Ernst prefers the advanced manufacturing partnership strategy, which says the US' competitive edge lies in its superior capability to use transformative technologies to provide packaged solutions through integrated manufacturing, services and innovation. That arguably could address the challenges, he said, but added that political division and ideological gridlock may constrain its implementation.

Ralph A. Cossa, president of Pacific Forum, Center of Strategic and International Studies, holds a similar view. Answering a question on the US presidential election and China after delivering a speech in Honolulu recently, he said, "the two parties (Democrats and Republicans) are always arguing" without solving problems and China often becomes a target of their firepower, especially concerning trade.

That's another of Ernst's concerns. The advanced manufacturing partnership neglects the consequences for international competitors like China. In a forthcoming study, "High Road or Race to the Bottom? Reflections on America's Manufacturing Futures", he analyzes the possible effects on China. If the US succeeds in the transformative technologies, for example in the emerging "3D printing" or "laser-enabled additive manufacturing", the production facilities could shift to consumer countries, leading to falling demand for imports from China, whose integration into international trade and global production networks make it vulnerable to such transformations.

But the proliferation of such technologies could also create an opportunity for US-China cooperation, he said. Both countries have a common interest in developing effective new forms of global governance to manage the risks and conflicts, and avoid a vicious circle of high-tech protectionism and trade and investment wars.

In a live web-cast speech at the China Town Hall program earlier this year, US Ambassador to China Garry Locke also said that "people from both countries are benefiting from greater economic integration" and the US would welcome "Chinese investment".

There is enough room to extend cooperation in advanced manufacturing beyond the exchange of scientific knowledge, Ernst said. Since the US is still far ahead in overall innovations despite China's recent success in the field, the later will create new markets for American firms.

Such cooperation, however, needs to be on an equal footing with reciprocity of rights and obligations on contentious issues such as maintaining the right balance between protection of intellectual property rights and China's interest in technology diffusion. The job "is not easy, but there is hope".

"Progress toward adjusted rules of reciprocity should be possible," Ernst said, "once the US and China accept that while their economic institutions and innovation systems are different, they are deeply interdependent."

The author is a journalist with China Daily. E-mail: [email protected]

(China Daily 11/10/2012 page5)