Trade with China cost the U.S. 2.7 Million Jobs

Since China entered the World Trade Organization in 2001, the massive increase in Chinese exports to America and China’s unfair trade practices have cost Americans more than 2.7 million jobs, according to a new report.

“The growing trade deficit with China has been a prime contributor to the crisis in U.S. manufacturing employment,” states the report from the Economic Policy Institute.

U.S. imports from China have soared from $102 billion in 2001 to $398.5 billion last year. Meanwhile American exports to China have grown from $18 billion in 2001 to $96.9 billion in 2011, producing a trade deficit last year of more than $300 billion.

“China’s entry into the WTO in 2001 was supposed to bring it into compliance with an enforceable, rules-based regime that would require China to open its markets to imports from the United States and other nations by reducing tariffs and addressing non-tariff barriers to trade,” observed Robert E. Scott, the author of the report. Scott is director of trade and manufacturing policy research at the Economic Policy Institute, a think tank that analyzes the impact of economic trends and policies on working people in the United States.

“However, as a result of China’s currency manipulation and other trade-distorting practices, including extensive subsidies, legal and illegal barriers to imports, dumping, and suppression of wages and labor rights, the envisioned flow of U.S. exports to China did not occur.

“Further, the agreement spurred foreign direct investment in Chinese enterprises, which has expanded China’s manufacturing sector at the expense of the United States. Finally, the core of the agreement failed to include any protections to maintain or improve labor or environmental standards or to prohibit currency manipulation.”

The 2.7 million-plus jobs lost since 2001 include more than 2.1 million in manufacturing, or 77 percent of the total. The hardest hit industry was computer and electronic products, which lost more than 1.06 million jobs, followed by apparel and accessories (211,000 jobs), textile mills and textile product mills (106,000), and fabricated metal products (120,000).

The report’s job loss estimates “include only the direct and indirect jobs displaced by trade, and exclude jobs in domestic wholesale and retail trade or advertising,” Scott points out.

“Imports displace goods that otherwise would have been made in the United States by domestic workers.”

The hardest hit state was New Hampshire, which lost 20,400 jobs or 2.94 percent of its total employment from 2001 to 2011, followed by California (2.87 percent), Massachusetts (2.86 percent), and Oregon (2.85 percent).

In actual numbers, California lost 474,700 jobs, followed by Texas (239,600), New York (158,800), and Illinois (113,700).

“But the jobs impact of the China trade deficit is not restricted to job loss and displacement,” according to Scott.

“Competition with low-wage workers from less-developed countries such as China has driven down wages for workers in U.S. manufacturing and reduced the wages and bargaining power of similar, non-college-educated workers throughout the economy.”

He concludes: “The U.S.-China trade relationship needs a fundamental change. Addressing the exchange rate policies and labor standards issues in the Chinese economy is an important first step. It is time for the administration to respond to the growing chorus of calls from economists, workers, businesses, and Congress and take action to stop illegal currency manipulation by China and other countries.”

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