Business | China has cost US 3.4 million jobs, says think tank
A Chinese worker tests circuit boards at a factory in Sichuan province. Photo: AFP
A Chinese worker tests circuit boards at a factory in Sichuan province. Photo: AFP

China has cost US 3.4 million jobs, says think tank

Economic Policy Institute says the US-China trade relationship needs fundamental change to stop 'unfair trade and illegal currency manipulation'

February 7, 2017 12:14 PM (UTC+8)

A lengthy report released last week by the Economic Policy Institute, a US think tank, lays bare the loss of American jobs to China, particularly in tech manufacturing.

The report states that “due to the trade deficit with China 3.4 million [American] jobs were lost between 2001 and 2015, including 1.3 million jobs lost since the first year of the Great Recession in 2008. Nearly three-fourths (74.3%) of the jobs lost between 2001 and 2015 were in manufacturing (2.6 million manufacturing jobs displaced).”

The most adversely impacted sector of the US economy was the computer and electronic parts industry, which experienced a loss of 1,238,300 jobs, representing 36% of the 2001–2015 total and primarily affecting California, Texas, Oregon, Massachusetts, Minnesota and Arizona.

Here’s another takeaway. “In 2015, the United States had a US$120.7 billion deficit in advanced technology products with China, and this deficit was responsible for 32.9% of the total US-China goods trade deficit. In contrast, the United States had a US$28.9 billion surplus in advanced technology products with the rest of the world in 2015.”

The incomes of all directly impacted US workers were reduced by US$37 billion per year, and growing competition with imports from China and other low-wage countries reduced the wages of all US non-college graduates by US$180 billion per year, the EPI found.

How did this happen?

“China both subsidizes and dumps massive quantities of exports,” the report says. “Specifically it blocks imports, pirates software and technology from foreign producers, manipulates its currency, invests in massive amounts of excess production capacity in a range of basic industries, often through state owned enterprises (SOEs) … and operates as a refuse lot for carbon and other industrial pollutants. China has also engaged in extensive and sustained currency manipulation over the past two decades …

“Other countries in the region have found it attractive to follow (and difficult to resist following) China’s lead in engaging in currency manipulation, resulting in the region’s large and growing trade surpluses with the United States and the world over the past 15 years.”

The report’s authors state that besides China, US multinational companies have reaped a rich reward in the form of billions in profits from trade with China. They urge the Trump administration to address “Chinese excess production capacity… in bilateral negotiations as it is this excess capacity that fuels dumping of exports in the United States.”

In addition, the EPI seeks to bar “China from all US government procurement contracts, and prohibiting Chinese government owned companies from direct investment in US manufacturing or high tech companies.”

A border-adjustable carbon fee on imports produced by energy-intensive industries should be established, and “China should not be rewarded for its market distortions with a bilateral investment treaty. Lastly, the United States must maintain currency vigilance and perhaps even consider negotiating a new Plaza Accord to rebalance currencies and global trade.”

The report concludes: “The US-China trade relationship needs to undergo a fundamental change. Addressing unfair trade, weak labor and environmental standards in China, and ending currency manipulation and misalignment should be our top trade and economic priorities with China. It is time for the United States to respond to the growing chorus of calls from economists, workers, businesses, and Congress and take action to stop unfair trade and illegal currency manipulation by China and other countries.”

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