China and the United States Are Intricately Linked, AeA Report Says
Both Economies Benefit from Growing Trade and Investment

Washington, DC (November 16, 2005) -- A study released today as part of AeA’s ongoing Competitiveness Series shows the increasingly interdependent nature of the U.S.-China economic relationship, particularly in the production and sale of high-technology goods. China was the sixth largest destination for U.S. high-tech exports in 2004; when combined with Hong Kong, it was the third largest destination.

U.S. high-tech exports to China have risen dramatically over the last seven years, according to the AeA report. Between 1998 and 2004, tech exports nearly tripled, from $3.0 billion to $8.7 billion. Over the same time period U.S. high-tech imports from China more than quadrupled, from $16.2 billion to $68.2 billion.

Direct investment is also on the rise between the two countries. In 2004, U.S. direct investment in China totaled $15.4 billion, a 34 percent rise over 2003. Technology investments represented $1.8 billion, a 38 percent rise over 2003. Chinese direct investment in the United States, while small, is growing rapidly. In 2004, China invested $490 million in the U.S. economy, a 59 percent rise over 2003.

“We are not going to stop the economic growth of China – nor should we want to,” stated Rob Mulligan, AeA’s Senior Vice President International. “The United States stands to gain tremendously as both investment opportunities and exports to a rapidly growing Chinese consumer market increase.”

“But we recognize that with these opportunities come challenges related to very legitimate U.S. concerns,” continued Mulligan. “These include an expanding trade deficit, currency controls, intellectual property infringement, inadequate WTO compliance, and a host of others. The Chinese government also needs to recognize the legitimacy of these concerns.”

“On the American side, public policy responses need to recognize the interdependent nature of our relationship with China and avoid the temptation toward protectionism. As history shows, such policies restrain trade, damage the world economy, and hurt the United States as much or more than the targeted country.”

AeA intends to follow up this report with another in 2006 that addresses many of the major policy concerns in the U.S-China economic relationship.

The AeA report may be found at: www.aeanet.org/CS.

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About AeA
AeA, founded in 1943 by David Packard, is the largest high-tech trade association in the United States with nearly 2,500 companies, representing all segments of the industry and 1.8 million employees. Currently, AeA has 18 offices in and around the United States, as well as offices abroad in Brussels and Beijing. Our primary purpose is helping our members’ top and bottom lines by providing the following services: Access to Investors; State, Federal & International Lobbying; Insurance Services; Government Procurement; Business Networking; Foreign Market Access; Select Business Services; and Executive Education.
 

This page was last updated on 11/16/05.