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China plays a critical role in the competitiveness of the U.S. consumer electronics (CE) industry. This role increases
as the pace increases for the development of new and ever more cutting edge CE products, and as consumers
demand that prices for CE products drop still more to stimulate sales. This report examines the contribution of
China to the competitiveness of the U.S. CE industry so that policy makers can devise appropriate responses.
n The U.S. CE industry is highly competitive, and global production is an integral part of the industry's strategy for
quickly developing new products at affordable prices.
n U.S. CE production supports a network of global production. The United States remains a strong producer
of CE components and parts, most notably semiconductors and related devices, and software. As the global
network of production expands and deepens, U.S. manufacturers focus on the production of higher-end
consumer electronics as well as the design and marketing of CE products manufactured elsewhere.
n The product and country composition of U.S. CE exports and imports, as well as recent trends in CE exports
and imports, reflect the growing internationalization of U.S. CE production. They also reflect the increasing
importance of China to the competitiveness of U.S. manufacturers. Growing imports from China are largely
replacing imports from other Asian suppliers, which are declining. Large shares of U.S. CE imports come from
suppliers abroad to whom the U.S. importer is related in some way.
n CE investment abroad supports the competitiveness of U.S. CE manufacturers. U.S. CE investments in China, in
particular, contribute positively to the competitiveness of U.S. CE firms and their U.S.-based support operations.
These investments serve two purposes: to supply the growing Chinese market with locally-produced CE
products, and to help U.S. companies lower costs of CE products sold around the world, including in the highly
price-competitive U.S. market.
n CE trade and investment support high-skilled jobs in the United States. By relying on foreign suppliers for the
manufacture of competitively-priced finished CE products, U.S. companies are better positioned to devote
scarce financial resources to what they do best: research and development, design, marketing, software
development and production. CE sectors are more R&D intensive than other manufacturing sectors. They
employ a greater proportion of scientists and engineers, and generally pay higher wages than other
manufacturing industries.
n U.S. CE imports from China also support good jobs in the United States. We estimate that CE imports from
China support more than 66,000 U.S. jobs across a range of sectors. Every U.S. state has a net positive
employment stake in CE imports from China.
n Global CE production keeps CE prices affordable to American families. The availability of competitive production
facilities in Asia generally and China specifically has permitted U.S. CE producers to meet consumer demand for
lower-cost CE products without abandoning U.S. production altogether.
n Public policy has a role to play in supporting the competitiveness of the U.S. CE industry. Policy makers should
support efforts to liberalize international trade and investment, and to protect U.S. intellectual property rights
both at home and abroad. Policy makers should also support the promotion of science and math education in
American schools. Policy makers should consider expanding the number of visas available for foreign scientists
and engineers to work in the United States. Last but not least, policy makers should avoid restrictions on U.S.
imports, including imports of CE products from China. These imports are job-supporting; import restrictions
would cost jobs and raise prices.
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