Chinese traveling abroad while spending $48 billion dollars, U.S. state tourism offices are working harder than ever to attract tourists from China

Nevada's mission, however, is further complicated by the growing sophistication of Chinese tourists.

“Since 2004, we have marveled at the growth of Chinese outbound tourism as well as the refinement of tastes and the increased budgets, just getting on a bus and snapping pictures is not enough for most Chinese travelers anymore,” said Chen.

“There is interest Nevada’s history, especially Virginia City and the Chinese role in the development of the American West,” she continued.  “Even Area 51 and Nevada’s nuclear test site are just some of the things many Chinese have read about or have seen on television.”

Nevada is catering to the new sense of adventurism by tapping deeper into its natural gifts: skiing in Lake Tahoe, golfing in Mesquite and trying out the cowboy life in Elko. All have become attractions offered up to travel operators through trade shows and through its Chinese language website.

One creative attempt to draw tourists beyond Las Vegas is currently taking place: this week, northern Nevada played host to the Miss China Cosmos Pageant semi-finals.

“Eighteen of the loveliest Chinese women on the planet will be assembled in northern Nevada… and it really gives us an opportunity to really showcase another area in Nevada, other than Las Vegas,” said Brian Krolicki, Nevada’s Lt. Governor, during a quick trip to Beijing last month.

Sunny skies
Glamour, though, is only part of the picture.

Blessed with plentiful geothermal hotspots and sunny skies, Nevada in recent years has aimed to diversify its economy so it’s less dependent on tourism.

Not for nothing, did Sen. Harry Reid (D-Nev.) once boldly declare his state was poised to one day become the “the Saudi Arabia of renewable energy.”

In 2011 alone, both Reid and Krolicki paid visits to China to promote their home as a future renewable energy hub and to investigate opportunities for Chinese foreign direct investment (FDI) into the state’s nascent clean tech efforts.

These visits and others to drum up business in the state have proven fruitful for Nevadan businesses.

Earlier this year, Nevada-based Applied Soil Water Technologies and Shengong Environmental Protection Company of Shanghai signed a partnership agreement to market $85 million waste-to-energy recovery and recycling facilities that would be the first of its kind in the United States and could potentially reduce the flow of solid refuse into landfills by 85 percent.

Perhaps most prominent of such potential green deals is a $6 billion project pitched by ENN Group, a privately-held Chinese energy company with more than 24,000 employees worldwide. Reid gleefully described the potential deal earlier this year saying it “would be the biggest [foreign investment] we've had, period.”

Slated to be located in the southern Nevada town of Laughlin, the ENN project will be a mixed residential/industrial/commercial “eco-city.” Its proposed vast 9,000-acre campus will include a solar-cell manufacturing plant, a green energies industrial park, a solar energy farm and residential housing for employees.

Steve Marcus / Las Vegas Sun

Senator Harry Reid (D-Nev), center, is seen here arriving with Jinxiang Lu, second from right, chairman and CEO of A-Power Energy Generation Systems for the dedication of a wind farm in Henderson, Nev., on Oct. 12, 2010.

Aside from the boon of nearly 4,000 construction jobs that this ambitious four-year construction project would bring to Clark County – an area currently suffering from 14 percent unemployment – ENN has claimed that the solar-energy park and other sections of the business would bring 2,000 badly needed long-term manufacturing jobs with an average salary of $72,000 a year.

Construction on the Laughlin project was due to start this year, with state officials hoping to see solar cell production beginning in the first quarter of 2013 and the solar farm producing electricity the following year.

However, sticking points still remain – namely over ENN’s desire to purchase, not rent, the land and a change in the plans that would expand the building area from the initial 5,400 acres to 9,000 acres.

Rough roads
Not all the seeds planted by Nevada have borne fruit.  One of the earliest energy deals to be championed by Reid was a proposed wind turbine assembly plant.  The project has been potentially derailed by a growing concern: financial and accounting irregularities on the part of the Chinese investor.

The deal was an oddball joint venture between A-Power Energy Generation Systems, a young upstart provider of distributed power generation systems in Shenyang, the American Nevada Company, a prominent Southern Nevadan real estate developer, and The U.S. Renewable Energy Group, a Dallas-based investment group whose close Washington ties attracted scrutiny.

