China's N.C. love affair.

Author:Martin, Edward
 
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Huge investments in computers, pork and, possibly, ag chemicals have made China an integral player in the state's economy. Can Sino American relations withstand growing signs of strain?

This countryside is a world apart from the state's thriving metropolises. It's fall, and farmhouses and barns dot the browning landscape as Andy Garrett drives through Warren County. He's worked in fields like these all his life, grueling days with clothes, arms and hands coated with sticky black, nicotine-laced gum, stooping and breaking off suckers--growth-sapping sprouts--and squashing leaf-eating hornworms as big as his thumb.

Across the state line, Virginia's faded South Hill was once a thriving tobacco town. After wrapping up a meeting here, Garrett heads back to North Carolina, pleased with his day. The tobacco buyers he met agreed to pay about $2.18 a pound for 19 bales. At more than 700 pounds per bale and 15 cents or more per pound than others are offering, the deal will gross more than $30,000. "We've done pretty well," he says.

Farmers like Garrett are the soul of Tar Heel agriculture, powering the state's economy. "It's made a life for me," says Garrett, who farms about 100 acres of tobacco near Vicksboro.

On this day, though, the buyers crucial to his future are from the opposite side of the globe. Deqing Liang and his delegation from China Tobacco International (North America) Ltd. are based in Raleigh, but Garrett's tobacco will eventually go up in the smoke of premium Chinese cigarette brands such as Huanghelou and Panda. Last year, North Carolina sent China about $184 million in tobacco, while overall exports to the Asian nation topped $2.1 billion.

Garrett's tobacco sale exemplifies the degree to which China has penetrated North Carolina commerce, from bucolic family farms to golf courses, urban apartment projects and pharmaceutical and computer factories, plus new industries in moribund towns.

"The Chinese have for several years been on an investment splurge throughout the world," says Michael Walden, an N.C. State University economist. "They want to diversify their portfolio. They're a global power and want a presence in major countries. And they've got the money."

The creation of 15,000 jobs in North Carolina by Chinese companies since 2000 is more than any other state, topping California's 8,300, says New York City-based Rhodium Group LLC, which tracks international investment. The state ranked third nationwide in dollar value of Chinese investment for that period, while another source estimates the Asian nation's representatives spent $13.6 billion from 2006 to mid-2016, says Kim Genardo, spokeswoman for the N.C. Department of Commerce. Chinese investors have acquired about 60 companies here.

North Carolina is ardently courting China. N.C. Agriculture Commissioner Steve Troxler has led three trade missions, the latest including about 50 business leaders, while Commerce Secretary John Skvarla has led others. "We've invested a lot of time and energy over there," Troxler says.

Behind the international romance are major misgivings. Donald Trump's election may slow the pace of Chinese-U.S. integration. He has repeatedly categorized China, and its ruling Communist Party, as a principal adversary and promised to crack down on alleged currency manipulation, impose trade tariffs and expand the U.S. military presence in the South China Sea.

Wary politicians including U.S. Rep. Robert Pittenger of Charlotte fret about the national security threat posed by China's growing role in technology, particularly Lenovo Group Ltd., which bought IBM's Triangle-based personal-computer business for $1.75 billion in 2005, then its server unit in 2014. The company employs about 3,200 in North Carolina. Pittenger raises the specter that Lenovo might program computers sold to, among others, the U.S. military for spying.

Others worry that Chinese investment will prompt intellectual-property pilfering and, in a worst-case scenario, endanger America's food security. State-owned China National Chemical Corp. is offering $43 billion for Basel, Switzerland-based Syngenta AG, which has more than 1,500 employees in the Research Triangle and Greensboro. North Carolina's Syngenta operations include seed development and crop protection.

Anecdotes like those underscore the circular paradox of Chinese trade in North Carolina: The state wants the jobs and export...

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