U.S. Secretary of State Hillary Rodham Clinton speaks during a press conference following meeting with Myanmar officials. (AP Photo/Saul Loeb, Pool) (SAUL LOEB/AP)

Does innovation destroy or create jobs? Can the United States regain its competitive edge? Will China surpass the United States in fostering an innovation economy?

These were among the questions posed during a gathering of business and policy leaders at the Newseum in Washington on Wednesday for “Innovation and the Global Marketplace,” an event sponsored by Intel, The Aspen Institute and the PBS NewsHour.

Secretary of State Hillary Clinton was the keynote speaker, appearing in an interview format with PBS NewsHour Executive Editor Jim Lehrer.

“What we’ve tried to do in the State Department is to demonstrate clearly that economic state craft is an essential part of American diplomacy,” Clinton said.

Lehrer didn’t stick entirely to innovation, taking the opportunity to ask Clinton about the accusation by Russian Prime Minister Vladi­mir Putin that she was inciting unrest following the country’s disputed election results and subsequent protests.

“Russia has one of the most highly-educated populations in the world and a growing middle class, so this didn’t come from the outside, it came from within,” Clinton said.

The conversation also turned to China and the actions the United States was taking to protect U.S. businesses, while still expanding its reach in the growing marketplace.

“China is now going to have to come to grips with being a responsible stakeholder in the global economy as well as in the traditional areas of diplomacy,” Clinton said. “It is one thing to be a developing country and get cut some slack. . . . We need new rules of the road.

“We do not begrudge or fear a peaceful rise of China,” Clinton said. “We also think it is in our interest as well. At the same time, though, countries go through phases. . . .We engage with the Chinese as we do with others around the world.”

Clinton was also asked about Republican presidential candidate Newt Gingrich’s comment last week that Palestinians were an “invented people, and whether the former House speaker’s comment was helpful in U.S. foreign relations. “No,” Clinton said. “I think he realized that was one of those innovative moments.”

A mix of concern and optimism from industry and policy leaders

Experts took predictable sides in the first panel discussion, centered around innovation, trade and the creation of the next 10 million jobs.

“Most of the net new jobs come from a small number of high-growth businesses,” said Karen Mills, administrator for the U.S. Small Business Administration. Meanwhile, Fred Bergsten, director of the Peterson Institute for International Economics, argued that reducing, if not eliminating, the trade deficit is at the center of improving U.S. competitiveness and key to an innovation economy.

“Let’s not allow an election year to undermine the ability of the United States to show economic growth,” said Myron Brilliant, senior vice president of international affairs for the U.S. Chamber of Commerce.

All of the panelists agreed that education reform was needed to sharpen the United States’ competitive edge. But they disagreed on how best to go about it. The issue was further complicated by calls for a revamping of the nation’s visa system.

“I worry about the trend lines there,” Brilliant said referring to the growing number of immigrants who come to the United States for an education, then return to their home countries.

“Look at the share of Americans getting graduate degrees. It’s the same as in the 1970s,” said Bergsten of the Peterson Institute for International Economics. “We’ve stood still and the rest of the world has shot by us. . . .Whether you look at human capital or physical capital, the United States has been asleep at the switch.”

Asked why this has happened, Bergsten suggested two things: complacency and the difficulty the nation has in developing a comprehensive education policy. “The bottom line is we’ve stood still for several decades,” he said.

But James Rogers of Duke Energy said later in the program that, “A college education is not always necessary. Rogers, who is president and chief executive officer of the company, cited the apprenticeship and training programs in Germany as an effective way to bring prospective employees who lack the necessary skills up to speed quickly.

Thea Mei Lee, deputy chief of staff of the AFL-CIO, highlighted the rising cost of education even as job opportunities for college graduates decline. “You can’t have it both ways,” said Lee, contrasting the outsourcing of jobs with rising education costs.

China was also front and center, with panelists discussing the pervasive worry that China could undermine the U.S.’s global economic standing.

“Handwringing is the way you stay at the top of your game,” said Robert Shapiro, co-founder and chairman of Sonecon, LLC. “In China and India and Europe they look at the United States with respect to innovation and say, we wish we had their problems.”

China’s innovation challenges, however, are not insignificant, argued Lael Brainard, U.S. under secretary for International Affairs.

“In order for China to continue having very rapid productivity, they are going to have to take on fundamental policy decisions that they’ve been resisting,” Brainard said. “And they’re the same ones that are critically important if Americans are going to have any confidence that this relationship with China is fair. . . .You can’t be an innovation society if you cannot enforce intellectual property rights.”

Later, in the third panel, Andy Stern, president emeritus of the Service Employees International Union, reiterated this point, but from the perspective of the United States. “You can’t have an American economy that innovates,” he said, “when Microsoft software is pirated and companies spied on by China.”