A-Power planned to construct a turbine assembly facility, its first in the United States, in Henderson, Nevada.  The plan was that the facility would supply the company’s first 240 2.5-megawatt wind turbines for a proposed $1.5 billion dollar wind energy farm in west Texas, built by another Sino-American joint-venture, Spinning Star Energy.

Approximately 250 tons of steel are needed to make the nearly 8,000 components that make up a wind turbine, ranging from the blades to the towers. So the pitch was that the A-Power plant would be a huge boon not just for the newly hired plant employees, but also the United Steel Workers.

But the project gained instant notoriety after charges that the wind farm would create 300 temporary construction jobs and a mere 30 permanent positions for Americans.  In contrast, the farm would reportedly generate 2,000 Chinese jobs.

The fact the backers were also seeking $450 million of federal stimulus money to pay for the project was the final nail in the coffin.

In spite of the setback, A-Power has gone ahead with other investments in the U.S. In October 2010, A-Power in conjunction with a Singapore partner opened a new LED manufacturing plant in Henderson, with Reid in attendance.

“The more we invest in and develop clean energy – like the kind A-Power generates – the faster we’ll solve two of our toughest challenges: Creating jobs and reducing our reliance on oil,” said Reid during his prepared remarks that day.

Associated Press

Blessed with more than 250 days of sunshine a year as well as ample wind and geothermal resources, Nevada has been aggressive in seeking out Chinese investment for renewable energy projects.

“Nevada is already our nation’s hub of renewable energy [and] companies like A-Power are making us the international hub of the renewable energy industry.”

Not all that glitters…
Despite the promise of A-Power’s Henderson deal, things took a dramatic turn in June of this year. The company’s auditor, MSCM, suddenly resigned amid allegations that A-Power “had not retained a qualified independent forensic accounting firm to evaluate certain business transactions... "

A-Power, which at the time wase a NASDAQ listed and traded company, saw trading of its stock suspended soon after and was delisted just this week.

Since the accounting fallout, there has been little talk of the Henderson plant and A-Power’s intentions for the U.S. market. A spokesman for A-Power declined to comment on the NASDAQ suspension, the delisting, or its current financial position — citing the advice of the company’s legal counsel

A-Power’s financial status is unknown, but the company recently hired a new Korean auditor and earlier this month announced a plan to for a joint feasibility study for a biomass fueled electric generation plant with Lincoln County in Nevada.

Nevada is not the only state vying for dollars
If Nevada has its way, Chinese investment will be a key driver for overhauling the state’s economy and for creating jobs.

Robert F. Bukaty / AP

Using 250 tons of steel to fabricate the nearly 8,000 components that make up a wind turbine, the A-Power plant was also a potentially huge financial windfall for the United Steel Workers and the American steel industry.

It’s already taken steps to position itself for more Chinese foreign direct investment. The state has no corporate or personal income tax, foreign trade zones, favorable tax incentives such as reduced property and business taxes, and a full embrace of the EB5 visa program, which offers permanent residency for those who invest $1 million into the state.

But if and when Nevada’s manufacturing and export driven economy really does take off, it will come with the same lingering problems that plagued Nevada even before the recession: namely logistics and the problem of California.

With no true logistics or shipping hub in Nevada – air freight and other cargo predominantly arrive in or depart from California first –the former will always find itself justifying its competitiveness to countries like China.

California could also blunt Nevada’s efforts to tap into its increased investment in green energy.  The former is poised to generate 40 percent of its energy from resources like wind, solar and geothermal by 2020.  If so, California could export cheap renewable energy to neighboring states at the cost Nevadan power.

But as we’ll see next week, these two states are not the only ones looking to corner the market for America’s renewable energy.

Next week: Illinois, where "Our carp tastes better."

Weibo user: Binson

BEIJING – For all the grief the Obama administration is getting from China for filing a complaint with the World Trade Organization about Chinese tariffs on American chicken exports, perhaps the president should be suing China for royalties instead.

We’ve seen Obama peddle chicken for Kentucky Fried Chicken in Hong Kong, so it was just a matter of time before he broke loose and got his own franchise here in the mainland.

