U.S. Technology Leadership Erodes as China Gains

The United States used to be a global leader in technology exports, but since 2002, the nation has imported more technology products than it exports. The deficit reached a high point of $44.4 billion in 2005 and eased to $38.3 billion in 2006.

In a new report from the National Science Foundation (NSF), the technology deficit is seen as resulting from a trade imbalance primarily with some Asian nations, especially China.

"It's one more indicator of Asia's rising science and technology strength," said Lawrence Rausch, senior analyst in the Science Resources Statistics division at NSF. "Technology product trade deficits with Asia, especially with China, Malaysia and Japan overwhelm U.S. trade surpluses and relatively balanced trade with many other parts of the world."

In 2006, Asia supplied 60 percent of all U.S. imports of advanced technology products, compared to about 20 percent from Europe.

In 2003, China surpassed Japan as the largest supplier of technology products to the United States. Now 25 percent of U.S. technology imports come from China.

"U.S. trade in products with high technology content had been a strong market segment where the United States historically exported more than it imported," Rausch said.

America remains strong in just two of 11 sectors identified in the report.

"The comparative advantage held by U.S. advanced technology producers has narrowed considerably in a matter of a few short years, with the overall trade balance in this market segment turning negative fueled by large trading deficits in information and communication technologies, life science technologies and optoelectronics," Rausch said. "On the other hand, in 2006, the United States continued to export considerably more than it imported in two technology areas: aerospace and electronics. We'll need to continue to watch these trends."

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