China Overtakes U.S. As High-Tech Supplier
After almost a decade of explosive growth in its electronics sector, China has overtaken the United States as the world's biggest supplier of information technology goods, according to a report by the Organization for Economic Cooperation and Development.

Data in the report, to be published Monday, show that China's exports of information and communication technology - including laptop computers, mobile phones and digital cameras - increased in 2004 by more than 46 percent to $180 billion, easily outstripping for the first time U.S. exports of $149 billion, which grew 12 percent from 2003.

The figures compiled by the OECD, based in Paris, 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, to $375 billion from $230 billion.

To some industry experts, the report is more evidence that China has made progress in its long-term plan to upgrade the capacity of its manufacturing 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 business consultant in Hong Kong and former president of AT&T in China.

The most spectacular demonstration of China's ambition to become a consumer electronics heavyweight came this May when the Chinese computer maker Lenovo Group, bought IBM's personal computer unit for $1.75 billion.

What's more, China's efforts to impose its own technology standards on a range of consumer products, including cellphones, digital photography and wireless networks, are widely interpreted as a strategy to dominate the global market for information technology goods.

Some analysts say they 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 could 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.

"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 International Assessment and Strategy Center in Washington.

It is foreigners who have driven much of the growth in technology production, with heavy investment from global giants like Intel, Nokia, Motorola, Microsoft and Cisco Systems.

Figures from the Chinese Ministry of Commerce show that companies that had received overseas investment accounted for almost 90 percent of 2004 exports of high technology products.

But leading chip makers have avoided setting up facilities in China in order to protect their designs and technology. This means that China is still heavily dependent on imports of advanced chips it needs to assemble electronic products. But Li, the CLSA research chief, said, "Most equipment makers are getting close to cutting-edge technology."