<html><head><meta http-equiv="Content-Type" content="text/html charset=utf-8"></head><body style="word-wrap: break-word; -webkit-nbsp-mode: space; -webkit-line-break: after-white-space;" class=""><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;" class=""><a href="http://www.marketwatch.com/story/how-chinese-imports-may-have-curbed-american-ingenuity-2017-03-22" style="color: rgb(149, 79, 114);" class="">http://www.marketwatch.com/story/how-chinese-imports-may-have-curbed-american-ingenuity-2017-03-22</a><o:p class=""></o:p></div><h1 style="margin-right: 0in; margin-left: 0in; font-size: 24pt; font-family: 'Times New Roman', serif;" class="">How Chinese imports may have curbed American ingenuity <o:p class=""></o:p></h1><p class="timestamp" id="published-timestamp" style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;">Published: Mar 22, 2017 11:34 a.m. ET<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><b class=""><span style="font-size: 18pt;" class="">Firms hit by Asian competition produce fewer patents, Autor finds</span></b><a href="http://www.marketwatch.com/topics/journalists/jeffry-bartash" title="Jeffry Bartash" style="color: rgb(149, 79, 114);" class=""><b class=""><span style="font-size: 18pt; color: windowtext; text-decoration: none;" class=""><o:p class=""></o:p></span></b></a></p><h3 style="margin-right: 0in; margin-left: 0in; font-size: 13.5pt; font-family: 'Times New Roman', serif;" class=""><u class=""><span style="color: blue;" class=""><a href="http://www.marketwatch.com/topics/journalists/jeffry-bartash" title="Jeffry Bartash" style="color: rgb(149, 79, 114);" class=""><span style="color: blue;" class="">Jeffry Bartash</span><span style="color: windowtext; text-decoration: none;" class=""><o:p class=""></o:p></span></a></span></u></h3><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;" class="">Soaring imports from China are blamed for having taken U.S. manufacturing jobs, but what’s less well known is how they also undercut American ingenuity, according to a prominent labor economist.<o:p class=""></o:p></div><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">Massachusetts Institute of Technology professor David Autor and several of his colleagues found that manufacturers most exposed to Chinese competition were forced to skimp on research and production, leading to a “significant decline” in new patents.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">Autor examined all corporate patents filed by U.S.-based firms between 1975 and 2007 and granted as of March 2013.<o:p class=""></o:p></p><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;" class=""><img apple-inline="yes" id="B17224E8-EE11-495D-8918-EC498532C9D1" height="514" width="640" apple-width="yes" apple-height="yes" src="cid:image001.jpg@01D2A3B7.D1455410" class=""><o:p class=""></o:p></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;" class="">Patents dropped after China entered the World Trade Organization.<o:p class=""></o:p></div><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">Why is that important? <o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">“Manufacturing is the locus of U.S. innovation and accounts for more than two thirds of U.S. R&D spending and for a similarly large share of U.S. patents,” <a href="http://voxeu.org/article/competition-china-reduced-innovation-us" target="_new" style="color: rgb(149, 79, 114);" class="">Autor writes in a new article.</a><o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">The U.S. has been running large trade deficits with China for more than two decades. In 2016, the deficit with China totaled $310 billion and accounted for about 62% of the overall U.S. trade gap.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">The slowdown in innovation has broad consequences for the U.S. economy. If companies are less able to develop improved processes and technologies, their productivity will suffer. And low productivity is a hallmark of weaker economies.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">That’s the situation the U.S. has found itself in. The nation’s productivity has risen about 1% annually since 2007, compared to a post World War Two average of about 2.2%. Productivity is one of two keys to a faster growing economy — the other is an expanding working-age population.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">The prolonged soft patch in productivity is evident in the current recovery, the weakest in the postwar era when viewed through the prism of gross domestic product, the official scorecard for the economy.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">GDP has averaged about 2% growth since the Great Recession. The last time it topped 3% was in 2005, marking the longest stretch of sub-3% growth in modern times.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">“While politicians’ ‘obsession’ with manufacturing is primarily due to the sizable employment losses in the sector during recent decades, an accompanying reduction in innovation may well affect economic growth in the longer term,” Autor wrote.</p></body></html>