Colorado's exports to China are hopping, making this huge nation one of our key trading partners. Recognizing its importance, Denver has maintained a trade office and representative, Paul Taylor, in Shanghai for the last four years to help businesses enter the China market. From beef to emissions testing equipment to architectural services (many Chinese cities boast hundreds of new skyscrapers), Colorado's exports to China are a critical part of our economic recovery.

Yet, entering the China market requires careful planning. I've just returned from its mighty economic powerhouse, the Pearl River Delta, my fourteenth visit to China since 1987. Ranging from Guangzhou (the former Canton) to Shenzhen, just north of Hong Kong, this prosperous region has exploded in the last 25 years from a bundle of tiny fishing villages to a string of cities with 40 million people. While business opportunities abound, it's critical to know what challenges you'll face as well.

We met once again with American and Chinese businesspeople, scholars, and government officials. They are enthusiastic about U.S. business relationships with China and are equally realistic about the problems. A clear admonition from American and Hong Kong businesspeople with long experience in China is to find a partner who really knows the country, who has strong personal relationships there, and whose honesty you trust.

Chinese accounting, for example, is far from meeting American standards. Data collection is difficult and the analyses, generally inaccurate. One researcher pointed out that Chinese government officials advance politically by generating economic growth. Consequently, the data they forward to the next level of government is usually very rosy, no matter what the real facts are. A bank manager told us banks are only beginning to share data. As a result, a company often pledges the same asset to multiple banks to secure several loans. And, without good information, the banks have no way of knowing their collateral is impaired.

Government plays a pervasive role in the economy. Even "private" companies are usually government-owned at some level. A private company may be owned by several large corporations or investment companies, which themselves are all or mostly government-owned. Good relations with government officials are essential if one is to get a land lease, highway access or, often, financing. Even the ubiquitous new luxury subdivisions are built on land leased from the government for 70 years. There are many private companies, but their owners also fully understand the importance of government in their success. Chinese people are generally very comfortable with their government and government ownership of assets, believing that government customarily operates in the best interests of all Chinese.

On the education front, Guangzhou alone is building a multi-university campus for 10 institutions and 350,000 students. Among China's several million university graduates each year are hundreds of thousands of engineers and scientists. The result is a wave of new home-grown technology which will surely challenge U.S. innovations. While that could be problematic for us, it also makes China more interested in protecting intellectual property, never before a priority, since now the pirated property may be Chinese instead of American.

China's scale is monumental. Next year, it expects to have a highway system as large as the U.S. It plans additional highway construction worth tens of billions of dollars, including a 120-kilometer long tunnel between the mainland and Taiwan (economically foolhardy, but politically clear--Taiwan belongs to China). Cellular telephones number 350 million, twice the number in the U.S. The country's population just reached 1.3 billion. While most people remain very poor, hundreds of millions of Chinese are now eagerly consuming members of the middle class.

So, Denver is smart to have a representative in booming Shanghai. Colorado companies will continue expanding their exports to this huge market. It's importance to Colorado, as well as to the U.S., will grow exponentially. Good reason to understand more about this restless giant and to build the strong relationships that are essential to our economic future.