Obama Fried Chicken, or at least what we assume OFC stands for, was found earlier this week in Beijing and comes with the slogan written underneath in Chinese: “We’re so cool, aren’t we?”

Indeed...

Thanks to the team at Shanghaiist for the photo.

BEIJING – Any attempt to compose a serious reflection Friday morning on the significance of China's successful launch of the Tiangong-1 module into space last night was dashed this morning when we started reviewing coverage of the launch.

As the Guardian first discovered – and we missed over the din of breathless Chinese coverage of the launch on CNN and the BBC – amidst the video distributed by state broadcaster China Central Television (CCTV) was a computer animation ostensibly created by the Chinese space agency showing the rocket soaring up into the heavens. Later, the Tiangong (which in English translates roughly to “Heavenly Palace”) module is shown linking up with the Shenzhou crew capsule  – all accompanied to patriotic music...

But not quite patriotic in the way you’d expect.

The music selected to accompany China’s great national feat was none other than… “America the Beautiful.”

Was it meant as a musical overture to the U.S. for greater Sino-U.S. cooperation in space?  A thumb in the eye of the West’s primacy in space?  Or simply an embarrassing blunder by China’s propaganda department? 

Whatever the answer, this isn’t the first time we’ve seen popular American culture unexpectedly showing up in Chinese news.

Just this past January, CCTV was found using video from the Tom Cruise classic, “Top Gun,” to spice up a news report on China’s military forces.

So those of you who are anxious that China may one day surpass the United States in the space race or are suspicious of the mainland’s space ambitions, take comfort in knowing that for at least one night, the Chinese people were united with Americans in crowning thy good with brotherhood, from sea to shining sea.

To read more about the successful launch of the Tiangong-1 module last night and the ramifications of the launch, be sure to check out MSNBC’s coverage of the event here and here.

By NBC News Bo Gu

BEIJING – Too cute?

Here is some video of a dozen baby pandas playing in a crib-like structure at the Chengdu Giant Panda Research Base in China’s southwestern province of Sichuan. 

The 12 panda babies just made their debut at the research center on Monday. They were all born this year from eight different litters. 

The Chengdu base started in 1987 with only four pandas, but now it has 108 giant pandas.

China started sending its pandas overseas as a diplomatic gesture as in 1958. Now 32 giant pandas live outside China, including 13 in the U.S.

In June 2011 China began conducting its once-a-decade “panda census” to learn how many are living in the country, but the results have not been released yet. According to the last census done in 2000, there were 1,596 pandas in China, with most of them living in Sichuan province.

By NBC News' Bo Gu

BEIJING – At the age of 60, Wang Jiyu couldn’t bear to keep quiet any longer about a story that he had never mentioned in public for over 40 years: As a 16-year-old member of the Red Guard during the Cultural Revolution, he killed another young man in the middle of a confusing melee.

His story is similar to many others from the violent era in Chinese history known as the Cultural Revolution; what is remarkable is not that he killed someone, but that he is now willing to speak out about it.

Wang broke his silence in an article he wrote for the outspoken Chinese magazine “Yan Huang Chun Qiu” last year. He recently spoke with NBC News about what he says was “an era when all humanity collapsed.”

Violent era
“The Great Proletarian Cultural Revolution” was a 10-year movement from 1966 to 1976, led by Mao Zedong, to purge opposition from the Communist Party. Mao’s stated goal was to enforce socialism in the country by removing capitalist and bourgeois elements in society. As a result, millions of Chinese citizens, especially intellectuals, high-ranking officials and military officers, were persecuted, forced into manual labor or killed.

Despite all the literature covering this chaotic period of Chinese history, the Cultural Revolution is rarely discussed in public or mentioned in mainstream Chinese media. The death toll from the Cultural Revolution still remains a mystery, but historians estimate it may go as high as 2 million.

In 1966, the “Red Guards” campaign was formed, made up mainly of young students from relatively well-off families. Lacking structure or real organization but championed by Mao, the Red Guards soon overtook the whole country. Schools were dismissed, and the Red Guards broke into different factions, resorting to violence against their opponents.   

Very few people have publicly admitted to misbehavior or crimes. Wang is one of just a few people in all of China to stand up and admit he killed someone during the era.  

