- The Washington Times - Tuesday, November 8, 2011

Third of four parts

BEIJING — Stepping up its long-running struggle with the United States over access to technology, China this year embarked on a campaign to target advanced industries such as aerospace, medicine and information technology for its next stage of development.

Those industries are long-standing strengths in the U.S. and important sources of wealth and high-paying jobs. Many in Washington remain reluctant to see a rising competitor in the economic and geopolitical spheres gain access to valuable trade secrets and technical know-how.

China’s goal is to establish high-tech industries by attracting Western businesses to build plants and partnerships in China. Chinese leaders say they also would like to import more high-tech products directly from the U.S. and acquire technical expertise by helping Chinese firms invest in U.S. companies with leading technologies.

But government officials say export restrictions on high-tech products, justified as protecting national security, and congressional opposition to proposed mergers have quashed many deals to the detriment of both China and the United States.

“Investing in the U.S. could be mutually beneficial, create more jobs and boost revenues,” said Lu Kang, deputy director-general at the Ministry of Foreign Affairs. “But when Chinese companies go to the U.S., they face a lot of difficulties.”

U.S. political leaders want to preserve restrictions enacted during the Cold War that have become “obsolete” in light of China’s evolution into a capitalistic economy, he told visiting U.S. journalists. Chinese officials, when asked, shunned the word “communist” and used the phrase “market socialism” to describe the nation, though they did not repudiate outright the government’s Marxist roots.

“Economic cooperation between our countries could be on a much bigger scale,” but a “Cold War mentality” is preventing that, said Qu Xing, president of the Chinese Institute of International Studies. He said the U.S. prefers to press conflicts over Taiwan, the South China Sea and other issues rather than deepen trade ties.

“In the next 10 years, China will import $800 billion from abroad,” but U.S. export restrictions will prevent American firms from reaping much of the benefit, he said.

U.S. restrictions drive the Chinese to purchase technology from South Korea, Europe and Japan instead, officials said.

The Chinese Commerce Ministry estimates that if the U.S. had maintained the 18 percent share of Chinese technology imports it had in 2001, it would have sold $300 billion more in goods to China in the past decade. That would have put at least a small dent in a U.S.-Chinese trade deficit that has climbed to the highest ever between any two nations at nearly $300 billion a year.

Just a 1 percent increase in exports to China would help create 100,000 jobs in the U.S., according to U.S. estimates.

“The U.S. needs to rethink its policy and behavior,” Mr. Qu said. “You have some serious problems in the economy,” including unsustainable levels of federal debt, oversized trade deficits and a need for jobs and growth.

“These kinds of difficulties deserve a lot of attention,” and a more open economic relationship with China would help solve the problems by enabling the U.S. to “put more resources” into reducing deficits and debt, and expanding the economy, he said.

Several officials pointed out that Chinese firms are flush with cash and keen to invest in the United States, a trend that would help the U.S. economy grow and create jobs just as U.S. investment in China has helped the Chinese economy.

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