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Equipment at a Volvo Group manufacturing facility in Hagerstown, Maryland, where US President Joe Biden last week touted the nation’s job gains. Photo: Bloomberg

Trade with China actually boosts US employment, new studies find

  • Most job losses between 2000 and 2014 were limited to American manufacturing sector and offset by gains in other fields, says researcher
  • Findings come as US government seeks public comment on Trump-era trade tariffs in highly charged political landscape

American trade with China has not proved pivotal to the loss of US jobs and in fact such engagement boosts employment overall, according to new studies highlighted by an influential Washington-based think tank and top American university on Friday.

Defying conventional thinking, the research highlighted by the Centre for Strategic and International Studies’ Trustee Chair in Chinese Business and Economics and the Stanford Centre on China’s Economy and Institutions concluded the US had experienced “no net employment loss due to trade with China”.

Instead, trade between the world’s two leading economies resulted in “wage increases for 75 per cent of American workers” between 2000 and 2014, said Wang Zhi of George Mason University, whose research the studies cited.

Wang explained that most job losses came in the “US heartland” where population density was relatively low.

US President Joe Biden speaking last week in Poughkeepsie, New York, about creating jobs. Photo: AFP/Getty Images/TNS

Losses were confined to the manufacturing sector, which makes up a small portion of the US labour market, and these were offset by gains in non-manufacturing sectors, the researcher added.

Andre Kurmann of Drexel University, another researcher whose similar findings were also highlighted, said China did not figure prominently in the US jobs situation.

Labour markets with a “relatively educated population saw small manufacturing job losses from plants that moved from manufacturing industries to non-manufacturing, R&D, wholesale and management”, Kurmann said. Meanwhile, local labour markets whose education levels were low witnessed few “non-manufacturing gains.”

“Every country” experienced job losses of some kind after China joined the World Trade Organization in 2001, Kurmann said, adding that the US policy formulated in response to its rival’s meteoric economic rise might have made it more “vulnerable” to job losses due to a lack of government support.

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He advised against maintaining the trade tariffs imposed on Chinese imports in 2018 by then US president Donald Trump worth $300 million. “They may be a bargaining token, but they are non-productive”.

In his successful campaign for the White House in 2016, Trump vowed to rein in China, bring back American jobs and reduce the trade deficit.

China’s total trade surplus with the US shrank to US$36.7 billion in August from US$41.5 billion in July. The trade deficit between the two surged by 14.5 per cent year on year in 2021, according to data released by the Commerce Department in February.

The administration of Joe Biden remains ambivalent about lifting the tariffs in full or in part, owing to what experts say is political pressure to appear tough on China before the US midterm elections in November. Speculation has arisen about a relief package to ease the impact of high inflation on consumers. Inflation now stands at 8.4 per cent.

US keeping tariffs on Chinese imports till Beijing opens up economy: trade rep

To gauge popular sentiment, the United States Trade Representative office has sought public comments on trade tariffs. On Wednesday it announced the launch of an electronic portal containing questions about their effectiveness.

But Jeremie Waterman, president of the US Chamber of Commerce’s China Centre, countered that while academics can “debate the mix of jobs between manufacturing and services”, the “bottom line” in policymaking and politics is that there was “a significant shock tied to the US economy stemming from China’s entry to the WTO”.

The US “misjudged the speed” of that shock and was slow to address “distortions emanating from China and the Chinese model”, Waterman said. He called for further research on how Beijing’s industrial policy and the country’s manufacturing overcapacity have rendered US exporters less competitive globally.

However, Kurmann said the current politics amounted to a reflection of the palpable negative effects of trade with China, with the positive impacts being less visible.

“When someone loses a job and it’s been a small town somewhere in the middle of Pennsylvania … and there’s nothing else afterwards, that’s very tangible,” he said. “The benefits for consumers and voters of having cheaper goods that are made in China – they’re less tangible.”