Drawn into chaos
Wang was born in 1951 to a military family. His father served as a high ranking cadre in the Air Force, an elite position in China that enjoyed many privileges. Wang grew up in a typical Beijing residential compound, where the children of military officers played together.

“Before the Cultural Revolution, we were only 14 or 15 years old, and all the education we had was about class struggle, and gradually and automatically that was the only thing we believed in,” Wang recalled during a recent interview with NBC News.

By the early 1960s, China found itself in the midst of another political upheaval as a result of the growing conflict between Mao and the senior Communist Party leader Liu Shaoqi.

Liu, along with Deng Xiaoping, tried to steer China’s planning economy toward a more practical route after the disastrous Great Leap Forward had led to a massive famine that killed millions of people. The re-direction threatened Mao’s authority, prompting him to set out to purge Liu from the central leadership.

“The Great Cultural Revolution was actually a power reshuffle, with its ultimate goal of setting up Mao’s absolute power and getting rid of Liu Shaoqi,” said Wang.

Day gone wrong
By 1967, Wang was 16 years old and chaos and violence had become the norm across the country. But Aug. 5, 1967 was a day that changed him forever.

“I was at home, then a friend came over [and] told me, one of our friends had been taken by another faction, beaten up and was still being held at the Beijing Grain School,” he said.

Wang immediately gathered some other friends and went to the school to take revenge. Soon a hostile confrontation turned into a violent melee between his group of Red Guards and the other faction.

In the middle of the chaos, a young boy dressed in a blue worker’s uniform hit Wang’s arm with a brick.

“I chased him like crazy. He didn’t realize how angry I was,” Wang recalled. “I hit the back of his head with a heavy wooden club, and he flew away down a slope, like an empty bag. When he tried to get up, I struck him again on his forehead and blood splattered on the club.”

Wang ran away to chase other boys, unaware how serious his attack turned out to be, until a few minutes later when he was told the boy was dying.

“‘No way! How is that possible?!’ I said. I was completely shocked. I went to the clinic where the boy had been sent. He was lying there exhaling only, while blood trickled out of his neck. His face was paper white. I almost collapsed right there. I wanted to say I didn’t do it on purpose, but I knew I had killed someone.”

Wang said he called the police that same night, but nobody bothered to arrest him. The whole country was in pandemonium.

In September of that same year, Wang went to the southern island of Hainan hoping to join China’s war against Vietnam. But his efforts came to no avail, and in December he was arrested for the murder and sent back to a Beijing prison.

However, nine months later he was released, at the consent of the victim’s parents. The father, according to Wang, never mentioned Wang’s name in public. Instead, he met Wang’s father before the release and told him, “It’s a mistake.”

“I couldn’t have come out of jail so quickly if they hadn’t forgiven me,” said Wang, tears welling up in his eyes.

Haunted
Wang had a dream soon after the incident. “I dreamt I was lying on a hard, cold wooden slab. There was no pillow. Then I saw a very tall woman. I couldn’t see her face, but she was wearing a white gown and told me, you are going to lie here for 10,000 years.”
Wang attributes all the subsequent difficulties in his life to his crime. He has worked at different farms, served in the army, worked for state-owned enterprise and eventually settled down to running a horse farm.

Many of his comrades died young. Wang himself lost his left eye in an accident while he was working as a locksmith at an aviation factory in Jinan, Shandong province in 1971.

“I always believe in karma. If you do bad things, you will be punished. I don’t believe those people who committed crime can sleep well every night.”

Wang said he still believes in the Communist Party and believes in the country, but he cannot stand that everyone is untruthful in today’s society.

And even though his public confession about the crime is incredibly rare, there has not been much of a public reaction to it in China. Only a few outspoken, but non-mainstream, media outlets have picked up on his story. He has done only one TV interview with Phoenix TV, a Hong Kong-based broadcaster. He says he tried to get an interview with CCTV, the state television broadcaster that has the highest viewership in mainland China, but that they wouldn’t do it. 

“The children now don’t know what happened. We are choosing to forget. We should not let them forget and everyone should know what happened to this country,” said Wang. “Some people still miss and praise those years – let them go to hell.”

