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US trade deficit with China costs millions of American jobs, report finds

by Jodi Xu Klein

The US trade deficit with China, which has ballooned since 2001, is responsible for the loss of millions of American jobs, according to a new study.

More than 3.4 million US jobs have been eliminated since Beijing joined the World Trade Organisation 17 years ago and has added over US$100 billion to the trade deficit since 2008, according to a report published on Tuesday by the Economic Policy Institute, a left-leaning think tank based in Washington.

About 1.3 million of the job losses have occurred in the last 10 years.The development “has contributed heavily to the crisis in US manufacturing employment”, according to the report. It said the job losses have been concentrated in the manufacturing sector, including industries in which the US has traditionally held a competitive advantage, because of the trade deficit.

As a result of the deficit, the US “is piling up foreign debt, losing export capacity and facing a more fragile macroeconomic environment”, wrote the researchers, who were led by Robert Scott and Zane Mokhiber.

The trade deficit with China has cost jobs in all 50 states and in every congressional district, and grew the most in the computer and electronic parts industries, the report said. Other hard-hit sectors include apparel, electrical equipment and appliances.

The study comes amid an escalating trade war between the world’s two largest economies. The Trump administration has criticised China for what it calls unfair practices and demanded that it materially change how it conducts trade with the United States.

The two sides have been locked in a stalemate in negotiations, following billions of dollars of tariffs they have imposed on each other since July.

The researchers also identified Chinese trade policies that have long concerned observers on both sides of the aisle.

“China’s trade-distorting practices, aided by China’s currency manipulation and misalignment and its suppression of wages and labour rights, resulted in a flood of dumped and subsidised imports that greatly exceeded the growth of US exports to China,” they wrote.

The trade imbalance’s negative impact on wages was also singled out. The report said it had resulted “in a net loss to workers as they move from higher-paying jobs in import-competing industries to lower-paying jobs in exporting industries”.The researchers said “the US-China trade relationship needs to undergo a fundamental change”.

The two nations are “locked in destructive, interdependent economic cycles, and both can gain from rebalancing trade and capital flows,” the study said.

The Economic Policy Institute analyses the economic impact of policy with a focus on the conditions of low- and middle-income Americans.


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