Generic Text

U.S. High-Tech Industry Coalition on China
- American Electronics Association - Business Software Alliance -
- Computer Systems Policy Project - Computing Technology Industry Association -
- Electronic Industries Alliance - Information Technology Industry Council -
- Semiconductor Industry Association - Semiconductor Equipment & Materials International -
- Software & Information Industry Association - Telecommunications Industry Association -
- United States Information Technology Office -

Benefits to the American Software Industry
of
Permanent Normal Trade Relations with China

Software Industry Facts

The U.S. software industry is one of the greatest business success stories of recent history. Not only has the industry emerged as one of the fastest-growing and largest job-creating sectors of the global economy, it has fueled an information revolution.
The U.S. software industry continues to grow at 18 percent a year – three times faster than the GDP of the entire U.S. economy.
This year, it is estimated that the software industry's contribution to the U.S. economy will be greater than the contribution of any manufacturing sector – surpassing the automobile industry.
The software industry now employs nearly 1 million Americans, each earning an average salary of nearly $69,000 a year – more than twice the average U.S. wage.
In 1998, China’s packaged software industry represented a $755.9 million market and is expected to grow to $5 billion by 2003, according to the International Data Group.
The American software industry is a trade success story, generating a $20 billion surplus each year, and 60 percent of U.S. software company revenues come from overseas sales.

Why PNTR with China is Important

China is a huge opportunity for the U.S. software industry, and granting PNTR is key to realizing this opportunity. China’s software market is growing at 28 percent a year, and the number of Internet users in China more than quadrupled in 1999 – from 2.1 million in December 1998 to 8.9 million in December 1999, and is estimated to reach 20 million by the end of 2000.
By joining the WTO, China will become subject to the Agreement on Trade Related Aspects of Intellectual Property (TRIPs). The TRIPS agreement is best vehicle available to our industry to combat software piracy and create a healthy environment for the development of the entire software industry in China.
Industry experts estimate that 95 percent of the business applications software used in China was pirated in 1998 (the last year for which data is available), depriving the software industry of nearly US$1.2 billion in licensing revenue. If China were to bring its legal system into compliance with the standards in the TRIPs Agreement, the U.S. software industry will be able to enforce its intellectual property rights in Chinese courts and administrative tribunals. However, the United States will be unable to ensure Chinese compliance with the TRIPS Agreement absent the grant of PNTR to China.
In addition, the commitments undertaken by China in the accession agreements on market liberalization tariff reduction and increased market access should all expand the market for U.S. software products in China.
The American software industry needs the grant of PNTR to China to ensure that it gets the full benefit of China’s accession to the WTO. Without PNTR, the United States will not be able to ensure Chinese compliance with the critically important provisions of the TRIPS Agreement, nor will U.S. industry be guaranteed of the benefits of Chinese market access commitments with respect to information technology products and services.
Exports to China of U.S. computer and office equipment increased well over 500 percent between 1990 – 1998.
With annual growth rates of 20 – 30 percent, the market in China for computers is expanding rapidly, according to the International Data Group.
In fact, China’s personal computer (PC) market is growing twice as fast as the world average and is expected to be the world’s second-largest PC market – surpassing Japan – by the end of this year.

Printer friendly version