By NBC News' Adrienne Mong and Ed Flanagan

BEIJING—It’s been often said that the Chinese are stealing American jobs.

Now it sounds like they’re creating them.

At least this week it has seemed so.

First off, the new U.S. Ambassador to China Gary Locke announced a blueprint for Sino-American economic and trade relations.  Chief among the former commerce secretary's goals is jobs creation back home. 

“[M]y top priority here is to work with the American business community in China to support President Obama’s job-creating efforts,” said Locke in a speech before a joint American Chamber of Commerce and U.S.-China Business Council luncheon.

In order to achieve that, Locke will strive to double American exports to China by 2015 and boost Chinese investments in the U.S.  The latter is, again, part of a larger initiative under the Obama administration called Select USA.

“Instead of making it in China – [make] it in America and employ American workers,” Locke told NBC News this week.  Foreign direct investment in the United States, according to the ambassador, is responsible for the employment of 4 to 5 million Americans in America.

The new emphasis on foreign direct investment echoes Obama’s jobs speech earlier this month, which noted, “And we’re going to make sure the next generation of manufacturing takes root not in China or Europe, but right here, in the United States of America.”

That trend is already taking root, though driven more by other factors, as our colleague Ian Williams reported this week.  A tightening labor pool and rising costs (thanks to the strengthening Chinese currency and inflation) mean that for some American businesses, it makes more sense to move some of their manufacturing back home.

Courting Chinese investment
Locke intends to make his sales pitch to invest in America during five trade and investment missions across China in the coming year. The tours are also designed to help U.S. companies get “better access to provincial and local governments [and] introduce them to potential buyers and customers” in order to keep increasing U.S. exports to China.

Also this week, the state of Illinois signed a $200 million deal with China’s second-largest wind turbine manufacturer, Xinjiang Goldwind Science & Technology.  (We profiled the company in a documentary about the race for renewable energy that aired on CNBC last year.) 

The deal means a dozen permanent jobs and 100-plus construction jobs will be created, according to the office of Illinois Governor Pat Quinn.

We launch a new series
Quinn is one of several governors who’ve been trooping through town trying to drum up trade and investment.  And it got us thinking that it might be worthwhile taking a look at every U.S. state that has a representative office in China. These folks are on the frontline of selling to the Chinese, and we wondered how they pitch their state and how effective they can be. 

After all, the impact of China on employment in the United States is a bit murky.  Economists and statisticians argue all the time over whether globalization – or more specifically, the growth of the Chinese economy – is good for American workers. 

We know U.S. exports to China, in the decade 2000-2010, soared 468 percent to $91.9 billion, according to the U.S.-China Business Council.  China is the third largest market for American goods and services, well behind Canada ($248.2 billion) and Mexico ($163.3 billion).  But considering that the other two are contiguous to the U.S. and share a trade agreement, it's not surprising that they would be the two largest trade partners. But, their growth rates were in the low double digits for the same decade.

And then there are the individual states themselves, which saw phenomenal growth in the same period.  Oregon, for one, clocked 1,227 percent growth in its exports to China.  South Carolina, which has a very busy trade office in Shanghai, saw 1,596 percent growth in exports.

Chinese foreign direct investment in the U.S. has seen less spectacular results. But as its foreign exchange reserves continue to grow – and concentrating on U.S. treasury bills seems so much less appealing – China is under pressure to diversify its investments.

Between 2005 and 2010, Chinese foreign direct investment in America outpaced that of any other source, now totaling almost $6 billion dollars.  It's still meagre compared to direct investments from Europe or Japan, but the rate of growth is noteworthy; in two years, Chinese direct investment in the U.S. jumped 400 percent.

So starting next Friday, Behind The Wall will profile different states and their trade and investment track records with China. 

Along the way, we’ve learned that green technology is a key growth sector for both the Americans and Chinese.  Virtually every state we’ve talked to is looking to woo the Chinese in green tech – whether it be helping to upgrade renewable energy technology or develop environmentally efficient production chains –so distinguishing one state from another will be critical to winning those investments.

And then there are the other, more quirky or unexpected industries: carp, gambling, coal.

Up next week: Nevada.

