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EU warned about China's threat to high-tech firms

Millions of European industrial jobs are under threat from China, India and other emerging economies as these countries combine growth in low-skill, low-wage manufacturing with an expanding presence in innovative, hi-tech sectors, two EU reports warned.

They challenged the assumption that Europe could offset its loss of traditional manufacturing jobs by retaining a lead in knowledge-based industries and exporting higher-value goods to emerging economies.

"China is emerging as the most competitive manufacturing platform ever," a European parliament study said.

Launching plans to upgrade R&D in the EU, Janez Potocnik, science and research commissioner, said research investment in China is growing by 20 percent a year while that in Europe is stagnating. The share of Chinese GDP devoted to R&D is growing 10 percent annually while in the EU it is rising by 0.02 percent.

"If we think that the competition from emerging economies such as China and India is simply about low wages and manufacturing, then we are kidding ourselves," Potocnik said.

"These countries are also competing with us in hi-tech, high-skilled sectors because they are investing more and more in research and innovation. And, yet, as they catch us up, we are still lagging behind our traditional competitors such as the US and Japan," he added.

A report adopted by the parliament's international trade committee and drafted by Caroline Lucas, a Green MEP, said Europe's textiles industry, under siege this summer in the so-called "bra wars," could lose 1,000 jobs a day.

"China is also fast developing competitive advantage not only in footwear, machine components and autos but also in hi-tech goods. This is a systemic challenge, not a one-off sectoral one," it said.

Lucas urged the commission to investigate the extent to which the "China price" -- using economies of scale to produce goods for 30percent to 50 percent less -- is affecting EU industries, examine the level of existing offshoring and identify sectors that will be under threat in the future.
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