This is an important issue which is central to the mission of my agency. Relations with China are in a period of transition, and this can create the potential for risks in technology transfer. Our job is to manage that potential risk so that the U.S. can reap the substantial benefits posed by China trade for our economy and for American foreign relations without adversely affecting our security. I want to describe how this is done. First, we should consider the broad factors which shape technology transfer issues with China.
China is a dynamic market, with high rates of growth and real opportunities for foreign firms.
The U.S. has a significant advantage in the high value, high tech end of the market, but we have serious competition from the European Union and Japan. At the same time, U.S. demand for Chinese goods is high, and we have a significant bilateral trade deficit which we would do well to rectify. While technology transfer restrictions account for only a small portion of the trade deficit, in many cases they have a deterrent effect on trade expansion that goes beyond our national security needs. Since that time, we have found a growing difference in how we and our allies treat high tech exports to China. A number of our allies no longer appear to regard China as being of strategic concern and have dismantled export restrictions on a range of dual-use technologies.