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Is China poised to close the technology gap?
Monday's news that a Chinese firm aims to build large jetliners renews concern about US competitiveness.
By Mark Trumbull | Staff writer of The Christian Science Monitorfrom the March 14, 2007 edition
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Last year, one of the biggest and fastest rising US exports to China was something very basic: scrap metal.
China, meanwhile, is racking up billions of dollars in trade surpluses with America in computers and other items grouped by the US Commerce Department as "advanced technology products."
On Monday, an official at one of China's major aviation companies touted China's ambition to build large commercial jetliners by 2020 – a move that could put Chinese workers in direct competition with Boeing and Airbus in producing one of the world's most advanced industrial products.
This doesn't mean that China has caught up with the United States or Europe in its technological prowess. But the world's most populous nation is adding new capabilities with notable speed and determination.
Because China represents such a large potential market, it has been able to enlist help from the world's largest companies, including General Electric and Sony as it develops.
As a result, some experts say, China's trade relations with the US and other nations hold an unusual risk as well as opportunities for shared prosperity. The threat is that, as large corporations spread their best practices worldwide, China may climb the "value chain" – produce more advanced goods – and freeze the standard of living for most workers in the US, Japan, and Europe.
"We can compete ... only to the extent that we have far superior technology within our borders, not just in companies that may be incorporated in Delaware," says Charles McMillion, an economist who studies China at MBG Information Services in Washington.
The standard theory of trade is that all participating nations tend to benefit. Each gravitates toward selling products they are good at producing. Companies compete with one another, but in the process all national economies become more efficient.
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