China is Third Largest Destination for U.S. High-Tech Exports

AeA, a trade association representing all segments of the high-tech industry, has released the 23rd edition of its ongoing Competitiveness Series. The report analyzes the strong economic relationship between the U.S. and China in terms of high-tech trade and foreign direct investment.

“China’s economic rise poses not a threat but a host of opportunities and challenges to the rest of the world,” said Rob Mulligan, AeA’s Senior Vice President International. “Public policy in both the U.S. and China must recognize the interdependent nature of our economies and avoid protectionism and distorting trade practices. Such policies restrain trade, damage economies, and raise prices for consumers.”

U.S. high-tech goods exports to China more than doubled between 2001 and 2007. This makes China the third fastest growing (and the third largest destination) for U.S. high-tech exports. Only the United States’ two NAFTA partners, Canada and Mexico, are larger export destinations for American tech products than China. Between 2001 and 2007, U.S. high-tech goods imports from China rose from $26 billion to $112 billion.

Total U.S. direct investment in China was $22.2 billion in 2006, a 30% increase over 2005. In 2006, U.S. technology investments in China totaled $1.9 billion, a 69% rise over 2005.

"As China seeks to become a global leader in technological innovation,” continued Mulligan, “it will need to move away from policies promoting discriminatory local standards, domestic government procurement preferences, and protectionist competition laws."

The report outlines a series of public policy recommendations for dealing with China as a rising economic power.