US-China Commission Report - Fatal System Error

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tios—two of Asia’s technology tigers. China’s share of world technology
exports was 14 percent in 2005, and its share of imports
was 12 percent, or a ratio of 7 to 6. For South Korea, the ratio was
5.3 to 3.1; and for Taiwan, it was 4.4 to 2.8. Japan was a standout
among nations, with 8.5 percent of world technology exports and
just 4.7 of tech imports. The United States, by contrast, ran a huge
$120 billion deficit, with 10 percent of the world’s tech exports but
15 percent of its imports. 317
The U.S. technology trade balance continues to deteriorate. The
U.S. global balance in advanced technology products suffered its
worst-ever one-month loss in July 2008, with a deficit of $7.1 billion,
bringing the seven-month 2008 deficit in U.S. high-tech trade
to a record $29.9 billion. The U.S. advanced technology products
deficit with China alone reached a new monthly record of $7.2 billion
in July and a new seven-month record of $40.5 billion.
The United States continues to maintain an overall lead in some
of the indices of success in advanced technology. A 2008 RAND
Corporation report notes that
The United States accounts for 40 percent of total world
R&D spending and 38 percent of patented new technology
inventions by the industrialized nations of the OECD [Organization
for Economic Cooperation and Development],
employs 37 percent of OECD researchers, produces 35 percent,
49 percent, and 63 percent, respectively, of total world
publications, citations, and highly cited publications, employs
70 percent of the world’s Nobel Prize winners and 66
percent of its most-cited individuals, and is the home to 75
percent of both the world’s top 20 and top 40 universities
and 58 percent of the top 100. 318
However, RAND Corporation noted some disquieting trends as
well. China added the same number of researchers as did the
United States in the period 1995–2002, and both the EU–15 and
China have been graduating more scientists and engineers than
the United States. Students in America’s high schools ‘‘demonstrate
lower achievement than most of their peers in other industrialized
nations.’’ Also, the ‘‘diminishing share of degrees awarded to U.S.
citizens, particularly for the higher degrees such as doctorates and
masters, suggests that science and engineering careers are becoming
less attractive to U.S. citizens or, alternatively, that U.S. citizens
encounter more competition (from foreigners) in applying for
a limited number of desirable spots at colleges and universities.’’ 319
Perhaps most ominously:
The United States is less capable (than it once was when
it was more dominant) of denying other nations access to
advanced technology to maintain a wide military capability
gap between itself and potential adversaries. Technological
capability is more widely diffused to potential competitors
and may provide adversaries with capability to pursue
non–traditional strategies and tactics on the battlefield or
through insurgency and terrorism. 320
In its critique of the RAND study, The Information Technology
& Innovation Foundation 321 notes that most of the study’s statis-