Schwarzenegger leads group on trade mission to Asia

While the state government limps through its 10th week without a budget, Gov. Arnold Schwarzenegger is flying to Asia on Thursday with an entourage of about 30 state employees — most of their travel courtesy of a Chinese billionaire — to schmooze foreign officials and try to drum up trade.

In contrast to the reception the governor gets at home, where his latest approval ratings barely top 20%, Schwarzenegger’s itinerary promises international celebrity treatment: He will be feted by an Internet tycoon in China, ride the fabled bullet train in Japan and visit U.S. troops in South Korea.

The governor’s critics are asking what the fanfare will do to help California, which is still burdened with a $19-billion budget deficit that Schwarzenegger says costs taxpayers $52 million every day. Schwarzenegger says the six-day trip is aimed at helping the budget.

“The easy thing to do is to raise more taxes, but that will stifle our economy,” Schwarzenegger said at a news conference in Silicon Valley on Wednesday. “The right thing to do is go on trade missions … and create more revenue for the state.”

Among the goals of this mission, which begins with a private jet flight for the governor, is to encourage Asian builders to bid for work on California’s high-speed rail line. Schwarzenegger hopes increased competition will help lower the ultimate cost of the project, said spokesman Aaron McLear.

The governor, and dozens of business leaders who are paying their own way to accompany him, will build relationships in a region whose citizens bought more than $27 billion in California exports last year and spent $1.3 billion visiting the state, McLear wrote.

Although Schwarzenegger’s celebrity may give him an advantage as a pitch man, some economists question the utility of such missions. The tour will garner some publicity, and a few trade deals will be heralded while Schwarzenegger is in Asia, including a Korean Air plan announced in March to redevelop the Wilshire Grand Hotel in Los Angeles, and a yet to be revealed “major South Korean investment in California,” McLear said.

But if both deals have been in the works for months, the question for economists is whether the schmoozing dignitaries have any measurable effect on international trade.

“The answer is nobody knows, and anybody who pretends to know is either full of hot air or a liar,” said Christopher Thornberg, a founder of Beacon Economics in Los Angeles, where he studies the state economy. “It probably doesn’t make that big of a difference. It just gets lost in the massive amount of trade that goes on every day.”

At Wednesday’s news conference, Schwarzenegger claimed as a victory from his last Asian trade mission China’s temporary lifting of a ban on imported strawberries during the Beijing Olympics. His staff added to the list a maintenance agreement between Air China and a company based at San Francisco International Airport, and China’s admission of California plums.

Schwarzenegger also said Wednesday, “Not one single tax dollar is being used for this trade mission.”

But people who rent cars and stay in California hotels pay a fee that will fund travel for three officials from the state Trade and Tourism Commission. And federal money will cover two representatives from the state Agriculture Department who are traveling to promote specialty products such as dried fruits, nuts and wine.

Travel for most of the state employees, including about 15 from the governor’s office, will be covered by a $550,000 gift from the Alibaba Group — an Internet company commonly referred to as the EBay of China. The firm wrote the check in June just before a state regulation limiting such donations to $420 took effect.

A Santa Clara-based spokeswoman for the company, which recently bought two Bay Area tech firms, could not be reached for comment on the donation. Schwarzenegger is scheduled to meet with the company’s founder, Jack Ma, on the first day of his visit.

Although Schwarzenegger is proud of his ability to save taxpayer money by raising private donations for such travel, good-government advocates say it is better to spend public money than to rely on private interests who may expect something in return.

“If it’s an important trip for the state, then the state should pay for it,” said Bob Stern, president of the Center for Governmental Studies, a Los Angeles watchdog group.

Legislative leaders, who are at an impasse with Schwarzenegger over the budget, have refrained from harshly criticizing the trip, even as state Controller John Chiang warns that he will have to pay vendors with IOUs if a deal isn’t done soon. So it has fallen to Assembly Whip Noreen Evans (D-Santa Rosa) to toss the rhetorical grenade for her party.

Evans held a rally of female legislators on the Capitol steps Wednesday, accusing Schwarzenegger of trying to balance the state’s budget on the backs of women and children, the primary recipients of social programs that he has proposed cutting to close the budget gap.

The Asia trip “removes any lingering doubts about whose interests [Schwarzenegger] cares about,” Evans said. “The state is going to be paying bills with IOUs and the governor is on a junket with special interests.”

jack.dolan@latimes.com