China Trade

U.S.-China Trade, 1989-2003
Impact on jobs and industries,
nationally and state-by-state
A Research Report Prepared for the
U.S.-China Economic and Security Review Commission
By Dr. Robert E. Scott
Director of International Programs,
Economic Policy Institute
January 2005
EPI Working Paper #270

The Paper is a must-Read for Anyone concerned with the current American Trade deficit. It clearly outlines the Job loss due to Chinese Imports. It clarifies the fact that this Job loss is uniform across American industry, not just contained in Labor-intensive sectors. Chinese expansion into Advanced Technology Products comes rapidly, and American Labor is losing their advantage in this area. Many important points need be considered:


China now accounts for the entire $32 billion U.S. trade deficit in Advanced
Technology Products (ATP).

the WTO and the broader process of globalization have tilted the economic playing field in favor of investors, and against workers and the environment, resulting in a race to the bottom in wages and environmental quality.


U.S. exports increased from $5.8 billion in 1989 to $26.1 billion in 2003, a fourfold increase. Imports rose from $11.9 billion to $151.7 billion in the same period, a twelvefold increase on top of a base that was already twice as large as exports. As a result, the U.S.-China trade deficit increased $119.5 billion, or nearly two thousand percent.


Between 1989 and 2003, the growth in U.S. exports to China created demand that supported 199,000 additional U.S. jobs. In the same period, the growth of imports displaced production that could have supported an additional 1,659,000 jobs


The distribution of job losses between 1989 and 1997 closely follows changes in trade patterns,
The largest losses of job-supporting production in this period occurred in leather products (-66,000 job opportunities) apparel (-55,000 jobs), rubber and plastics (-38,000 jobs), furniture (-15,000 jobs), and electronic machinery (-69,000 jobs) — which included audio/video equipment (-18,500 jobs) and communications equipment (-3,700 jobs). The textile industry also experienced a major indirect effect, as it suffered a loss of output that would have supported 24,000 jobs, due to the growth of apparel imports


Several major shifts are notable:

The furniture share triples from the earlier to the latter period. Rubber and leather products decline precipitously. The share of computers more than triples and audio/video equipment doubles. Communications equipment rises even more rapidly, though its share remains small. These results provide clear evidence of China’s growing technological prowess and the rapid accumulation of skills in its labor force


Growing trade deficits with China have displaced production supporting 1.5 million U.S. jobs since 1989. The rate of job displacement is accelerating, especially since China entered into the WTO.

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What this Paper does not relate to the Reader remains the net Causes for the Trade imbalance. The United States, EU, and other member of the G7 will not announce the Chinese peg of the Yuan to the Dollar is an Economy-wide vehicle to dump Chinese Product on the World market below production cost. The United States, on the other hand, must sell its Exports below normal industry profits due to excess amount of Dollars and Treasuries held by foreigners. This will not last very long, as the EU is beginning to suffer as does the U.S. from the practice, and Japan loses a like advantage as held by China due to Material Cost increases and low Export ratios. lgl