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01-27-2006, 10:06 PM
The International Herald Tribune
December 12, 2005 Monday
HEADLINE: China overtakes U.S. as high-technology supplier
BYLINE: David Lague
DATELINE: BEIJING
After almost a decade of explosive growth in its electronics industry, China has overtaken the United States as the world's biggest supplier of information technology goods, according to a report from the Organization for Economic Cooperation and Development.
Data in the report due to be published Monday show that China's exports of information and communication technology ‹ including laptop computers, mobile phones and digital cameras ‹ increased by more than 46 percent to $180 billion in 2004 from a year earlier, easily outstripping for the first time U.S. exports of $149 billion, which grew 12 percent from 2003.
The figures compiled by the Paris-based OECD also reveal that China has come close to matching the United States in the overall value of its trade in information and communications technology products. The value of China's combined exports and imports of such goods soared to $329 billion in 2004 from $35 billion in 1996. Over the same period, the value of U.S. information technology trade expanded at a slower rate from $230 billion to $375 billion
To some industry experts, the OECD report is further evidence that China has made rapid progress in its long-term plan to upgrade the capacity of its manufacturing industry as it strives to become a major economic power.
''It confirms that the Chinese economy is really moving up the value chain from simple manufactured goods like textiles, shoes and plastics to very sophisticated electronics,'' said Arthur Kobler, a Hong Kong-based business consultant and former president of AT&T in China.
The most spectacular demonstration of China's ambition to become a consumer electronics heavyweight came in May this year when the Chinese computer maker Lenovo paid $1.75 billion to buy IBM's personal computer unit.
In addition, China's ongoing attempts to impose its own technology standards across a range of consumer products, including mobile phones, personal computing, digital photography and wireless networks, are widely interpreted as a strategy to dominate the global market for information technology goods.
Some analysts believe that Chinese technology exports would have overtaken the United States much earlier without restrictions applied by Western countries to China on the transfer of so-called dual-use technologies ‹ which can be used for both civilian and military ends ‹ to China after the 1989 Tiananmen crackdown.
''Without this trade barrier, China's information technology industry would have grown much faster,'' said Li Hui, head of China research for Investment Bank CLSA Asia-Pacific Markets.
The OECD report may also heighten fears among some critics that China's drive to build a powerful information technology and consumer electronics sector could have far-reaching military consequences for the United States and other major economic powers. China's defense industry works closely with information technology companies and the government's research and development sector in what some analysts have described as a ''digital triangle'' that supports the country's rapid military modernization.
''The People's Liberation Army is moving very quickly to adopt practically every information-related aspect of military technology that the U.S. is pursuing at this time,'' said Rick Fisher, vice president of the Washington-based International Assessment and Strategy Center and an expert on the Chinese military.
In its November report to Congress, the U.S.-China Economic and Security Review Commission said the Pentagon had become reliant on an increasingly globalized private sector for some critical military technologies. ''This is taking place as China's position at the center of the global technology supply chain grows, raising the prospect of future U.S. dependency on China for certain items critical to the U.S. defense industry as well as vital to continued economic leadership,'' the report said.
While China's rise as an information technology power had its beginnings in a plan by the top Chinese leadership in the early 1980s, it is foreigners that have driven much of the growth, with heavy investment from global giants including Intel, Nokia, Motorola, Microsoft and Cisco Systems. Figures from China's Ministry of Commerce show that companies that had received overseas investment accounted for almost 90 percent of 2004 exports of high technology products.
And foreign companies are increasing their research and development in China in a bid to generate real innovation. ''Ten years ago, it was done just to please the Chinese, but now these R&D facilities are integral to their global manufacturing,'' Kobler said.
Leading integrated circuit manufacturers, however, have avoided setting up fabrication facilities in China in order to protect their chip designs and manufacturing technology. This means that China is still heavily dependent on imports of advanced chips it needs to assemble electronic products. The OECD report shows that China recorded a $50 billion deficit in its integrated circuits trade in 2004.
Yet, Li said, ''Most equipment makers are getting close to cutting-edge technology.'' In recent months, China has unveiled a new supercomputer that is capable of performing 11 trillion calculations per second, making it among the fastest in the world. Also, researchers at Tsinghua University have produced a microprocessor that matches Intel's Pentium II.
For military analysts like Fisher, the combination of domestic innovation and the spill-over effect from foreign research and development means that China was now poised to make rapid strides in defense technology. ''China is quickly becoming an innovator and, as we know, it has the money to turn those ideas into weapons,'' he said.
There are also challenges for major information technology companies from China's growing power in the global market for ICT goods.
For industry veterans like Kobler, that partly explains why companies like Microsoft and Cisco have opted to invest heavily in India as a counterweight to China.
''This is an important strategic issue for a lot of companies,'' he said. ''Everybody is looking to diversify.''
