Increases in employment and wages outweigh negative effects, study finds
A leading research team has found that the positive impact of Chinese imports on employment and wages in the United States far outweighs the negative effects, such as job losses in the manufacturing sector.
The analysts discussed their findings in a recent webinar after publishing a report in Big Data China, a collaboration between the Center for Strategic and International Studies in China Business and Economics’ Chair of Administration and the Center from Stanford on the Chinese economy and institutions.
According to the research, most job losses in the United States between 2000 and 2014 were limited to the manufacturing sector. The more educated and economically diverse regions of the country, which have much larger populations than the “heartland” or “homeland”, have been much less affected by the surge in Chinese imports.
The report came as the U.S. Trade Representative’s office sought comment on trade tariffs left by the Trump administration. Former President Donald Trump sparked a trade dispute with China and imposed additional tariffs on more than $300 billion worth of Chinese imports in 2018.
Trump’s successor Joe Biden kept the tariffs, although he signaled his administration could use tariff cuts as a tool to contain soaring inflation.
Wang Zhi, senior researcher of government and politics at George Mason University, whose analysis is cited in the report, said both upstream and downstream effects should be considered when measuring the impact of Chinese imports on American employment.
“We find that the downstream job creation effect is both economically and statistically significant,” he said during the webinar.
Wang said most of the job losses were in “central” regions with relatively low population density, and the losses were limited to the manufacturing sector, which is a small part of the labor market. American.
According to the report, between 2000 and 2007, the average effect for each US region analyzed was a net increase in employment of 1.27%. In addition, workers in an average region saw their wages increase by 75% due to trade with China.
The researchers also found that workers with a college degree were the “winners” in commerce, with average wage increases of 7.2% per year, while wages for workers without a college degree fell an average of 4%. .3% per year.
“The trade winners far outweigh the losers,” Wang said.
The report cites a similar study by a team led by Drexel University professor Andre Kurmann. This study used “confidential census microdata” to conclude that Chinese imports had no significant impact on US manufacturing and service industries between 2008 and 2015.
Kurmann said his team found that job losses in the United States were mostly in regions like the Midwest or the South, where levels of human capital (measured by the percentage of the population with a college degree ) are lower than regions like the west coast or the northeast. Job losses in the former regions were offset by job increases in other sectors, such as the service sector, in the later regions.
“Think of Apple headquarters in San Jose or Nike headquarters in Portland. They both have over 10,000 employees. Most of their manufacturing is done overseas, mostly in China, but the design , research and development and management, it’s all done in the United States,” Kurmann said. “They can benefit a lot from intermediaries that they can use in American markets.
“What happens when you look at the companies and the actual factories that are owned by those companies is that it’s the large importing companies that are reorganizing towards services that account for a lot of the negative effect on manufacturing” , did he declare. “That’s very much in line with what we’ve heard before. It’s the companies that use these downstream imports and benefit from cheaper imports from China.”
Anna Ashton, director of China and U.S.-China business affairs at Eurasia Group, said it’s helpful to consider the differences between U.S. multinationals and core country workers when weighing costs and benefits. trade advantages with China, because “the effects are clearly complex”.
“And I think that’s translated into tensions in American domestic politics between working-class American voters in the heartland and then the educated coastal elites, which seems to be reflected in this research, and it lends itself in turn to fairly simplistic rhetoric and policy proposals that are fundamentally protectionist and may, in the short term, appease segments of America, who feel most aggrieved, but may not actually solve the problem “said Ashton.