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Doing business with China presents a raft of issues, from friction on human rights to industrial espionage.

But the potential benefits of closer ties with the world’s second-largest economy are too attractive to ignore, a panel of business and government leaders said.

There is a “need for us to engage China at a much deeper level,” University of Washington President Michael Young said at a panel discussion Thursday night at Microsoft’s campus in Redmond.

Gary Locke, former Washington governor and U.S. ambassador to China from 2011 to earlier this year, suggested making it easier for students and workers to travel and work between the two countries.

China is already the largest source of international students studying at Washington universities, according to data from the Institute of International Education.

The economic ties are also tight. Washington is the largest single state in terms of trade with China, exporting $16.7 billion in merchandise last year.

Much of that is the work of Boeing, which has come to rely on China as a market for passenger jets and a supplier of parts. China buys a quarter of the planes Boeing produces today, said Boeing Commercial Airplanes CEO Ray Conner.

“It will be far and away the largest market as we move forward,” Conner said. To succeed in the long term, he said, Boeing needs to “not just sell but really become a part of the growth that’s happening within China.”

The company now employs 6,000 in its joint ventures in China, he said.

Of course, China is also a competitor to Washington’s key industries.

State-owned Commercial Aircraft Corp. of China is working on the country’s first large domestically designed airliner in decades. While few expect it to pose a serious challenge to Boeing anytime soon, many see China’s homegrown aviation industry as an eventual competitor.

“There is going to be a competitive element,” Conner said. Still, “through collaboration, you stand a better chance of success.”

It’s a similar story for Microsoft.

China, with a giant population and growing business community, represents a huge potential market for the software and device maker.

But Western firms, and technology companies in particular, have found China particularly difficult to navigate in light of weaker protections for intellectual property and an industrial policy designed to shield domestic industry.

A Chinese regulator in June began investigating Microsoft for what it said were potential monopolistic practices, the latest pressure Beijing brought to bear on Western technology firms.

“It’s a hard time for companies to do business” in China, said Jimmy Hexter, a senior partner with private equity firm Catterton Partners and a former chair of the Beijing office for consulting giant McKinsey. But “American companies shouldn’t let up…this is a great opportunity.”

Thursday’s discussion, “A Bridge to China: Exploring the Northwest’s Future with the East,” was the second of The Seattle Times’ LiveWire events series.

The gatherings are designed to showcase “meaningful discussions about vital issues impacting our region and its people.”

The first event, a panel on early-childhood education, was at Microsoft’s campus last month. Microsoft is a sponsor of the series.

While much of the Washington-China relationship used to center on firms here trying to sell goods and services into the Chinese market, that relationship now goes both ways. Chinese e-commerce company Alibaba opened a recruiting office in Seattle, and wealthy families are buying property in the region.

Alibaba is just the beginning, said Brad Smith, executive vice president and general counsel at Microsoft. He highlighted the emergence of other major Chinese technology companies, some of which he said will eventually seek a home for their North American operations.

“I think we should be making the case for them to come to Puget Sound,” Smith said.

Matt Day: 206-464-2420 or On twitter: @mattmday