Report: Trade Deficit with China Cost PA 122,600 Jobs in 12 years

Dec 15, 2014

A report released by the Economic Policy Institute found 122,600 jobs don’t exist in Pennsylvania because of unbalanced trade with China.

Nationally, the trade deficit cost 3.2 million jobs between the same period of 2001 and 2013.

Most U.S. trade comes from manufactured goods rather than agricultural and war materials such as oil or services such as health care, therefore most job creation or loss dependent on trade is manufacturing.

Executive Director of the Keystone Research Center, Stephen Herzenberg, said a majority of job losses were manufacturing. Production operations jobs dropped fro 525,000 in 2001 to 400,300 in 2013 according to the Department of Labor.    

“So in practice we have fewer manufacturing jobs than we had actually at the beginning of this period. So in many cases you are talking about people losing jobs. In some cases you are talking about jobs that aren’t created,” he said.

The EPI’s report sites currency manipulation as the biggest contributor to the growing U.S. trade deficit which reached $324.2 billion in 2013. China has an increasingly large U.S. dollar reserve allowing the country to inflate the currency exchange.

“They basically keep the dollar relative to the Chinese currency artificially high. And that makes their goods cheaper and that keeps us importing more from China,” Herzenberg said. 

For several years China has had the strategy of becoming competitive in a wider range of high-tech manufacturing goods rather than labor intensive goods such as clothing or toys. While other countries became competitive in manufacturing, Herzenberg said the U.S. continued to import and never maintained a guided policy.

“Our national policies unfortunately have not been shaped by concerns around maintaining strength around our manufacturing sector, but much more guided by letting big companies move their production off-shore,” he said.

While China has always had a manufacturing strategy, he said the U.S. is just coming around to the idea.

“The U.S. in the last few years has had more awareness that we might want to make a manufacturing strategy as well as for economic development reasons or just that manufacturing is critical to our living standards, to our middle class and to that matter to our national defense.”

The U.S. and China are slated to meet in Chicago this week for the 25th session of the U.S. and China Joint Commission on Commerce and Trade. The session will include a full day of events to facilitate private sector engagement.