LOAD-DATE: December 19, 2005
Prev
December 12, 2005 Monday
HEADLINE: China overtakes U.S. as high-technology supplier
BYLINE: David Lague
DATELINE: BEIJING
After almost a decade of explosive growth in its electronics industry, China has overtaken the United States as the world's biggest supplier of information technology goods, according to a report from the Organization for Economic Cooperation and Development.
Data in the report due to be published Monday show that China's exports of information and communication technology ‹ including laptop computers, mobile phones and digital cameras ‹ increased by more than 46 percent to $180 billion in 2004 from a year earlier, easily outstripping for the first time U.S. exports of $149 billion, which grew 12 percent from 2003.
The figures compiled by the Paris-based OECD also reveal that China has come close to matching the United States in the overall value of its trade in information and communications technology products. The value of China's combined exports and imports of such goods soared to $329 billion in 2004 from $35 billion in 1996. Over the same period, the value of U.S. information technology trade expanded at a slower rate from $230 billion to $375 billion
To some industry experts, the OECD report is further evidence that China has made rapid progress in its long-term plan to upgrade the capacity of its manufacturing industry as it strives to become a major economic power.
''It confirms that the Chinese economy is really moving up the value chain from simple manufactured goods like textiles, shoes and plastics to very sophisticated electronics,'' said Arthur Kobler, a Hong Kong-based business consultant and former president of AT&T in China.
The most spectacular demonstration of China's ambition to become a consumer electronics heavyweight came in May this year when the Chinese computer maker Lenovo paid $1.75 billion to buy IBM's personal computer unit.
In addition, China's ongoing attempts to impose its own technology standards across a range of consumer products, including mobile phones, personal computing, digital photography and wireless networks, are widely interpreted as a strategy to dominate the global market for information technology goods.
Some analysts believe that Chinese technology exports would have overtaken the United States much earlier without restrictions applied by Western countries to China on the transfer of so-called dual-use technologies ‹ which can be used for both civilian and military ends ‹ to China after the 1989 Tiananmen crackdown.
''Without this trade barrier, China's information technology industry would have grown much faster,'' said Li Hui, head of China research for Investment Bank CLSA Asia-Pacific Markets.
The OECD report may also heighten fears among some critics that China's drive to build a powerful information technology and consumer electronics sector could have far-reaching military consequences for the United States and other major economic powers. China's defense industry works closely with information technology companies and the government's research and development sector in what some analysts have described as a ''digital triangle'' that supports the country's rapid military modernization.
''The People's Liberation Army is moving very quickly to adopt practically every information-related aspect of military technology that the U.S. is pursuing at this time,'' said Rick Fisher, vice president of the Washington-based International Assessment and Strategy Center and an expert on the Chinese military.
In its November report to Congress, the U.S.-China Economic and Security Review Commission said the Pentagon had become reliant on an increasingly globalized private sector for some critical military technologies. ''This is taking place as China's position at the center of the global technology supply chain grows, raising the prospect of future U.S. dependency on China for certain items critical to the U.S. defense industry as well as vital to continued economic leadership,'' the report said.
While China's rise as an information technology power had its beginnings in a plan by the top Chinese leadership in the early 1980s, it is foreigners that have driven much of the growth, with heavy investment from global giants including Intel, Nokia, Motorola, Microsoft and Cisco Systems. Figures from China's Ministry of Commerce show that companies that had received overseas investment accounted for almost 90 percent of 2004 exports of high technology products.
And foreign companies are increasing their research and development in China in a bid to generate real innovation. ''Ten years ago, it was done just to please the Chinese, but now these R&D facilities are integral to their global manufacturing,'' Kobler said.
Leading integrated circuit manufacturers, however, have avoided setting up fabrication facilities in China in order to protect their chip designs and manufacturing technology. This means that China is still heavily dependent on imports of advanced chips it needs to assemble electronic products. The OECD report shows that China recorded a $50 billion deficit in its integrated circuits trade in 2004.
Yet, Li said, ''Most equipment makers are getting close to cutting-edge technology.'' In recent months, China has unveiled a new supercomputer that is capable of performing 11 trillion calculations per second, making it among the fastest in the world. Also, researchers at Tsinghua University have produced a microprocessor that matches Intel's Pentium II.
For military analysts like Fisher, the combination of domestic innovation and the spill-over effect from foreign research and development means that China was now poised to make rapid strides in defense technology. ''China is quickly becoming an innovator and, as we know, it has the money to turn those ideas into weapons,'' he said.
There are also challenges for major information technology companies from China's growing power in the global market for ICT goods.
For industry veterans like Kobler, that partly explains why companies like Microsoft and Cisco have opted to invest heavily in India as a counterweight to China.
''This is an important strategic issue for a lot of companies,'' he said. ''Everybody is looking to diversify.''
LOAD-DATE: December 19, 2005
Prev