Their exports to China rose nearly 5,000 percent from 2000 to 2010.

And it’s not just casinos they’re selling.

By Ian Williams, NBC New Correspondent

DONGGUAN, China – For Bill Green it was more than just a routine visit to his Dongguan factory.

The thuds, bangs and sparks of the factory floor were the same; the metal cut, twisted and welded in the usual shower of sparks. It had all become very familiar from five years of visiting factories in China, outsourcing his production of industrial cabinets, chasing lower costs.

For years he had generally been happy with the results, but no longer.

"If they don't sand the stuff down, that will come back through the damned paint and we'll have an issue here," he said, running his finger along the edge of one unfinished cabinet.

Later, hunched over a laptop, the factory boss at his side, his frustration came pouring out.

"This is unacceptable, we can't have this," he complained. "This is rust coming out from here."

The factory boss looked to his chief engineer who became defensive, "We can't fix every problem. It takes too much manpower," he complained.

The boss said Green was being too demanding.

"None of these problems are hard to fix," Green shot back. "We work to these standards all the time in the United States."

Green owns a metal-processing factory in Mobile, Ala., where his workforce shrunk from 60 to just 25 as more work, on cabinets and also on lamps, was outsourced to China.

But after this trip he made a decision – to bring at least some of that work back home.

"Everybody knew you could get anything made in China, and make money on it back in the United States. But things are changing," he told me later. "Prices are going up, and its making it harder to import stuff from here."

More than that, attitudes were changing. "Used to be when you'd come over here everyone wanted your business. Now it’s harder and harder to get them to cooperate with you."

So Green is planning to shift the final assembly of cabinets back to Alabama, and will divide much of the lamp production between India and the U.S.

Is China as the ‘world’s factory’ done?
The area Green was visiting, around Dongguan in southern China, has been called the workshop of the world, China's export powerhouse.

There are tens of thousands of factories, sprawling for miles from the Hong Kong border, their stained peach and white tiled walls lining the motorways. Laundry hangs in the windows of the adjacent dormitories that have been home to millions of migrant workers, the foot-soldiers of China's export machine.

For 17 years, Tao Dong, now chief Asia economist with Credit Suisse, has been covering its breakneck growth. But when I met him in Hong Kong recently, he told me, "China as the world factory, the best time is behind us."

Labor costs are soaring by 40 percent a year, as migrant workers are becoming pickier, since there are more job opportunities at home. Also China's one-child policy means there is no longer such a huge pool of young, dexterous workers. Bank lending is tightening and China's currency is also appreciating by around 6 percent a year against the U.S. dollar, not quickly enough for US and European policymakers, but sufficient for factories on low margins to feel the pain.

"This is the first time I've seen so many Chinese exporters collectively turning down orders from the U.S., from Europe," Dong told me. "They're bleeding," he said. "Costs are rising so much. They are just not profitable. They are actually dying."

As Green discovered, it wasn't the costs alone. Labor shortages, and what he suspected to be corner-cutting by the factories were impacting quality, and he found himself paying as much to have a cabinets put right in the U.S., as he was paying for the original product in China.

"We've reached a point where the risks are not worth the rewards," he told me.

‘Poor quality is expensive’
Green's agent in Dongguan is Ben Schwall, a veteran import-export man, and one of the most astute observers of the local economic scene as you could hope to meet. He's become a regular point of call when I visit the area, and this time Schwall told me his job was becoming much more complicated.

Factories are responding to cost pressures by demanding bigger orders or larger down payments, he told me, or abandoning exports and looking to the growing domestic market.

"A lot of the problems we have now are delivery times and the cutting of corners. It's more than just price. All these things end up having a cost, though. Poor quality is expensive, angry customers are expensive. Missed shipments are expensive,” said Schwall.

But he thinks it’s too early to write an obituary for China Inc. The supply chain is still second to none, he said, and the latest trade figures show exports from China overall still to be strong.

That said, Schwall's just got himself a five-year visa for India. "I'm also planning to go to Vietnam in the near future to look at some factories. Offshoring, outsourcing, no longer means just China. There are other places we need to look, and, yes, there's also the
American solution of bringing some products back to the U.S.”

