WASHINGTON, DC, July 30, 2008 - A study released today blaming widespread US job losses on trade with China is based on flawed analysis and distracts from the real challenges facing the US economy and the trade relationship with China, the US-China Business Council (USCBC) said today.
"The Economic Policy Institute's study, 'The China Trade Toll,' assumes that every product imported from China would have been made in the US otherwise, which is clearly wrong--several decades wrong, in fact," said John Frisbie, USCBC's president. "Think about a Sony TV. It used to be made in Japan--and was an import. Look on the label now and it is likely made in China--and still an import." Frisbie continued, "Much of what we import from China is replacing imports from other countries, not products we make in the US today. A jobs impact study that ignores the facts undermines its own credibility."
The United States remains the world's largest manufacturer, with manufacturing output hitting an all-time high last year. US manufacturing jobs have been in a long decline over the past four decades, long before China came on the scene, and now constitute about 10 percent of total US employment.
"The simple reason for the decline in manufacturing jobs is productivity--the US makes more with fewer people, because of productivity and technology advances," continued Frisbie.
Some workers nonetheless do lose their jobs to lower-cost imports. US policymakers need to ensure these workers have the opportunity to transition to new work in growth sectors of the economy.
"The key is not to build walls around the US to isolate us or cut us off from our growing export opportunities with China," Frisbie said. "The key is to make sure our companies and workers stay competitive and remain global leaders in manufacturing--and that means encouraging innovation, improved education, better healthcare policies, and sensible energy policies."
In addition, Chinese trade policies that create unfair advantages should be addressed through focused dialogue and the use of available trade dispute tools to level the playing field.
"Critics dismiss the effectiveness of dialogue, but dialogue has produced a nearly 20 percent appreciation in China's exchange rate, nearly the amount critics claimed was necessary two years ago," Frisbie said. "The US just won a World Trade Organization case against China to remove barriers curbing US auto parts exports, and has three more cases pending to address China's poor record of protecting intellectual property rights and remove barriers that keep out American movies and financial news services." Frisbie concluded, " We need to continue this mix of effective dialogue and the use of trade rules to ensure the US benefits from what is our most important economic relationship now and in the future."
The USCBC (www.uschina.org) is the leading organization of US companies engaged in business with the People's Republic of China. Founded in 1973, the USCBC provides extensive China-focused information, advisory, and advocacy services, along with events, to more than 250 US corporations operating within the United States and throughout Asia.
