China became a net importer of energy in 1995 and is expected to become increasingly dependent on imports; however, it is expected to remain a net exporter of coal through the forecast period. Lack of infrastructure and distances from resources to population centers will be one of China’s greatest challenges in the immedate next few decades. Energy demands overall should grow 4-5% each year in the next 20 years, roughly four to 5 times the rate of growth in industrialized nations. China is the second largest consumer and producer of energy (both at 10% of world supply).

It is unlikely that Alaska will play a role in supplying energy to China in the next few years because Alaska’s oil producers are increasingly focused on the North America market. There were no crude oil sales to China in 2000.

China is Alaska’s 5th largest trading partner and represents an important market diversification in Asia.

It is likely that China will be increasingly important to Alaska as an export market in the future.

Oil exports have stopped. Market demand and other factors have Alaska oil producers focusing on the U.S. domestic markets.

Holidays Celebrated in China

High end hotel and restaurant niche markets are key to growth in China.

In cities like Shanghai and Hong Kong, Alaska seafood can find acceptance within the large populations of extremely wealthy residents and travelers. This institutional sector is an important one. It is key for Alaska to develop this high-end food service market. ASMI’s representative in China has said that there is unmet demand in the high end markets. Alaska can have more of this market if it focuses on quality

China has an increasingly affluent consumer market.

The growing affluence of many Chinese consumers is a plus for Alaska. An estimated 100 million Chinese have incomes between US$9,000 to US$10,000. This translates into buying power of US$40,000 to US$45,000 in the U.S. A segment of the population is becoming increasingly concerned about eating food that is nutritious and from a healthy source.

China presents challenges to Alaska seafood.

China remains a cost sensitive market. Although its consumers are increasingly affluent, it is important to remember that China is still a developing country. For instance, the lower-priced salmon, such as chum and pink, is more appreciated in the general consumer market while high-quality king and sockeye salmon are more limited due to higher prices. And, overall, there are other seafood such as pollock, cod, and crab which are more familiar to traditional tastes. Competition is fierce in China. Norway is the major competitor for Alaska salmon in China. The next biggest competitor is Russia. Russia is closer to China, has more convenient transportation links, and overall cheaper price. Yet, Russian product lacks quality and packaging know-how. There is a niche for Alaska’s products in venues where quality and recognizability play a part.

The Alaska Seafood Marketing Institute has a seafood representative in Shanghai, China.

U.S. cargo air carriers currently operate cargo service to China from Anchorage. Other Asian carriers like Korean Air and Japan Airlines also provide cargo service to China. The Chinese carriers operating via Anchorage--Air China, China Southern, China Eastern—do not yet open their cargo doors in Anchorage to provide Alaska/China nonstop air cargo service, however, they would be allowed to do so under the terms of the current US/China aviation agreement. The resource of aviation links—made possible by Alaska’s geographic position on great circle routing on the Pacific—has yet to be fully exploited. As the high end market in China for Alaska fresh and live seafood develops, the high level of cargo activity at Ted Stevens Anchorage International Airport will provide convenient access.

Frequent and regularly scheduled marine transportation links across the Pacific operate via Seattle. Charters for forest products route directly from Alaska to China.

China’s need for a wide variety of technical engineering services is growing. In the environmental sector, demand is strongest for water and wastewater treatment but environmental monitoring equipment and also offers significant opportunities. As income levels rise in a huge country with acute environmental needs; China’s environmental market may grow to become the world’s largest. Demand for environmental equipment and expertise will increase in the longer term as affluent coastal cities open their coffers and tighten enforcement, provinces establish environmental funds, and multinational investors build more plants with modern pollution control facilities. In oil field support, there are opportunities for Alaska businesses to partner with China’s large oil producing entities because of the depth of expertise that Alaska’s firms have in this sector. Also, Alaskan businesses understand the special challenges that occur in providing technical services in an area unaccustomed to extensive development or in an area devoid of public infrastructure.

Alaska/Heilongjiang Sister State/Province Relationship

The State of Alaska and Heilongjiang Province established a sister state/province agreement in 1985. The two parties have promoted exchanges primarily in the area of natural resources with a focus for many years on forest products.

Most recently, exchanges have occurred in the area of agriculture. Heilongjiang and Alaska are exploring what opportunities may exist for trade related to Alaska's seed potatoes. An 11-member delegation from the Heilongjiang Province Agricultural Committee visited Alaska in 2001 to meet with producers, tour fields, and visit agricultural research facilities. While in Alaska, the group visited the State of Alaska's Plant Materials Center and the University of Alaska Fairbanks Agricultural and Forestry Experiment Station, and viewed greenhouse productions facilities at the State of Alaska's Division of Agriculture Plant Materials Center on Trunk Road.