Exporting U.S. goods to China?
Before he returned to Alabama, Green was faced with an intriguing offer.

One factory boss said he wanted to re-orientate his production of lamps towards China's domestic market. "We've got a lot of rich people now," he said, "and we want to offer them a complete American flavor." He explained that middle-class Chinese associated American products with higher quality, and asked whether Green would work with him to bring U.S.-style lamps to the Chinese market.

The proposal was short on detail, but Green found it tantalizing all the same. "It's a fantastic idea," he said. "I didn't realize the market was ready at this point. We are going to pioneer it."

Back at my hotel, there was an unusual sight from my 26th-floor window. I could actually see the factories of Dongguan, sprawling for miles below me. I'd never seen it so clear. Usually it’s just a smudge through a thick miasma that hangs over the factories.

The lobby too was different, almost empty. Usually it’s packed with buyers from every corner of the planet on their phones and iPods, waiting to be whisked away to factories by a fleet of mini-buses. The pianist was still there half way up a spiral staircase, but serenading just two or three lonely buyers beneath the lobby's artificial palm trees.

Further evidence of a slowdown at the factories? Schwall warned me not to read too much into it. The summer's always quieter. The Christmas buyers hadn't yet arrived.

But something was certainly changing. "Five years ago it was a no-brainer. If you wanted variety and low costs on a whole range of goods, you'd come here. Now it’s a lot more complicated," Schwall told me.

For American business people like Green, it’s no longer a one way street. There are new opportunities. And Green returned to Alabama preparing for the first time in years to create new jobs – in America. 

Eric Piermont / AFP - Getty Images file

China Central Televison (CCTV) anchor Rui Chenggang speaks during a CCTV televised debate focusing on China's growth at the World Economic Forum in Davos on Jan 29, 2010.

BEIJING – If new U.S. Ambassador to China Gary Locke thought he had escaped the tough, sometimes embarrassing questions of political punditry by moving to Beijing, he was in for a rude awakening Thursday.

Speaking at the World Economic Forum in Dalian, Locke was taking questions from the audience when CCTV business host Rui Chenggang stood up and asked him, “I hear you flew here coach. Is that a reminder that U.S. owes China money?”

The question was in reference to the swathes of coverage Locke received for his apparent humble and low-maintenance comportment since taking the ambassadorship – a characteristic not always shared by even the most junior Chinese government officials. He has gotten a lot of attention in the Chinese press for flying economy class on trips and purchasing his own coffee at Starbucks.

His provocative questioner, Rui, is no stranger to media attention himself. He was dubbed by Fortune Magazine as the “Lou Dobbs of China” and was profiled by the New York Times two years ago. Some have hailed him as a standard-bearer for a new, self-assured China, but others paint him as an opportunistic self-promoter extremely cozy with China’s Communist Party.

Regardless of his true affiliations or desire for publicity, there can be no denying that Rui, 33, has a history of bold and sometimes inflammatory positions.

Headline grabber
We at NBC News first reported on Rui in 2007 when he led a high-profile campaign online calling for the removal of a Starbucks burrowed away in the middle of Beijing.

Chinafotopress / Getty Images Contributor

Gary Locke, the new United States Ambassador to China, talks to the media during a press conference at the Ambassador Residence on Aug. 14, 2011 in Beijing, China.

Writing in his blog at the time, Rui argued that the coffee company’s store "undermined the Forbidden City's solemnity and trampled over Chinese culture."

Following intense discussion online by Chinese netizens and pressure from the government, Starbucks was forced to close its Forbidden City location.

In recent years, Rui has successfully injected himself into economic and social conversations here in China, most prominently perhaps in 2010 during President Barack Obama’s visit to Asia.

At the G-20 Summit in Seoul, Obama said he wanted to leave the last question to the South Korean press. Rui stood up and cheekily said to Obama, “I’m actually Chinese, but I think I get to represent the entire Asia – we’re one family here in this part of the world.” 
 
The move – and the claim that he represented the “entire Asia” – quickly caused an uproar among the Chinese  – some ridiculed it, while others cheered it.

Most recently, Rui also sparked a debate about Chinese wealthy and their penchant for luxury goods like Hermès, describing the items as “strong weapons for China’s nouveau riche and socialites to show off their wealth.” 

