According to the U.S. International Trade Administration (ITA), in 1989 American total imports of Chinese manufactured goods was about $12 billion; by 2000 it rose to more than $100 billion; and by 2010 it had skyrocketed to $365 billion.
Conversely, the U.S. exported to China a mere $5.8 billion in manufactured goods in 1989, for a net trade balance of $6.2 billion in China’s favor. By 2000 China’s trade lead over the U.S. expanded to $83.8 billion; and by 2010 it had exploded to $273.1 billion.
China has stolen U.S. intellectual property (IP) for more than 30 years causing considerable damage to our economy. Recently it was discovered that a number of fake Apple stores have opened shop in China, complete with with iPads, iPhones, sales reps in Apple T-shirts, etc.
America’s Founding Fathers so understood the importance of protecting IP rights to the nation’s future that in Article I of the Constitution, they mandated Congress to secure to “… Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”
In May 2011, the U.S. International Trade Commission (ITC) issued a wake-up report on the impact of China’s underhanded IP practices. The report, “China: Effects of Intellectual Property Infringement and Indigenous Innovation Policies on the U.S. Economy,” surveyed more than 5,000 U.S. companies and estimated China’s intellectual piracy cost the U.S. at least $48.2 billion in 2009 alone and as much as $90.5 billion.
According to the report, had the U.S. received this revenue it would have directly produced 900,000 new U.S. jobs, and through supplier linkages up to 2.1 million new jobs.
China is sending a record number of students to study in the U.S. The Institute of International Education (IIE), with Department of State funding, creates an annual survey of international students studying in the U.S. The 2009/10 academic year survey showed a record 699,000 international students studying in the U.S.
This record year was driven by a 30 percent increase in Chinese students, who comprised 18 percent of the total, or 127,628 students.
Two-thirds of these students pursued degrees in business and management, engineering, physical and life sciences, and mathematics and computer sciences.
I did a cross-comparison with Yale University’s international student population in the 2009/10 academic year. China provided 20 percent of Yale’s international students, almost twice as many as any other foreign country, and the highest since 2004.
At Massachusetts Institute of Technology (MIT), America’s leading technology university, Asia provided over 50 percent of international students in the 2009/10 academic year. We can infer from the IIE survey the majority of these are from China and they took MIT coursework in biological engineering; electrical engineering and computer science; nuclear engineering; and physics.
Given all of this, can anyone be surprised the U.S. is now struggling under a perilous $14.7 trillion debt that grows daily and that China owns $1 trillion of it?
Congress led our country into China’s financial grip and it must lead us out. The following five recommendations would be a start:
1) Lower corporate taxes on U.S. manufacturers that make products in America. This would both improve their price competitiveness and stimulate local employment.
2) Significantly reduce to barebones government red tape on businesses. The dizzying overhead of tax laws and environmental and labor regulations is enough to drive any U.S. business offshore.
3) Increase U.S. budget expenditures on high-growth employment industries. Since 1970, Office of Management and Budget (OMB) figures show the U.S. budget for science and technology has gone down 21 percent in constant dollars. The U.S. needs to get aggressive on job growth in these innovation driven sectors.
4) The government should make it a priority to buy American made products. This is more than just a symbolic gesture as the U.S. government is the largest purchasing organization in the world.
5) The U.S. government should strongly encourage universities to give priority admission to American citizens for business-, science- and technology-related programs. These programs are often supported by government research grants and funding that are paid for by U.S. tax dollars.
These recommendations are bold, but I believe merited as America’s economic security and future is at stake. In the words of President Theodore Roosevelt, “A great democracy has got to be progressive or it will soon cease to be great or a democracy.”
Joe Green of Piketon is president and CEO of NPRC, a management consulting firm, and can be reached via email at firstname.lastname@example.org or jobgrowthnow.com.