China vows to narrow $10B tech trade deficit

China's contracted value of technology imports far exceeded its technology exports last year, resulting in a deficit of more than US$10 billion. The Chinese government has pledged to help narrow the gap by boosting exports and enhancing intellectual property protection in the sector.

Zhou Liujun, director-general of the Department of Trade at the Ministry of Commerce, said the contracted value of China's imported technology products grew 25.5 percent year-on-year to hit US$32.16 billion in 2011, while technology exports clocked US$21.4 billion, China Daily reported Friday. This amounted to a deficit of US$10.76 billion.

"Chinese companies are changing from technology importers to exporters, and the country's technology exports have entered a fast-growing phase," observed Zhou, who was speaking at a press conference to promote the upcoming China International Technology Fair to be held in Shanghai in May next year.

He pointed out the lasting deficit in China's technology trade is rooted in the country's strong demand for high technology as it shifts from a "made-in-China" model to a "created-in-China" model. This makes it near impossible to reach a balance in the short term by reducing technology imports, he noted. "We should concentrate on the structural balance of technology trade. Imported technology is urgently needed for our manufacturing sector and can save costs in research and development."

But the official also pointed out China had made important technology advances in the past decades and had "great potential for export". According to the Chinese government, the contracted value of technology exports grew from US$580 million in 2006 to last year's US$21.4 billion.

Zhou said China is aiming to increase exports of its IT products in order to narrow the US$10 billion tech trade deficit, as the country improves its manufacturing sector and restructures its economic growth.

Its tech exports last year comprised mainly computer software, which accounted for 89.2 percent of overall volume, as well as technology consulting and services and licensing of proprietary technology, the China Daily report said.

According to Zhou, technology trade accounted for 12 percent of China's services trade over the recent years, reflecting strong potential for expansion. He added the upcoming Shanghai fair would allow technology buyers and suppliers to meet, and also provided an opportunity to break technology barriers imposed by developed economies.

The report also noted during his meeting Wednesday with former U.S. Secretary of the Treasury, Henry Paulson, Chinese Vice-Premier Li Keqiang urged the U.S. to loosen restrictions on high-technology exports to China as soon as possible.

Last May, at the Sino-U.S. dialogue, current U.S. Treasury Secretary Timothy Geithner said the U.S. will soon take substantial action to ease export controls to China, which currently stand at over 2,400 restrictions. Before the dialogue took place, the U.S. was considering exporting commercial satellite technology, but China was not on the buyers list.

In October, however, the U.S. House of Representatives Intelligence Committee issued a report arguing that Chinese networking equipment vendors, specifically Huawei and ZTE, posed national security threats to the country. It urged U.S. companies against working with the Chinese vendors. China's commerce ministry later voiced its objection to the U.S. report, describing it as "subjective guesswork". 

Meanwhile, the Chinese government also said it would improve efforts in promoting and protecting intellectual property, and set up an IPR (intellectual property rights) alert mechanism to resolve disputes in the technology trade.

A technology evaluation system is also in a pilot stage, according to Cao Donggen, deputy director-general of the patent administration department at China's State Intellectual Property Office, the report added.