Rui’s words and a questionnaire he posted on his Twitter-like Weibo account, titled “The Ten Most Vulgar Luxury Brands,” also drew immediate attention online. Some of it was very much bemused – as many wondered how a man who according to the New York Times wears Zegna suits and drives a Jaguar to work could possibly be the man who would lead such a crusade against luxury.

Humble civil servant or savvy politician? 
All of which brings us to back to Thursday morning in Dalian. To his credit, Locke seemed to answer Rui’s belligerent question with composure, describing the economy-class plane tickets as a State Department standard. He also noted that, "As a very easy-going person, I believe I'm a good representative of the way Americans do things."

Locke continued by saying, "I hope this type of openness will help Chinese and Americans to know more about each other, break down barriers and dispel misunderstandings.”

Taking to his Weibo account later Thursday, Rui responded to Locke’s comments by noting that Locke was once a U.S. governor and thus – unlike many Chinese officials – savvy to the ways of proper communication and public relations:

“Gary Locke always spares no effort at seizing every occasion and opportunity to publicize American values. He only mentions the good sides of the U.S. and avoids mentioning the bad sides. This is his job. He is probably the most willing to showcase his own and is good at doing so as an ambassador. His public behaviors, from using a backpack to buying coffee, from taking a van (instead of a car) to taking economy class, are all accurately received, photographed, spread and discussed. He knows how the media works because he used to run for governor.”

His statement immediately drew more than 20,000 comments from other Weibo users, both in support and critical of his stance toward the ambassador.

Two weeks ago, many of us in the American press corps in China were invited by the American Embassy to an informal gathering to meet some of the new transitioning press attaches joining the Beijing embassy. To our surprise, the ambassador appeared at the event and took a couple minutes to talk to the group informally as a whole before mingling with the gathered journalists.

Throughout that admittedly limited experience, Locke’s self-characterization as “easy-going” seemed justified. Absent the cameras and microphones, he joked about flying to the event in economy class and having spare Starbucks coupons to loan to journalists interested in getting a discounted cup of joe.

Rui may have a point about the savvy communication skills of America’s politicians, but in this case his impertinent attitude toward a foreign dignitary may have backfired on him.

Instead Rui may have inadvertently accentuated a slow-developing, but nevertheless aggressive position China has taken both politically and journalistically towards the United States in recent years.

BEIJING – China has welcomed millions of eager new drivers onto its increasingly congested roads in the last few years.

None appear as young as this young whippersnapper.

Ever-popular China blog, Shanghaiist, pointed us toward this disturbing video of what appears to be a young girl around the age of 4 or 5 casually driving a small sedan down the streets of a Chinese city.

Even more surprising though is the fact that she is apparently accompanied by two adults – presumably her parents – who encourage her as she navigates early morning traffic (the clock at one point shows 7:00 a.m.).     

“Drive safely,” says the woman holding the camera at the beginning of the clip to the young girl as she starts down the street, her head barely reaching over the wheel. Later, about 40 seconds in to the video clip, the young girl brightly notes that the “flowers are starting to bloom” as she passes a large SUV before a man in the back reminds her again to drive carefully and pay attention to the road.

Later about 1:05 into the clip, the bubbly girl actually makes a fairly deft pass around a car in front of them that is waiting at a stoplight to make a left turn.

The question of how this young girl’s legs were able to reach the gas and brake pedals is answered at the end of the clip when the girl stops the car and a man comes around and appears to remove some sort of extension pedals from beneath the driver’s area.

Understandably, the video created instant outrage among netizens in China. “We need to prosecute this little girl’s parents for endangering public safety!” called out one user of the popular Chinese video site, Youku. Another called upon the now legendary searching prowess of Chinese web users – known colloquially as the “human flesh search engine” – to be employed to search for the parents, saying “I demand a human flesh search! Punish these brain damaged parents!”

However, some users were impressed with her adept driving skills and her coolness on the road, a trait not always apparent on China’s modern roadways. “Her driving skills are good and it seems that she likes driving,” said another user before continuing, “maybe in the future she can keep learning about driving a car, but now this is very unsafe and way irresponsible.”

Our sentiments exactly.