Bush singled out the world's two most populous nations one day before Chinese President Hu Jintao's scheduled visit to the White House. Bush noted that event and his recent trip to India.
"These countries are emerging nations," Bush said in a speech at Tuskegee University. "They are growing rapidly and they provide competition for jobs and natural resources.
"As these new jobs of the 21st century come into being, people are going to hire people with the skills set," he said. "And if our folks don't have the skill set, those jobs are going to go somewhere else."
Before his speech, Bush visited a lab at Tuskegee where students were researching nanotechnology. The science involves the manufacture and manipulation of materials at the molecular or atomic level.
The president also urged Congress to make permanent a popular tax credit for businesses that invest in research and development.
"It's research that will keep the United States on the cutting edge," Bush said.
Bush remarked that government-funded research contributed to the development of the iPod music player.
"I tune into the iPod occasionally," the president said to laughter from the audience.
Critics said the president's actions do not match his rhetoric on keeping America competitive. Sen. Edward Kennedy, D-Mass., said Bush has cut critical education and research programs.
"China, India and the rest of the world are playing for keeps, and we need more than half measures to keep up," Kennedy said in a statement.
Before heading back to Washington, Bush met privately with the families of four members of the military who were killed in Iraq.